1 Right Tool for the Job? Unique position!! They wont give up - - PDF document

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1 Right Tool for the Job? Unique position!! They wont give up - - PDF document

Sep 20, 2023 204 likes •429 views

Sandwich Generation David Goeller Farm Transition Specialist 402 450 2420 dgoeller28@gmail.com Dept. of Agricultural Economics University of Nebraska-Lincoln Need For Personal Legal Advice The information in this presentation and

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Sandwich Generation

David Goeller Farm Transition Specialist 402 450 2420 dgoeller28@gmail.com

  • Dept. of Agricultural Economics

University of Nebraska-Lincoln

Need For Personal Legal Advice

The information in this presentation and accompanying material is provided for educational purposes only. It is not a substitute for individual legal consultation.

Objective Not selling anything!! Not to tell you what to do!! Organize your thoughts and help you think about….. “Right Tools for the Job!!”

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Right Tool for the Job? Unique position!!

They won’t give up control Old fashioned ideas Won’t change their ways Slave drivers! They’re the only ones that can run this place! They don’t plan to ever retire We never discuss anything I think they will farm forever…..

Right Tool for the Job? Unique position!!

They aren’t very responsible This place wouldn’t last a week without me They just aren’t willing to put in the work Spending too much on living expenses! They’re pushing us out Will we ever be able to afford to retire? Quits a 5 pm so he can see family, sports etc Can’t afford for them to loose it. All we have

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FACTS FEELINGS PERCEPTIONS

Solving the Problem??

  • Most unsolved problems remain unsolved if we don’t

know where to start!!

PLANNING POCESS TOOLS Farm Management Planning Process Business Succession Planning Process

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4 Process Overview

11

Where is the farm now?

  • Financial Tools
  • Balance sheet
  • Ratios
  • Schedule F Tax Return (Income Statement)
  • Trend Sheet (How did you get here?)
  • Cash Flow Projection
  • Enterprise analysis/breakeven
  • Family living costs $$$$$

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Where is the farm now?

  • Production Data (Big 8)
  • 1. Yield information
  • Bushels/acre
  • Lbs/head/day gain
  • % Death loss
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Where is the farm now?

  • Production Data (Big 8)
  • 2. Input costs? $$$
  • Seed, fertilizer, chemicals, etc/acre
  • Feed, veterinary, etc/head
  • Machine Hire?
  • Hired labor?

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Where is the farm now?

  • Production Data (Big 8)
  • 3. Machinery costs/acre? $$$
  • Repairs
  • Depreciation
  • 4. Rent/acre or /head
  • 5. Marketing plan?????

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Where is the farm now?

  • Production Data (Big 8)
  • 6. Risk Management plan? $$$
  • Insurance
  • Crop
  • Liability
  • Health and life
  • Human risks?
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Where is the farm now?

  • Production Data (Big 8)
  • 7. Debt Service & RE taxes/acre
  • Principal
  • Interest

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Where is the farm now?

  • Production Data (Big 8)
  • 8. Family Living/year$$$$$$
  • Health insurance
  • Toys
  • Off farm job
  • Credit card debt???
  • Interest

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Where is the farm now?

RECORDS…RECORDS RECORDS??? How can you manage if you can’t measure?

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19

Where do you want to be?

Go Goals ls

  • Older Generation
  • Retirement lifestyle

(money needed)

  • Residence
  • Nonfarm heirs
  • Fair vs Equal
  • Contribution
  • Compensation
  • Younger Generation
  • Lifestyle (money needed)
  • Growth of business
  • Attitude toward debt
  • Ownership vs. renting
  • Family time vs. work

Start by Communicating

  • Effectively communicate
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Where do you want to be?

  • Goals……..Vision.……..Values…....…Objectives........Pr

iorities?

  • Stakeholders?
  • Who needs to be involved/?
  • Family members?
  • Business partners?
  • Time table. By when?

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How do you get there?

  • Planning Process Models
  • S.O.C.S. Model
  • Situation
  • Options
  • Consequences & Costs
  • Solution

Decision Making Process

  • Explore the options
  • S.O.C.S. Model
  • Situation
  • Where are we now?
  • Financials
  • Production
  • Management
  • Family Living Costs
  • Other
  • Can we ID the problem or problems?
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Decision Making Process

  • Explore the options
  • S.O.C.S. Model
  • Options
  • Start Brain Storming…Initially, anything

goes

  • Consider all options including doing

nothing

  • If changes are necessary, what would

they be willing to change? Prioritize?

  • Begin to help THEM Identify THEIR

realistic alternatives/options

Decision Making Process

  • Explore the options
  • S.O.C.S. Model
  • Options (cont.)
  • Narrow it down to the top 3 or 4 and

eventually the top 2

  • Is there more information that needs

to be gathered?

  • Tax Consequences
  • Family members opinions
  • Other???
  • TO DO LIST….What….When….Who….$

Decision Making Process

  • Explore the options
  • S.O.C.S. Model
  • Consequences & Cost$$$
  • Evaluate the alternatives. Good and

bad.

  • Look at costs and benefits of various
  • ptions
  • Financial viability…CASH FLOW?
  • Most decisions are not made on

financial information only

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Decision Making Process

  • Explore the options
  • S.O.C.S. Model
  • Solution
  • Help them Create THEIR PLAN
  • Step number 1 etc. What’s the first

hurdle in their race?

