1. Legal Considerations -- How property is titled Considerations? What kind of property is it? Who else is in business with you? Who will own property if you are not alive or you are no longer in business? What are your goals for the future?

2. WHAT IS “TITLE?” Title can refer to two things: 1) the rights of ownership and possession of a particular property; 2) the document that shows evidence of those rights.

3. What kind of property are we talking about? WHAT KIND OF STUFF HAVE YOU GOT?

4. WHAT ARE YOU DOING? What is your enterprise? Farming? Business?

5. Who else is in business with you? It must be clear or someday a judge may decide for you! Sole ownership? Joint Tenants – with right of survivorship? Common ownership?

6. SOLE OWNERSHIP Legal title in a single individual or an entity

7. Joint Tenancy persons who are co-owners of interest in the same land. At common law and in some states today, upon the death of a joint tenant, interest automatically passes to the surviving joint tenant(s). This survivorship feature, when it exists, is the principal distinction between a joint tenancy and a tenancy in common.

8. Tenants in Common When two or more people are legally granted interest in the same property, they hold a tenancy in common. The interests need not be equal nor created at the same time as in joint tenancy. If one of them dies, the others do not automatically own his interest, as they would in a joint tenancy. His interest passes to his heirs.

9. OK ENOUGH WITH THE DEFINITIONS!

10. WHAT KIND OF STUFF IS IT? REAL PROPERTY  Real estate, including land and buildings PERSONAL PROPERTY  All property you own other than real property.

11. Financing Documents for Real Property MORTGAGE LAND CONTRACT

12. ARE WE GOING INTO DEBT? You have already figured out your business plan – right? OK let’s look at some financing documents

13. Real Estate Mortgage

14. Variable rate note

15. Legal Description

16. Take my home clause (ouch!)

17. Release of Mortgage

18. NON REAL PROPERTY DEBT How does the creditor shows their interest to the world? Car loan Equipment loan Debt secured by Something!

19. http://www.sos.state.ia.us/UCC_Search/

20. UCC RA9 Search

23. What property does the filing cover?

24. Financing Statement

26. EWG.ORG

27. Comments Questions?

28. Planning for the Future The Importance of Planning Broad Based Planning Retirement Planning Estate Planning Planning for Disability

29. The Importance of Planning Because your family means the world to you. You mean the world to your family. The quality of your future and the future of your family is, in part, a function of how well you manage your wealth.

30. Broad Based Planning Understanding where you are today. Family Objectives and Goals for the future. Tax Considerations  After the 1 st Death, after the 2 nd Death Enhancements to the Plan Review and Monitoring

31. Retirement Planning

32. Retirement Planning Considerations The Need for Retirement Planning  Retirement Goals – Slow down, travel & leisure  Transfer business operation to children  Provide Retirement Income  Provide Diversification Compounding Time Value with Money Retirement Income Sources Retirement Assets Distributions Investment Considerations

33. Retirement Income Sources Social Security Personal Assets Farm Rental Income Social Security Amount you’ll need to provide 70% 30% Retirement Income Sources

34. Personal Retirement Assets Employer Sponsored Plans IRA’s – SEP’s, Simple’s, Traditional & Roth Nonqualified Investments Rental Income Turn operation over to children Contract Payments

35. Last Resort Retirement Assets Cash Value of Life Insurance Equity in Real Property  Residence  Farm Transfer ownership of property

36. Distributions from Retirement Plans Before age 59 ½  House  Education Age 59 ½ Age 70 ½ Death or Disability

37. Retirement Planning Considerations Investment Considerations  Time Horizon Investment Time Frame Short1-5 years Intermediate5-10 years Long10 years or more

38. Retirement Planning Considerations Investment Considerations  Tolerance for Volatility Tolerance for Volatility Low You have trouble stomaching any downturn in your account value. You want consistent returns, even if they are low. Medium Wide swings in your account value keep you from getting a good night’s sleep, but some fluctuation is okay. High Even wide swings in your account value won’t deter you from your strategy, because you can look past them.

39. Do you have enough for Retirement? **See Handout: “Retirement Income: How Much Do You Need?”

40. Estate Planning

41. Determining where you are today What personal objectives need to be considered  Care for the survivor  How to distribute assets to children  Special needs of any family member  Charitable intent Looking at the various tax issues  Estate Tax  Capital Gains  Income Tax

42. Estate Planning Considerations Types of Assets/Liabilities Location of Assets Registration of Assets Family Concerns and Goals  Farm Succession Plan to a child Tax Issues Probate Administrative Issues Review of Plan

43. Types of Assets & Liabilities Real Estate – Farm and Residence  Business Investments – Stocks, Bonds, Funds, Bank & Annuities Life Insurance Retirement Plans Personal Assets – Auto, Jewelry & Collections Liabilities Net Worth

44. Location of Assets Safe Deposit Box  Key Personal Safe  Combination

45. Registration of Assets Individual Joint with rights of survivorship Tenants in common Beneficiary Designations

46. Family Concerns and Goals Minor Children/ Grandchildren Transfer of business/farm Special Needs Child Management Assistance Charitable Interest Time frame for distributions Need for liquidity

47. Tax Issues Estate Tax  Federal Exemption  State Inheritance Tax Capital Gain  Step-up on Cost Basis – Income Tax

48. Probate vs. Non-Probate Use of Wills Use of Trusts  Intervivos – Living  Testamentary – Within Will  Charitable

49. Administrative Issues Discussion regarding the administration of your estate  Use of family members  Use of professionals

50. Review of Plan Changes in Family Situations Tax Law Changes Periodic Review

51. Planning for Disability

52. Review of plans currently in place Discussion of planning considerations  Health Care  Financial Concerns  Family Concerns Options available to assist you with this planning

53. Comments Questions?

54. Thank You! Ron Hook Farm Management Specialist 839 3 rd Ave. Sibley, IA 51249 712-754-3648 rhook@iastate.edu