Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women What is Estate Planning? The overall process of making decisions as to how property is to pass to others, during one’s lifetime, at death, or after death.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Planning Who Should do Estate Planning? Everyone…….It is not just about money Unless you are happy with the plan your state has provided

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women We are not giving Legal Advice Just Providing Non Bias Educational Information Seek out your own legal council

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Coordinate Your Planning Retirement Estate Transfer Income Tax Planning Planning PlanningPlanning

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Who is the Estate Plan for? Is it to pass a business to the next generation? Is it to plan for retirement? Is it to jump start the kids ambitions? Is it to avoid taxes?

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women What are your most important goals? Individual Family Retirement Business Spiritual Other

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Key is to Articulate Goals The parents together The parents individually The on-farm heirs The off-farm heirs 7

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Develop Goals under various circumstances What to do if spouse dies Receive Income? Sell interest? Participate in management? What to do if both die What to do if entire family dies

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Common Estate Planning Goals Minimize taxes at death Minimize probate costs and delays Conserve property during life and after death in accordance with estate planning goals Provide financial security – Parents in retirement – Family member with a disability 9

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Key Areas of Concern Guardian for minor children or adult children with special needs. Providing income for a surviving spouse or children. Management of estate property, assets and investments. Minimization of probate and settlement expenses. Minimization of estate and inheritance taxes. Flexibility. Liquidity for necessary and unavoidable expenses. Gift planning. Continuation and/or transfer of the business.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Putting together a team of Advisors Accountant Banker Insurance agent Investment advisor Lawyer Others Take referrals, put through interviews

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Who should be involved? – PARENTS – ASSET OWNERS – IF YOU OWN A BUSINESS - BUSINESS PARTNERS – HEIRS WORKING IN THE BUSINESS – HEIRS NOT WORKING IN THE BUSINESS – NON FAMILY BUSINESS PARTNERS – DAUGHTERS-IN-LAW & SONS-IN-LAW – ATTORNEY KNOWLEDGEABLE IN ESTATE PLANNING – FINANCIAL ADVISORS – INSURANCE ADVISORS – MANAGEMENT CONSULTANTS – LENDERS – MEDIATOR

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Scheduling a Family Meeting SCHEDULING THE MEETING How often meetings will be scheduled Set specific beginning and ending times Establish a standing agenda How are items added to the agenda How are emergency meetings scheduled How is notice of meetings given What constitutes a quorum What happens if someone cannot attend

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women A Process of Decision Making What criteria will be used; Financial, values, production, time, family, etc. Who will make the decision; Owner/Parents, children, employees, advisors. How will decisions be made; Autocratic, democratic, consensus, collaboration. How will conflicts be resolved.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women MEETING GROUND RULES Agree upon the role and authority of the facilitator. Critique the message, not the messenger. Everyone must listen to learn. Do not interrupt. Practice good manners and model good behavior. Discuss your emotions. Our emotions often drive our decisions. Expect honest comments from others by being honest in your comments. Enthusiastically support decisions made at the meetings. Trust the process to generate an estate plan that all will agree upon.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Important Considerations TIMING -Choose the right time for making the decision. Delaying a decision may be the same as not making a decision, however do not be rushed into making a decision. INFORMATION - Remember that there is never the right amount of information for making a decision. One always wishes that more information were available or one feels overwhelmed by the amount of information available.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Getting Started Determine what you own and how much it is worth. Who do you want to receive your bounty? Review any past estate planning

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Vocabulary Activity Take 10 minutes to complete vocabulary activity

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Estate Planning Steps – Examination of how property is owned or held – Review of family insurance program – Advisability of lifetime gifting – Alternatives for disposing of property during life

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Property Real Personal Classifying what you own

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Fair market value of real estate You may be pleased! May be one of your greatest stores of wealth

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Ownership a). Fee simple, life estate, life tenants, leaseholds, remainder interest b). Tenants in common c). Joint tenants with right of survivorship (car, bank account, simplified estate settlement) Note: different states may have different forms of ownership

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Forms of Co-ownership Tenancy in common – Each tenant holds an undivided interest in the property – Upon a tenant’s death, the interest passes in accordance with the tenant’s will (or state law if no will) – The decedent’s estate includes only the decedent’s interest 23

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Forms of Co-ownership Joint tenancy – Passes by survivorship designation – Precludes use of life estate/remainder arrangement as to non-marital portion of the estate – Magic words of conveyance – Takes precedence over the will 24

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Forms of Co-ownership Tenancy by the entirety (Ex: not allowed in Iowa) – Husband and wife can together convey a fee simple but neither can unilaterally sever the tenancy 25

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Estate Planning Implications of Property Ownership Forms Non-spousal joint tenancies – Property is taxed in the estate of the first to die except to the extent the surviving owner proves contribution for its acquisition – “Consideration furnished” rule – Property included in decedent’s estate receives a new basis at death 26

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Estate Planning Implications of Property Ownership Forms Spousal joint tenancies – The property is treated at the first death as belonging 50% to each spouse for federal estate tax purposes “Fractional share” rule 27

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Important Considerations Type of Asset – Inventory – Depreciable Machinery & Equipment Permanent Improvements – Real Estate Land Personal Residence Tax Basis

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Financial Statement (Net Worth Statement) (Balance Sheet) Now that you have inventoried all of your assets, you might just as well make a financial statement. It gives you your financial position as of a certain date.

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women John and Mary Assets: House $50, Lumina $1500 Personal property $10,000 CD’s $20,000 Total assets $81,500 Liabilities: None Assets $81,500 Debts 0 Net worth $81,500

Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and Ranch Women Financial Statement Might want to get more detailed: Assets Short, Intermediate, Long or Short term, long term Same with liabilities