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April 2013 Archive for Leave a Legacy

RSS By: Kevin Spafford, Legacy Project

Kevin Spafford is Farm Journal’s succession planning expert for the Farm Journal Legacy Project.  He hosts the nationally-televised ‘Leave a Legacy’ TV, facilitates an ongoing series of workshops for farm families across the U.S., and is the author of Legacy by Design: Succession Planning for Agribusiness Owners.

A Permanent Estate Tax?

Apr 30, 2013

Fotolia Farm RoadFrom Legacy Moment (04/26/2013).
Please join us for future issues,
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Well, it's permanent until they can change it. The estate tax, that is...

There was a collective sigh of relief, if not surprise, in January when the estate tax exclusion and the gift tax exemption amounts remained at $5 million. In the same measure, the estate tax was permanently set at only 40% in the beginning of 2013. Although not a perfect solution, the law allows farm families to plan for succession, anticipate the effects of the estate tax and create plans to eliminate or mitigate this onerous obligation.

But that was then. President Barack Obama's budget proposal for 2014 now seeks to use the estate tax to raise revenue by increasing the tax rate from 40% to 45%, lowering the exemption amount to $3.5 million and eliminating the inflation index, which currently applies to the exemption/exclusion amounts. Beyond that, the administration's proposal will eliminate other estate or value freeze strategies, ensuring that an assets appreciation will be subject to tax.

Keep in mind that any changes to the estate tax are only proposals at this point. It's prudent to focus on what a farm owner should do to ward off the negative effects of the tax, such as:

1. Commit to planning. Nobody wants to give Uncle Sam any more than is necessary. With enough time and some compromise, a family can minimize or eliminate an estate tax obligation.

2. Be open to options. Each situation is unique. Like matching puzzle pieces, the tools and techniques used in succession planning, especially as it applies to estate tax strategies, are not always off-the-shelf.

3. Remain flexible. Nothing is "once and done." Estate tax law will change; so will your family, your farm, the economy, commodity markets, etc. Annual reviews and continuous improvements are part of a comprehensive planning process.

4. Involve others. Through our respective communities, we have access to many other people, such as family farmers, professional advisers and subject matter experts. Learn from their experience; it might save you time and money.

5. Start now. Too many people might think, "I'll wait until [some triggering event: fill in the blank]." Or, "I'm too young." Or, "It might cost too much money." Or, "They're not ready yet." Or, any other excuse a person might gin up to postpone planning.

News & Resources for You:

Read full article: 2014 Fiscal Year Estate Tax Proposals (WealthManagement.com; 04-22-2013; Miles C. Padgett and Donald D. Kozusko).

 Remember: Estate planning is just one component of a comprehensive succession plan.

eLegacyConnect complements the Farm Journal Legacy Project. Have you taken a look? 

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Harvest to Hand

Apr 23, 2013

Rice   USDA ARSFrom Legacy Moment (04/04/2013).
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Recently, I ran across a mobile app, from an insurance company of all places, that helps consumers locate farmers markets, locally grown produce, agritainment farms, wineries and commodity-related festivals. Harvest to Hand is a simple mobile app designed to connect consumers to producers for healthy food choices.

It isn't the app that fascinates me so much as the concept and the source. Imagine how our daily lives have changed. Not too long ago, food choices (local, natural and organic) were limited to a very niche market. Today, we're using our cell phones to identify producers and find retail sales locations that specialize in this market. Yesterday, insurance companies sold financial security. Now, even these big corporations show compassion by helping customers make healthy food choices.

For me, this serves as another indication that field-to-fork is an increasingly viable, attractive and potentially profitable alternative for breaking into farming. The next frontier is quickly becoming reality and, beyond a niche for consumers, there are other forces helping to increase demand and ensure availability. Though it might always be small, to sustain a percentage of the food market will require professional farmers, processors, distributors and retailers—all of which constitute opportunity for the agripreneur.

Though I can't personally vouch for the mobile site, it looks like it might bring together a physical community, promote healthy eating and enhance the accessibility of locally grown produce. I, for one, appreciate the concept and anticipate there are or will be others. The accompanying website allows farmers, producers and event managers to post their offerings and festivals. 
 

News & Resources for You:

Is your mind wide open to new opportunities?

As you adapt your business plan, don't forget to also keep developing your leadership capabilities.

Have you started your free trial for eLegacyConnect? Give it a look! 

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Photo courtesy of USDA NRCS.

Opportunity on the New Frontier

Apr 16, 2013

Wildflowers   NRCSFrom Legacy Moment (04/12/2013).
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"In 2007, farmer-owned nonfarm businesses employed over 800,000 nonfarm workers and contributed an estimated $55 billion to their local communities' gross county product," according to "The Importance of Farmer-Owned Nonfarm Businesses in the Rural Economy," a study published by the USDA Economic Research Service. The message here is clear; we make the difference—on our farms, in our families and in our local communities.

