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Family Business Evolution

July 5, 2011
Dells Fam 2
The Legacy Project has been leading the Dell family through the rigors of farm transition during the past year. Pictured (from left) are Leona, Donald, Della, Greg, Shannon, Tommy, Lindsay, Douglas, Crystal and Gary Dell.  
 
 

The Dell family takes steps to secure its future.

Greg Dell jokingly calls himself a late bloomer. At an age when most farmers might be contemplating retirement, the Westminster, Md., farmer and his wife, Della, find themselves in the primary ownership position for the family farm.

Ironically, at the same time they are grasping the reins, they are looking for ways to bring their children into management roles.

When Farm Journal readers first met the Dell family, it was four generations deep and struggling for direction. Working with Farm Journal succession planning expert Kevin Spafford has allowed them to sort through the maze and begin to find financial and management solutions to help the family and the farm survive. Little did they know that the future wouldn’t include a key member of the third generation, Tommy Dell, who died in a farm accident.

The tragedy shifted plans, but two years into the journey the transition process has included:

  • financial analysis for first-generation founders Donald and Leona to ensure their financial security.
  • a plan to allow Roger, second-generation partner and Greg’s brother, to retire through a 20-year purchase agreement that redeems his stock in the farm corporation.
  • gifting of preferred stock from Donald and Leona to Greg.
  • transition of the bookkeeping responsibilities from Leona to granddaughter-in-law Shannon.
  • sale of dairy cows in the farm partnership to reduce debt.
  • a business plan that allows Greg and Della’s son Gary and his wife, Crystal, to purchase the cows and rent dairy facilities.
  • review of the current C corporation ownership structure.
  • review of current estate planning documents to ensure they meet the family’s objectives.
  • analysis to minimize taxes on each estate and ensure that funds are available to pay any tax due.
  • meetings with attorney and tax accountants to keep advisers current and working together.

     

The next steps. "Greg now holds the obligation and opportunity of ownership," Spafford says. "From here, we start to anticipate what the farm might look like in the future."

First, Spafford wants to review Greg and Della’s personal expenses and look at their hopes and dreams. Della, who works for the state of Maryland, has another six years before she can receive full benefits upon retirement. Greg, on the other hand, can’t fathom retirement.

The question of roles and responsibilities is more immediate than ownership transfer. "We need to enlist the people who want to be involved and keep them moving forward," Spafford says.

Gary has found that he enjoys the crop side and working at the family’s grain elevator. His brother Douglas, a full-time firefighter, enjoys working on the farm part-time.

Gary is considering new enterprises that might use the family’s commercial grain-handling facilities. An existing seed sales business might be expanded as well.

"This family has lots of talent, experience and resources. Our next challenge is to figure out how we pull it all together," Spafford says.

A business plan that outlines duties and payment is the answer. Operating agreements, employment policies and an employee handbook are in the works.

"We need to protect the farm, preserve it and grow it. If we do that, we can build a compensation plan that is fair," Spafford says.

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FEATURED IN: Legacy Project - Legacy Project 2011 Report

 
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