FARM ESTATE PLANNING:
Presented by:
Okarsamaa B. White, M.S., AFC
Extension Educator, Financial Management
University of Maryland – Cooperative Extension
Family and Consumer Sciences
obwhite@umd.edu
FARM ESTATE PLANNING:
AN INNOVATIVE APPROACH TO
EFFECTIVE COMMUNICATION WITH
FAMILY MEMBERS AND FARM EMPLOYEES
FOR UNDERSERVED FARMERS AND
RANCHERS
Objective of Abstract



Introduce farm estate planning communication to
underserved farmers and emphasize the
importance of communication
Increase farmer’s understanding to effectively
communicate strategies of transitioning family
farm
Providing the transition of a family farm to family
member (s) or/and non-interested family
members and what options are available to
protecting family legacy.
WHY COMMUNCATION!!




Who to trust and lack there of…
Difficult to communicate their
intentions...
Plan of when to transition from
farming operation…
Share information …
Estate Planning
Family Legacy
Farm w/ No Plan
Farm Viability
Two Instruments Used in Estate Planning

Wills and Trusts
Simplified definition of a Last Will and
Testament – A will is essentially a
legal document that lays out how
you want your assets distributed at
death.
Living Trusts (Revocable)

Revocable Living Trust – is complete
will substitute. It can control all
your assets both during your life
and after your death.


If a Farmer sets up a living trust,
he/she can transfer the title of all his
major assets (farm real estate, stocks,
bonds, etc.) from his name to the
name of the trust.
He won’t lose control because he would
name himself as the trustee and
beneficiary.
Three Principle Obstacles
In Planning Our Estate
Living
Probate
Death
Probate
Death
Taxes
Estate Planning & Its Important

What is an Estate Plan?
-
is a definite plan for managing your wealth while
you’re alive and distributing it after death.
-
Comprehensive Estate – arrange the ownership,
management and distribution of your assets in
ways that meet your needs and objectives while
minimizing estate shrinkage.
-
The goal of estate planning is to preserve the
greatest amount of your wealth possible for the
intended beneficiaries prior to your death. Your
trust must entered into order to avoid penalties
related to certain Federal and State tax laws.
Importance of Estate Planning



The Importance is to minimize and /or
avoid:
Frustration
Heartache
Probate
Dissension
Underserved family farm have limited
resources and it allows them to pass on a
legacy (no matter large or small)
Communication is the KEY …. Wealth and
Family Estate Planning
Purpose of Estate Planning
Communication



Increase Awareness of farm estate
planning
Increase farmer’s strategies for
planning to transition from farming
Deciding how and when a farm
estate plan should be implemented
Estate Farm Communication

You are merely planting the seed!

Encourage Farmers to attend Sessions


Encourage them to bring family
members and farm employees
Have Farmers relay message to
neighboring farmers to attend and
support farm preservation.
Underserved Farmers and Rancher
Communication Differentiate

Key to communication is to listen during
farm visit

Determine individual needs (Assess)

Don’t assume (Farmer’s Goals or Desires)

Discuss situation until clear about their
position and again don’t form an opinion
Farmers Communication Opportunities

Family Meeting
(All family members – who could be an
heir to the farm)




Several Family meetings maybe required
Listen to all parties’ interests
Set Goals, Plan and Action for transition of
farm
Family and Employees meeting (Discuss
your plan to transition the farm operation
to a family member or sale to interested
employee
Innovative Approach to Increase
Awareness of Farm Estate Planning

Underserved Farmers and Ranchers
 Create Estate Planning Listening Forum
a. Identify several farm families that have estate plans
b. Identify several farmers that have no estate plan
c. Inform farmers that listening forum and estate planning
workshops are to protect their family legacy and preservation
of farm businesses.
(Ex. This could be done 3 or 4 times a year.)
d. Listening Forum is to create and develop a relationship of trust
and respect. (Estate Planning Attorney, Accountant, Tax
Consultant, Financial Advisor, Insurance and Farmers).
e. Develop a one-day Estate Planning Seminar for farmers to
receive expert advice to protect their assets, legacy
and
inheritance.
Estate Planning Awareness

Create Partnerships with local county
and state agencies:




Local University Cooperative Extension
Educator, Specialist and Field Faculty
County Farm Bureau, District and County
Representatives
USDA Agencies (NRCS, CSREES, FSA, etc.)
State Land Preservation, Conservation &
Stewardship Programs
Farm Business
Farmer Requests Your Opinion



Let the farmer know that your are
not an expert in “Estate Planning”
Your organization is coordinating a
“Farm Estate Listening Forum” and a
one-day Estate Planning Workshop
Inform him that he/she is not alone
and doesn’t understand “Estate
Planning”
Strategies of Farm Transition

Discuss their plan with all interested parties

Set their plan in motion (Dates and Time frame)

Write out their plan of action

Encourage farmers to develop their estate plan


List every asset that they own or business party
Meet with appropriate persons as mentioned
(Estate Planning Attorney, Tax Accountant,
Financial Advisor and Insurance Company)
Estate Assets

All assets of any value that you
own, including:






real property
annuities
business interests (farm operation,
farm supply store or equipment)
insurance proceeds
personal property
even your personal effects
Plan of Action to Transition the Farm
Who, When and How
to Transition
Farm Operation
Continuation
Heirs to farm
FARM ESTATE SURVEY