Is the catalyst for the strength of nonfarm businesses owned by our farm families a coincidence of the farming vocation or a consequence of the farming experience? The report says the comparative advantage for farm households to own other nonfarm business interests, "appears to be their ability to organize resources across multiple enterprises when new business opportunities arise."

In paraphrasing the study, farm households might own a nonfarm business due to:

  • The availability of excess resources to operate a second enterprise.
  • Nonfarm opportunities appear to be more profitable than further development of existing resources.
  • The need to provide career paths for extended family.
     

As we talk succession, and consider the obligation/opportunity to create something bigger, better, stronger and faster, this report should make you feel confident in your ability. Recognize that demands exist for new business ventures and our rural communities are ripe with an abundance of enterprise opportunities.

 

News & Resources for You:

Take a look at the full USDA study: "The Importance of Farmer-Owned Nonfarm Businesses in the Rural Economy."

Don't underestimate the value of off-farm experience. There's always more to learn.

Also...does Beth's story sounds familiar? (Click on the box in the lower left of the page.)

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Photo courtesy of USDA NRCS

Conflict Resolution

Apr 09, 2013

Fence   NRCSFrom Legacy Moment (04/05/2013).
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delivered via email each Friday.


It's important to have a plan for conflict before it even erupts, emphasized Molly Darling, a communication specialist and guest on "Leave a Legacy TV." "The best time to plan for conflict is when there isn't any," she added, sending me on a search for a conflict resolution strategy I can share with readers, advisers and families engaged in the succession planning process.

That was almost four years ago, and I've finally discovered a concise outline that I hope will help you and your family as you engage in or continue to plan for succession. We all acknowledge that planning for the eventual transition of your farm is an emotional process. It involves money, careers, assets, future opportunities, multiple generations and all manner of related decisions. When the topic comes up, everybody gets tense, some participants get defensive and tempers can flare.

So, what do you do? I've always recommended a cooling off period and adherence to a set of agreed-upon behavior guidelines. Beyond that and until now, I was at a loss.

Though a bit simple (Remember, Einstein said, "Everything should be as simple as possible, but no simpler."), the following five alternatives might give you and your family a few approaches to consider when things get contentious:

1. Compromise: Form an agreement that addresses the wants and needs of more than one.

2. Accommodate: Accepting the terms/conditions of the other party and/or persuading the other party to accept your terms/conditions.

3. Avoidance: Agreeing to avoid a contentious topic and not letting it distract, undermine or preoccupy participants from otherwise important matters.

4. Collaborate: All parties working together to avoid discord and resolve conflicting issues. Collaboration might be seen as a compromise or it can be used to devise a solution that is better than any single individual might recommend—as in a synergistic relationship.

5. Compete: Members of a group consciously taking a side in a disagreement to resolve the issue and move onto constructive matters.

News & Resources for You:

For more common sense on communication, view the full interview with Molly Darling.

These discussion points might help to work through uncomfortable but solvable situations.

eLegacyConnect is a natural next step on the path to realizing your Legacy dreams. Take a look now.

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Photo courtesy of USDA NRCS.
 
 
 
 
 
 
 

Try Always Fails

Apr 02, 2013

Cornfield Farm   CroppedFrom Legacy Moment (03/29/2013).
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delivered via email each Friday.


You've heard it, but it might not have registered a reaction. We've all said it, but maybe not with literal intent. To try is to admit that the task will almost assuredly not be accomplished. We only try when we think we can't. If you know you can, you do. So really there is only try and do. The first is an early admission of failure; the latter is a declaration of action, a goal for achievement and a commitment. When discussing succession with a family, I often hear comments like, "we should try..." or "we're going to give it a try..." but neither rings with the sound of true commitment.

Commitment is one of the five keys to planning success. It is the fuel for accomplishment. Like a seed planted in the ground, an idea firmly planted in the mind will germinate and generate a result. That's why a person should be careful to plant positive seeds and count on success. An acorn can only grow an oak tree; it cannot contradict the laws of nature and do otherwise.

The same applies to your thoughts. Positive thoughts can only generate positive results and negative thoughts can only generate negative result. Think of the goal you want to achieve; the vision you see in your mind. Then work diligently, confident that you will achieve it—and you will.

News & Resources for You:

 For more on the power to accomplish, we recommend James Allen's 1902 classic, "As a Man Thinketh" (free digital download).

If you missed last week's farm family profiles on "Leave a Legacy TV," catch the complete episode online now.

Intent on keeping the farm in your family? 

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