1. 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

2. FARM ESTATE PLANNING: AN INNOVATIVE APPROACH TO EFFECTIVE COMMUNICATION WITH FAMILY MEMBERS AND FARM EMPLOYEES FOR UNDERSERVED FARMERS AND RANCHERS

3. 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.

4. WHY COMMUNCATION!!  Who to trust and lack there of…  Difficult to communicate their intentions...  Plan of when to transition from farming operation…  Share information …

5. Estate Planning Family Legacy Farm Viability Farm w/ No Plan

6. 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.

7. 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.

8. Three Principle Obstacles In Planning Our Estate Living Probate Death Probate Death Taxes

9. 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.

10. Importance of Estate Planning  The Importance is to minimize and /or avoid: FrustrationHeartache 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

11. 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

12. 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.

13. 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

14. 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

15. 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.

16. 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

17. Who should inherit the farm? Farm Business

18. 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”

20. 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)

21. 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

22. Farm Operation Continuation Heirs to farm Plan of Action to Transition the Farm Who, When and How to Transition

23. 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.

24. Have you Established a Family Farm Plan Estate?

25. What Type of Estate Plan Have You Implemented?

26. Have You Communicated Your Estate Plan to Others?

27. Who Approached You about Transitioning the Family Farm?

28. Upon Passing, Who Inherits Family Farm?

29. Inheritance - Legacy Homestead to Spouse/Children Farmland Woodland Parcel

30. 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

31. Underserved Farmers & Ranchers Probate Court Cost GROSS ESTATE SIZEPROBATE 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

32. Estate Shrinkage of Famous People Who Failed to Plan NameGross Estate Total Settlement Net Estate Percent Shrinkag e Franklin D. Roosevelt$ 1,940,099$ 574,867$ 1,366,13230% Humphrey Bogart$ 910,146$ 274,234$ 635,91230% Clark Gable$ 2,806,526$ 1,101,038$ 1,705,48830% Dean Witter$ 7,451,055$ 1,830,717$ 5,620,33825% Walt Disney$ 23,004,851$ 6,811,943$ 16,192,90830% Marilyn Monroe$ 819,176 $ 448,750 $ 370,42655% Elvis Presley$ 10,165,434 $ 7,374,635 $ 2,790,79973% J. P. Morgan$ 17,121,482$ 11,893,691$ 5,227,79169% John D. Rockefeller Sr. $ 26,905,182$ 17,124,988$ 9,780,19464% Frederick Vanderbilt$ 76,838,530$ 42,846,112$ 33,992,41856%

33.  American Academy of Estate Planning Attorney’s website. www.aaepa.comwww.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.Rural America at a Glance, RDRR-94-1  McGranahan, David. "Rural Population Loss in the 1990s," Rural America, Vol. 17, No. 4, Winter 2003.Rural Population Loss in the 1990s,  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 REFERENCES

34. Estate Planning Websites  American Academy of Estate Planning Attorney’s www.aaepa.com  Trust and Estate Planning www.trustandestates.com www.trustandestates.com  Rural America www.ers.usda.gov/

35. Please Complete Evaluation Form Return to Presenter !!! 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 REMEMBER COMMUNICATION IS KEY TO ESTATE PLANNING ! “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.”

36. 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!