Random survey sent to farmers
Approximately 100 survey’s
Requesting farm estate planning
Information.
Survey sent to 6 counties out of 23.
See questions and farmers responds.
Have you Established a Family Farm
Plan Estate?
100
90
80
70
60
50
40
30
20
10
0
Yes
No
No Response
Not Returned
What Type of Estate Plan Have You
Implemented?
100
90
80
70
60
50
40
30
20
10
0
Written Will
Living Estate
Trust
No Response
Not Returned
Have You Communicated Your Estate
Plan to Others?
100
90
80
70
60
50
40
30
20
10
0
Family
Member
Attorney
Financial
Advisor
Family/
Employee
Consulted
with others
Not
Returned
Who Approached You about
Transitioning the Family Farm?
100
90
80
70
60
50
40
30
20
10
0
Family
Member
Extension
Educator/
Agriculture
Manager
Nobody
Attorney/
CPA/ Tax
Advisor
Not
Returned
Upon Passing, Who Inherits Family
Farm?
100
90
80
70
60
50
40
30
20
10
0
S
e
s
u
po
C
en
r
ld
hi
u
o
Sp
se
&
C
en
r
ld
hi
r
C
en
r
ld
hi
&
G
d
an
i..
h
c
.
ib
gs
n
li
S
s/
Pa
nt
e
r
N
t
e
R
ot
ed
n
ur
Inheritance - Legacy
Homestead
to Spouse/Children
Inheritance - Legacy
Woodland
Parcel
Farmland
Options for Estate Planning

Four methods to use to Plan an
Estate:


DO NOTHING
Hold Title to your assets in Joint
Tenancy

Create a Last Will and Testament

Establish a Revocable Living Trust
Underserved Farmers & Ranchers
Probate Court Cost
GROSS ESTATE SIZE
PROBATE FEES
$
100,000
$
4,600
$
200,000
$
8,200
$
300,000
$
11,800
$
400,000
$
15,400
$
500,000
$
19,000
$
600,000
$
22,600
$
700,000
$
26,200
$
800,000
$
29,800
$
900,000
$
33,000
$ 1,000,000
$
37,000
$ 2,000,000
$
73,000
$ 3,000,000
$ 109,000
Estate Shrinkage of Famous People
Who Failed to Plan
Name
Gross
Estate
Total
Settlement
Net
Estate
Percent
Shrinkag
e
Franklin D. Roosevelt
$
1,940,099
$
574,867
$
1,366,132
30%
Humphrey Bogart
$
910,146
$
274,234
$
635,912
30%
Clark Gable
$
2,806,526
$
1,101,038
$
1,705,488
30%
Dean Witter
$
7,451,055
$
1,830,717
$
5,620,338
25%
Walt Disney
$ 23,004,851
$
6,811,943
$ 16,192,908
30%
Marilyn Monroe
$
819,176
$
448,750
$
370,426
55%
Elvis Presley
$ 10,165,434
$
7,374,635
$
2,790,799
73%
J. P. Morgan
$ 17,121,482
$ 11,893,691
$
5,227,791
69%
John D. Rockefeller
Sr.
$ 26,905,182
$ 17,124,988
$
9,780,194
64%
Frederick Vanderbilt
$ 76,838,530
$ 42,846,112
$ 33,992,418
56%
REFERENCES

American Academy of Estate Planning Attorney’s website. www.aaepa.com

Anderson, R. and Hachfield, G. and Weness, E. (2003) Preparing to Transfer the Farm, University of
Minnesota Extension.

Branan, A., An Introduction to Farm Transition Planning: North Carolina’s Experience, presented at
American Farmland Trust Conference, November 2006.

Down, Attorney Thomas P., Living Trust: Maryland Living Trust Seminar presented at Senior Estate
Planning Workshop, June 1998.

Cosgrove, G., Conservation Options in Farm Estate Planning, presented at American Farmland Trust
Conference, November 2006.

Culbertson, H. (2001) Conflict Management Strategies and Styles, Southern Nazarene University

DeVaney, S. (2003) Who Gets Grandpa’s Farm?, Purdue University Cooperative Extension Service

Hamrick, Karen (ed.). Rural America at a Glance, RDRR-94-1, Economic Research Service, U.S.
Department of Agriculture, September 2002.

McGranahan, David. "Rural Population Loss in the 1990s," Rural America, Vol. 17, No. 4, Winter 2003.

Martin, D., Forte, R., Lippincott, W., Barkley, T., Managing Farm Assets for Your Future and Future
Generations, Presented by University of Maryland Cooperative Extension, Baltimore County, March 2006.

O’Neil-Haight, M., The Basics of Estate and Succession Planning for Farm Families, presented at American
Farmland Trust Conference, November 2006.

Stum, M. (2000) Who Gets Grandma’s Yellow Pie Plate?, University of Minnesota Cooperative Extension
Service

Treem, T., Communicating with Family Members, presented at Estate Planning workshops, September,
2004
Estate Planning Websites

American Academy of Estate
Planning Attorney’s



www.aaepa.com
Trust and Estate Planning
www.trustandestates.com
Rural America

www.ers.usda.gov/
Please Complete Evaluation Form
Return to Presenter !!!
REMEMBER COMMUNICATION IS KEY TO ESTATE PLANNING!
Contact Information
Developed and Presented by:
Okarsamaa B. White, M.S., A.F.C.
Extension Educator, Financial Management
Family and Consumer Sciences
Prince George’s and Charles Counties
(301) 868-9410 (301) 753-8195
obwhite@umd.edu
“It is the policy of the University of Maryland, Agricultural Experiment Station and Maryland
Cooperative Extension, that no person shall be subjected to discrimination on the grounds of race,
color, gender, religion, national origin, sexual orientation, age, marital or parental status, or disability.”
Special Thanks!!!

Maryland Cooperative Extension Staffs
- Lori Sebastian, Administrative Asst.
- Donna Mohler, Administrative Asst.
- Crystal Terhune, FCS, Educator
- Julie Judy, FCS Faculty Ext. Asst.
Raising Kids, Eating Right, Spending Smart, Living Well!