Transcript OSU Extension Transition Planning Program

Building for the Successful Transition
of Your Agricultural Business
David Marrison, Extension Educator, Ashtabula County
Donald J. Breece, OSU Extension Farm Management Specialist
Barry Ward, OSU Extension, Leader for Production Business Management
Chris Bruynis, Extension Educator, Wyandot County
EMPOWERMENT THROUGH EDUCATION
Transitioning Your Family Farm
Building for Ohio’s Farm Future
• Age of Ohio farm operators is increasing.
• Ohio Ag Manager Team began in 2004
to provide farm management outreach
for Ohio farms and agribusinesses.
• Requests made for transition planning
assistance from clientele to Ohio Ag
Manager Team and State Dairy Team.
A Question for Ohio Farm Families
“Do I want to pass my farm
operations on to my heirs as an
ongoing business or do I want
to pass it on as a group of
assets?”
What is transition planning?
• Farm transition planning is the
process by which the ownership
and the management of the
family business are transferred
to the next generation.
North Central Risk Management
Education Center gives a boost to
Ohio’s transition planning team
OSU Extension Transition Project Team
• David Marrison, OSU Extension - Ashtabula Co.
• Chris Zoller, OSU Extension - Tuscarawas Co.
• Dr. Don Breece, OSU Farm Management
Specialist.
• Barry Ward, OSU Extension Leader, Production
Business Management.
• Jeff McCutcheon, OSU Extension - Knox Co.
• Chris Bruynis, OSU Extension - Wyandot Co.
• Mike Gastier, OSU Extension - Huron Co.
• Julia Woodruff, OSU Extension - Ashland Co.
Transitioning Your Family Farm
Workshops
• The two-day workshops were designed
to help farm families develop a transition
plan for their family business. The
sessions challenged participants to
examine their business to the core and
to actively plan for the future.
• The workshop retreats were conducted
at four locations in Ohio. Two of the
workshops included an overnight stay.
.
Transitioning Your Family Farm
Resources Developed
• Participant notebook of materials,
case studies, and teaching outlines
• Teaching Power-points
• OSU Extension Fact sheets
• Revised “Transferring Your Farm
Business to the Next Generation”
Bulletin
OSU Fact Sheets Developed
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Farm Planning Process Model
Planning for the Successful Transition
Develop a Useful Mission Statement
Developing Goals
Developing the Next Generation of Managers
A Comparison of Business Entities
Tax Characteristics of Business Entities
Starting, Organizing and Managing on LLC for a
Farm
 Using Liability Limiting Entities to Manage
Liability Exposure for Ohio Farms
Soon to be on OSU Extension’s Ohioline:
http://ohioline.osu.edu/
Revised in 2007
Bulletin Chapters
• Part 1 How can you tell that your business is
profitable enough?
• Part 2 Are there enough income and assets to
provide for the older generation?
• Part 3 How can you help the two generations get
along?
• Part 4 What should you transfer? In what order?
• Part 5 How to avoid paying too much income, gift
and estate tax?
Workshop Sponsors
Workshop Collaborators
• Dr. Bernie Erven, Professor Emeritus of
Agricultural Economics at The Ohio
State University.
• Paul Wright, Attorney at Law and former
OSU Extension Ag Law Specialist.
• Robert Moore, Attorney at Law, Wright
Law Co.
Workshop Outline
Day 1
• An overview of transition planning
• Assessing the foundation of your business
• Financial considerations in transition planning
• Assessing the strengths, weaknesses,
opportunities & threats to your business
• Developing business & personal goal setting
• Family business communication
• Management transfer to the next generation
Sessions were held from 9:00 a.m. to 4:30 p.m.
Workshop Outline
Day 2
• Order of transition for tangible assets
• Organization structures & strategies
• Retirement Planning & Tax Management
• Treatment of on and off-farm heirs
• Buy/Sell Agreements
• Trusts
• Life Insurance
• Legal Q&A
Sessions were held from 9:00 a.m. to 4:30 p.m.
Workshop Results……
Workshop Results
• 35 participants in the “practice”
workshop in Ashtabula County (far
northeast Ohio).
• 105 participants in the four regional
workshops.
• 22 Extension Educators attended the
workshops (train the trainer).
• Another 150 farmers participated in minisessions held across the state in 2007.
• Will offer two regional workshops in
2008.
Evaluation Questions
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Plan to hold an intergenerational meeting…96%
Plan to meet with an attorney ... ………..….89%
Plan to meet with an accountant…………...76%
Farms with 1,000 acres plus………………..35%
List of most important items learned:
Communication, Family Business Meetings,
Planning, Structure, Taxes, Transfer Strategies
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Averaged a 1 point change
of a 5 point scale!
Change in Knowledge
1.6
1.4
1.2
1
0.8
0.6
0.4
0.2
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Most Important Items Learned
• Communication is King
• Family Business Meetings/Goal Setting
• Aware of more Dimensions, Problems,
and Complications than was aware
before
• LLC Business Structure and Trusts
• “That we are Businessmen as well as
Farmers”
• You can not start early enough!
What Additional Information
Would Participants Like?
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Trusts
Business Transfer Strategies
Financial Issues in Transfers
Tax Issues in Transfers
Buy-Sell Agreements
Transition Planning
Developing Skills in Next Generation
38%
38%
37%
32%
29%
22%
17%
For More Information
David Marrison
OSU Extension-Ashtabula County
39 Wall Street
Jefferson, Ohio 44047
440-576-9008
[email protected]