New England “Transfer the Farm”
Workshops
Bob Parsons
Deb Heleba
University of Vermont
Regional Support Project With….
• Northeast Center for Risk Mgmt
Education
• Extension of Vermont, Maine, New
Hampshire, and Connecticut
• Land Link – New England, Vermont, and
Maine
• Cooperating attorneys
• Workshops held in 5 New England states
• Ongoing for past 3 years
Need for Farm Transfer Assistance
Crosses State Lines
• Survey - major concern of 40% of Vermont dairy
farmers
• Complicated by high real estate values – MA, CT
• Concern in region to preserve farmland
– Conservation easements,
– Development rights
• Complex – 2 different issues
– Estate Planning
– Business transition
Workshop Agenda for Workshop
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Communication and setting goals
Retirement, estate & business basics
Nuts & bolts – Legal aspects & methods
Creative alternatives
First-hand experience
Communication – Important Piece
• Speaker – Counselor who concentrates on
farm families
• Stress the need of talking with family
– Not necessarily agreement
• Approach the goals of each generation
– Each generation defines there goals
• Aligning goals with farm situation
Retirement & Transfer Basics
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Overall view of issues
Retirement planning
Determining your estate
Implication of taxes
Methods of transferring assets
Business organizations
Business transitions
Legal Aspects of Transfers
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Attorney with ag estate experience
Probate, estate, and taxes
Wills, inheritance, & heirs
Protecting assets
Picking right business structure
Conflict of interest between generations
FREE QUESTIONS FOR LAWYER!
Creative Alternatives
• Sell development rights
• Selling conservation easement
• Land Link – bringing in non-family member
First Hand Experience
• Farmer panel who have implemented plans
Valuable to hear from experienced family
• Give success and horror stories
• Provides insight on family approaches
• Gives courage to move on topic
Who Attended……
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5 states - 228 ’03, 252 ’04, 163 ‘05
Age distributed: 13% < 35, 29% >65
59% male, 41% female
64% sole proprietor, 20% partnerships
67% have retirement account
18% wrote/updated will in past 5 yrs
Workshop Increased Understanding of
the Issues…
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Communication issues from 30% to 85%
Retirement planning from 19% to 71%
Estate planning process from 18% to 78%
Business organization options
– From 12 to 71%
• Instructors effectiveness above 75%
• Satisfaction with workshop at 99%
• Note: on a scale of 1 to 5, answer 4 or 5
Conclusions from TTF-I
• Workshops very effective and popular
• Aids farmers in getting a handle on issues
• But leaves a major question…
What to do next???
Creation of Transfer the Farm II
• For farmers who are ready to “do something”
• Provide more detailed program
Problem is…
What exactly to present and how to
present it?
In 2004 – Trial Run
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2 workshops with out of state speaker
Mailed brochures to previous participants
Attendance 48
Evaluations good but…
Agenda was too much
Strong on retirement planning and health care
Weak on business structure and transition
Primary Comments…
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Want transition approach
How does a complex plan work?
How to the pieces fit together?
Want details but…
Most farmers want “fill in” plan!
Revising Program for 2005
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Outside legal speaker
Planning 3 workshops
Focus on business transition
Use of decision case approach
Walk through a farm transfer
Incorporate audience comments
Agenda for 2005 Workshops
• Introduce 2 case farms
• Review assessment of retirement
income and health needs
• Review and compare business
structures
• Develop plans for cases
– Now, 5 yr, 10yr
Audience Participation a Key Part
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Agenda focuses on developing a LLC
Evaluate needs now and in future
Ask audience for suggestions
Farmers will see an example of
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Developing a LLC agreement
Incorporate key elements
Incorporate changes as needed
The process for a 15 year transition
Reference Material for Workshop
• Checklist for ingredients of LLC agreement
• Limitations of LLC
– Does it provide limited liability?
– Preventing “piercing the veil”
• Checklist of post-LLC tasks
Points of Particular Interest
• Key elements of agreement for
– Divorce
– Controls
• Passing ownership through the LLC
• Does it really protect against liability
• Protecting against the “piercing the veil”
Next Program Involvement of
NECRME Project
• Set up farm visit with farmers planning
transfer with extension/lender/counselor
– Provide payment for travel
• Aid contacting professional (lawyer, acc’t)
– $150 stipend
• Provide guidance to farm by phone
• Goal of 55 throughout New England
So What Have We Learned?
• Farm transfer remains major concern
• Various issues
– Business transition
– Estate planning to reduce taxes
• Need assistance of professionals
• Task complex but can be accomplished
• New England
– Must take regional approach
Conclusion…
There are many ways to get there
But all require on basic step…
…at some point you must stop
procrastinating and put a plan
in action!!!