Apr 18, 2014
Home| Tools| Events| Blogs| Discussions| Sign UpLogin


July 2010 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.

How to Use a Redemption Agreement to Transfer Ownership

Jul 27, 2010
From Legacy Moment eNewsletter (07/23/2010)
Please join us for future issues, delivered via email each Friday.
 

 
Here’s an example of how an owner can transfer full ownership of the farm to an active child by using a redemption provision included in a buy-sell agreement:
 
Jack owns 100% of Tri State Angus (TSA), a C corporation. Fred, his son, is the manager at one location, and Laura, his daughter, is not active in the enterprise.

As part of a business succession plan, Jack gifts 10% of TSA to Fred, then drafts a buy-sell agreement that includes a redemption provision which triggers at the death of either shareholder. The provision states that the corporation will redeem the deceased partner’s shares in case of death.

Upon the death of either owner, the corporation will buy the interest of the deceased, thereby causing the remaining person to own 100% of the company stock.
News & Resources for You

It makes sense to review your Buy-Sell Agreement regularly.

Learn How to Talk to Dad
: Words of experience from Ben Hudye of Hudye Farms.

Using Life Insurance to Create an Asset for Inactive Children

Jul 20, 2010
From Legacy Moment eNewsletter (July 16, 2010).
Please join us for future issues, delivered via email each Friday.

Jake owns a successful agribusiness. His son Chad has been involved in the operation since college. The operation is worth $4 million, and it represents significantly all of Jake’s assets. His other son, Clayton, is not involved in the operation.
To make an equitable distribution to both his children, Jake purchases a $2 million life insurance policy and names Clayton as beneficiary. Though this is not an equal distribution, Jake rationalizes that a $4 million operation, like any business, is risky. It is fraught with opportunities and obligations, duties and responsibilities.

Would you make a similar insurance purchase? Check out our Life Insurance Needs Analysis to help you plan for the contingencies that may affect the financial health of your business.

News & Resources for You

Job Description Template: Fit the best candidate to each operational role and ensure that everyone involved is clear about responsibilities and expectations.

Weigh in about succession planning. Check out the Legacy Poll on the Legacy Project home page (upper right).

If you have decided to make succession planning a priority,we want to help you follow through on that decision.

Leading the Change – Legacy Project Workshops
Two more workshops this week:  Legacy Project workshops are scheduled for Des Moines, Iowa, on July 21; and Champaign, Ill., on July 23.

Sign up online or call the Farm Journal Events Hotline to reserve a spot: (800) 909-3681.

Extraordinary Profile on Legacy TV Thursday: Paul Engler

Jul 14, 2010

Coming up on the July 15th episode of Leave a Legacy TV:

Our country prides itself on an abundance of extraordinary agricultural leaders.  And yet it would be hard to top the achievements and impact of one man.  His engaging smile and polite Texas manner are a great decoy for a business mind honed over a lifetime of experiences.  Please join us, as we spend a day with Paul Engler of Cactus Feeders – one of the largest cattle producers in the world.   
  


The episode airs on Thursday, July 15th:
 
And will later be viewable online:

 

A Simple Transfer of Nonbusiness Assets to Inactive Children

Jul 13, 2010

From Legacy Moment eNews (July 09, 2010)

Please join us for future issues, delivered via email each Friday.
 

Jane, a single mother and agribusiness owner, owns 50% of Garden Products Co., a general partnership. Her son Sam owns the other 50% and is active in the business. Jane’s daughter, Eleanor, is a stay-at-home mom with three children of her own.

Jane would like to transfer her 50% interest in the business to Sam and provide some form of equitable assets to Eleanor at her death.


Jane's current assets are:
Cash
$ 200,000
Investments
500,000
Personal residence
300,000
Interest in Garden Products Co.
650,000
Total assets
$ 1,650,000

From her estate, Jane may leave her entire $650,000 interest in the business to Sam and still have enough other assets to leave an equal distribution to Eleanor. In fact, after transferring the $650,000 in business assets to Sam, her estate still has $1,000,000 in other property. Jane may equalize the distributions by leaving $650,000 to Eleanor and then dividing the remaining $350,000 between the two children.
 News & Resources for You

Business Plan Self-Assessment
 - This Legacy Project tool may be used to identify the strengths and weaknesses of your business plan.

The Wedge of Discontent - Your family may learn from this cautionary tale.

Confirm Your Subscription to the Legacy Moment Weekly eNewsletter – Update your preferences to ensure your weekly Friday afternoon receipt.

Leading the Change – Legacy Project Workshops
The next series of Legacy Project workshops are scheduled for Lincoln, Neb., on July 20; Des Moines, Iowa, on July 21; and Champaign, Ill., on July 23. Sign up online or call the Farm Journal Events Hotline for more information: (800) 909-3681.

 

 

    

Common Issues Regarding the Equal versus Fair Conundrum

Jul 07, 2010
From Legacy Moment eNews (July 02, 2010)
Please join us for future issues, delivered via email each Friday
 

Though each family’s succession situation is unique, there are a number of factors most owners should consider as they weigh the equal versus fair question:
  • Does the owner want the active children to receive the business free of obligations to outside owners and inactive siblings? If so, are there other resources to equitably fund distributions to other children? 
  • Will a lifetime transfer of the business to the active children create conflicts in the family if the inactive children do not receive an equitable distribution until the owner’s estate is settled?
  • Should an owner consider transferring voting stock to active children and nonvoting stock to inactive children? Though this is not fair in real or intrinsic value, a parent may feel satisfied with the equitability.
  • If there are multiple children actively involved in the operation, are they capable of working well with each other? Or is it necessary to give one of the children a controlling interest?
  • Are the children who are not active in the operation comfortable receiving no interest in the family operation?

Take the time to answer these questions with your family.

News & Resources for you:

Fair versus Equal Q&A: Is there an easy solution to this age-old conundrum?

What Is the Farm Journal Legacy Project?

Leading the Change – Legacy Project Workshops
The next series of Legacy Project workshops are scheduled for Lincoln, Neb., on July 20; Des Moines, Iowa, on July 21; and Champaign, Ill., on July 23. Sign up online or call the Farm Journal Events Hotline for more  information: (800) 909-3681.  

 

 

    

Log In or Sign Up to comment

COMMENTS

Legacy Newsletter
Ask Kevin
 

Follow Us

Facebook Twitter You Tube
 

Hot Links & Cool Tools

    •  
    •  
    •  
    •  
    •  
    •  
    •  

facebook twitter youtube View More>>
 
 
 
The Home Page of Agriculture
© 2014 Farm Journal, Inc. All Rights Reserved|Web site design and development by AmericanEagle.com|Site Map|Privacy Policy|Terms & Conditions