Transcript Inventory of the Legacy: - Oregon State University

Ties to the Land
Succession Planning for Livestock (and other
Ag.) Producers
Bart Eleveld, OSU Extension Economist
USDA—Risk Management Agency
Private Lands Committee
Outline for the day
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9:30
10 am
Registration/Check-In
Case Example Ranch and Financial Analysis
– Bart Eleveld, Oregon State University
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10:30
Succession Planning Process, Fair vs. Equal,
Conflict Resolution
– Steve Hopkins and Doug Sippel, Titan Financial Associates
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11:15
Appraisal, Valuation Discount Issues
– Randy Guyer, CPA
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12 noon
12:30
Lunch
Land Trusts
– Frank O’Leary, Oregon Rangeland Trust
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1 pm
Legal Issues—LLC, FLP, Buy-Sell Agreements
– George Guyer, Attorney
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1:30
Charitable Remainder Trusts
– Harold Weight, Multiplan Financial Services
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2:15
3:00
Panel Discussion, Q&A
Closing and Evaluations
Succession planning ≠, > Estate Planning
• Need to think about what happens if you
live as well as what happens if you die
• How to transfer control, decision making
and operation of the business if that is an
objective
• If the business is not to continue, who gets
what, and when?
Inventory of the Legacy:
Case Study and Financial Analysis
Of Future Alternatives
Dr. Bart Eleveld
Extension Economist, Farm & Ranch Management
Agricultural & Resource Economics Department
Ray and Reba Rancher
• Ray and Reba are mid 60’s, still active on ranch but moving
towards retirement.
• Reba had full-time job with no retirement benefits, Max had parttime job in winter.
• 3 children, aged 36 – 41.
• 800 Cow-calf pairs
• 400 ac. Irrigated alfalfa
• 100 ac. Winter wheat rotation crop
• 300 ac. Native grass hay (baled)
• 100 ac. Irrigated pasture
• 3500 ac. Deeded rangeland
• 4650 AUM Public rangeland pasture
Family Dynamics
• Ray and Reba want to ease into retirement but stay on
ranch.
– Have started drawing SS
– Fairly good health for now.
• Oldest son, Ray Jr. (41), joined ranch management after
college graduation.
– Divorced from Rosie (39) and has 3 kids, aged 10 – 14. Oldest
already works on ranch and wants in someday.
• Second son, Roy (37), has professional career in NYC,
is estranged from family.
• Daughter Rita Wrangler (36), married to Rudy who has
professional, 6 figure income.
– Has daughter (12) who is interested in ranching.
– Lives in town, but wants to have a house on the ranch.
Current Financial Status
• Balance Sheet is pretty healthy but cash
flow and income is tenuous.
• Current ratio = 1.88
• Farm debt to asset ratio = 37% (33% total)
• Farm equity to asset ratio = 63%
• Rate of return on farm assets = 1.7%
• Term debt coverage ratio = 103%
Balance Sheet
(Details in hand-out)
Income and Cash Flow
(Details in Handout)
YMMV !!!
Resources for Balance Sheet
Income Statement & Cash Flow
• FINPACK financial analysis software
– Center for Farm Financial Management @ U. of MN.
– Does balance sheet plus feasibility and cash-flow
budgeting for whole farm/ranch management plans
– Free trial download available:
• http://www.cffm.umn.edu/
– Can “rent” an annual license for ~ $100/yr.
• 2 spreadsheet formats
– Montana State University’s
– OSU/WSU Integrated Financial Statements
– Both on Succession Workshop website:
• http://arec.oregonstate.edu/succession.html
Prineville Keywords
• Mellow
• O on h (brand?)
• Blank—11several
pasture
• Alder
• Blue & red
• Key
• Family
• Lock & key
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Saving the ranch
MAC
Angus1
Midori
JCN
Ford250
Sukey
Baker City Keywords
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Blank—(211wheat)
Blackbulls
Sam
Blank—(221
Potatoes/cattle)
Forty seven
Z
Blitz
Bing01 ??
Kathryn
Sutton
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10dalton
Badger
Busy
Gus
)(
HD
host (or Lost)
Red Rock
Dogger
Cooper
50
Burns/Hines Keywords
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Covert
Steers
Rodeo1
Plan
Family
Ruby
Lyle ???
Rex
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Cottonwood
Hank
CAB
Iris
Lester
Blank—420 cattle
Blank—420 beef
Meat hook
cattle
Klamath Falls Keywords
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Blank—110 hay grain
Rabbit
BVR
Maxcat
“?”
FPI
Blank—220 cattle
Tyler
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Marie
Wheatgrass
Angus
Roseblossem
21
Molly
Gramma
Hereford
Eugene Keywords
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SLF
Symphony
Extension
Diamond2
Beef
G&C Farms
2 Horse
Blank—(411Beef/Timber)
Diamond
Heritage
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Jake
Bellatrace
Hermitage
Douglas Fir
Ponderosa Pine
Oscar dog
Calpooia
Checkers
Kieth
Red1