After months of document collection and analysis, Legacy Project advisors were finally able to sit down with Greg, Julie, Jim and Kathy Moes in late April to start sifting through options.
They met with Kevin Spafford and Josh Sylvester, transition planning experts who lead Farm Journal’s Legacy Project. What the Certified Financial Planners found shocked the Moes:
"There were a lot of surprises when Kevin and Josh went through our existing agreements," says Greg Moes. "We almost put the operation in worse jeopardy through the use of some of these agreements."
In fact, within a week of the first meeting, Greg and Jim were on a conference call with Sylvester to get suggestions on how to quickly amend some of the paper work.
The Moes, Goodwin, S.D., milk 1,400 cows and farm more than 2,000 acres, and hope to pass on the operation to the next generation.
Scott Moes is fifth generation, working on the dairy, and in line to become one of the new owner/managers.
The current set of documents were drawn up 20 years ago when land values were much less and transition to the third generation of Moes was not a big a priority. So land buy/sell agreements, stock transfer agreements within the Sub-Chapter S Corporation and cash-based compensation agreements all must be re-thought or re-drafted to allow transfers between existing partners and to the next generation to begin.
"When the agreements were drawn up back in the ‘90s, they were cookie-cutter agreements that worked for a lot of farm operations and other businesses," says Greg. "But there were not as many dollars involved as today. It’s scary because the agreements don’t even come close to meeting our needs today," he says.