At the American Angus Convention in Ft. Worth, Texas, Oklahoma State University’s Dr. Shannon Ferrell gave a presentation on succession planning and Senior Farm and Ranch Broadcaster Ron Hays caught up with him to get the details for you.
Ferrell acknowledged the increasing median age of agricultural producers across the nation and the fact that estimates show that perhaps a trillion dollars in agricultural assets will need to be transferred to the next generation of farmers and ranchers in the next twenty years.
Misconceptions surrounding succession planning are common. Ferrell detailed that only 30% of family-owned businesses will survive succession intact because owners have failed to plan correctly. Also, 64% of farms and ranches exist with no estate plan in place.
“You really have to do something,” he said. “You have to be proactive, otherwise, a lot of forces are working to pull your ranch apart as it makes that transition.”
Another common misconception is the minuteness of the estate tax exemption, when in fact, it is currently over $13 million. “I think a lot of people may be making transition steps out of fear, especially of an estate tax liability, when for most of our operations, that’s not really going to be the concern,” he stated. “We need to make sure that we aren’t letting that unfounded concern force us into decisions that may not be best for the operation.”
According to Ferrell, no matter what a person’s asset base is or their family situation, there are certain things that everyone needs to have in place. Parents with children under 18 need a guardian nomination on record. Anyone with an investment account should be taking advantage of the beneficiary designations on it. Everyone should have a durable power of attorney for business and one for health care decisions, an advanced directive for end-of-life care and organ donation decisions, and a will to designate their property after their deaths.
“If you don’t know where to start, do a deep dive inventory of all of the assets you have,” Ferrell instructed. “Land deeds, business records, investment accounts, and put it all together in one place.”
This is the first step that an attorney or accountant will take when asked to draw up documentation, so having it done already saves time and money. “The other thing is that as you go through that process, you start to see the picture of yourself, and you may not have ever pulled all of those pieces together before. You also start to think in your head about where that asset needs to go and how it might get there. So you have already jumpstarted the transition process just by that exercise,” Ferrell explained.
To access more information about succession planning, visit OSU’s Farm Transitions website here.
The Beef Buzz is a regular feature heard on radio stations around the region on the Radio Oklahoma Ag Network and is a regular audio feature found on this website as well. Click on the LISTEN BAR for today’s show and check out our archives for older Beef Buzz shows covering the gamut of the beef cattle industry today.