  • Action Plan/To Do List
  • What will happen?
  • When will it be done?
  • Who is responsible to make sure it

happens?

  • How much will it cost?

To Do List

What? needs When? Who? is to be done? Responsible?

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How do you get there?

  • Identify the specific problem
  • Brain Storm options
  • Evaluate costs and benefits
  • Create an Action Plan
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11 Resources

  • Joe M. Hawbaker, Hawbaker Law Office
  • Phone: 402-558-3540
  • Email: jmhawbaker@gmail.com
  • David Goeller, Farm Transition Specialist
  • Phone: 402-450-2420
  • Email: dgoeller28@gmail.com
  • Nebraska Farm Hotline
  • Phone 800-464-0258

FARM

Business Assets

Financial Viability

Succession Plan Goals Retirement Plan Estate Plan Estate Plan

SUC UCCE CESSION ON PLANNING POC OCESS

  • 1. Do you want your business to

continue beyond your lifetime?

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12 SUCCESSION PLANNING PROCESS

  • 2. Have you identified a successor?

Job Description

  • If you where to write a job description for the

successor of your business what would it say regarding:

  • Starting and ending time each day?
  • Breaks and lunch?
  • Job responsibilities?
  • Pay?
  • Benefits?
  • Vacation?
  • Advancement opportunities? When?
  • Evaluation Criteria?

SUC UCCE CESSION ON PLANNING PROC OCESS

  • 3. Goal Setting

Where do you want to be?

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Go Goals ls

  • Older Generation
  • Retirement lifestyle

(money needed)

  • Residence
  • Nonfarm heirs
  • Fair vs Equal
  • Contribution
  • Compensation
  • Younger Generation
  • Lifestyle (money needed)
  • Growth of business
  • Attitude toward debt
  • Ownership vs. renting
  • Family time vs. work

Start by Communicating

  • Effectively communicate

SUC UCCE CESSION ON PLANNING PROC OCESS

  • 3. Goal Setting

Where do you want to be? Family vs Business

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14 SUC UCCE CESSION ON PLANNING PROC OCESS

  • 3. Goal Setting

Where do you want to be? Family vs Business Long vs Short Term SUC UCCE CESSION ON PLAN LANNING PROCESS

  • 4. Will you pass your business on

as a “Super Farm” or a “Spin Off”?

Bu Busin iness Su Succe ccession Plan TWO BASIC CHOICES

  • Multi-Person Arrangement
  • Spin-Off Arrangement
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15 MULTI-PERSON APPROACH

P C

Business

P & C

Business

P

Business

C

SPIN-OFF APPROACH

Business Business

C C C P P

Business

P

Business

SUC UCCE CESSION ON PLANNING PROC OCESS

  • 5. What is the “Target” period for

transitioning the business management?

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16 Business Succession Plan TRANSFER PERIOD

  • wner

successor

time

Short Transfer Period

Business Succession Plan TRANSFER PERIOD

Long Transfer Period

  • wner

successor

time

Management Transfer

  • Phased plan approach
  • #1 Owner make decisions

(Mentor)

  • #2 Owner and successor make

decisions together

  • #3 Successor make decisions
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Management Transfer

  • Three most important factors

to a successful business:

  • Management
  • Management
  • Management

Business Succession Plan The Transfer Stages Testing Commitment Established Withdrawal Business Succession Plan

Testing Commitment Established Withdrawal Labor Timeline Income Timeline Management Timeline Ownership Timeline

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Beginning Farmer Tax Incentive Next-Gen

  • Renting Agricultural Assets
  • Landlord
  • Tax Credit to Agricultural Landlord
  • 10% Cash Rent
  • 15% Share Rent
  • Beginner
  • Personal Property Tax Exemption-Beginner
  • $500 to reimburse education requirement
  • 3 year lease

Beginning Farmer Tax Incentive

  • Eligibility - Beginners
  • Net Worth under $200,000
  • Farmed for less than 10 of last 15 years
  • Day-to-day management & labor
  • Financial management education class
  • Eligibility – Owners
  • Interest in Agricultural Assets in Nebraska

Beginning Farmer Tax Incentive

  • 160 Acres @ $300/ac Cash Rent = $48,000
  • 10% = $4,800 Tax Credit
  • 160 Acres @ 200 Bu/ac @ $4.00/bu = $128,000 gross income
  • 50/50 share rent $64,000 x 15% = $9,600 Tax Credit
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Beginning Farmer Tax Incentive

  • Eligibility - Owners
  • Interest in Agricultural Assets in Nebraska
  • CONTACT INFORMATION
  • 800-753-9396
  • WWW.AGR.NE.GOV

Resources

  • Joe M. Hawbaker, Hawbaker Law Office
  • Phone: 402-558-3540
  • Email: jmhawbaker@gmail.com
  • David Goeller, Farm Transition Specialist
  • Phone: 402-450-2420
  • Email: dgoeller28@gmail.com
  • Nebraska Farm Hotline
  • Phone 800-464-0258

Articles Available 1-800-464-0258

Estate Questionnaire Probate

  • Neb. Inheritance Tax

Federal Transfer Taxes Health care POA Durable POAs Intestacy Charitable Giving Future Interests & LE Deed Joint Tenancy & Tenancy in Common Options & Preemptive Rights Spousal Tax Planning & Portability Personal Representative PR Checklist Special Use Valuation Partition The Will Transfer on Death Deeds Trusts Buy-Sell Agreements

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