South Dakota Grassland Coalition

by Garnet Perman

Jan 2020

Dealing with farm/ranch transfer is important, but often difficult to accomplish. The Nebraska Grazing Lands Coalition recently hired a ranch transition task manager to work with ranch families in planning for succession and estate planning. Bethany Johnston shared the following advice for getting the process started. First, all the owners need to be unified regarding what they want to see happen in 5 years, 10 years, to estate settlement. Do you want the operation to stay intact? In the family? A well thought out vision statement can guide the process. Then assemble a team that will include a lender, an insurance agent, a lawyer, and an accountant. A financial planner or family counselor may also be good additions to the team.

Talking with family about transition can be hard, but not communicating is a bad option. Johnston observed, “Nothing is more expensive than a lawyer for counseling.” Communication counseling with a trained counselor may be a good initial investment, especially if communication within the family is poor. Nebraska UNL Extension has an excellent downloadable workbook designed to help the younger generation start the conversation with a reluctant older generation: “Workbook for Farm/Ranch Transition When You Aren’t in Control”. The workbook is also on the Nebraska Grazing Lands website along with several good articles. Follow the links under the Program tab.

Second, know your financial situation. What do you own? What are the land descriptions? What is the operation worth? How much do you owe? What would estate taxes be? What would land payments look like if an on farm heir had to buy out off farm heirs? Is cash flow adequate to provide a living and pay off debt, or is an off farm job necessary? How will you fund retirement and/or nursing home costs? If no family member is interested in returning to the operation, consider helping out a young producer. Large operations and absentee landowners may not value the land ethic common to Coalition members. Aiding like-minded young producers can be good stewardship of land resources in addition to helping sustain rural communities. Remember that times have changed. What worked for a previous generation may not be an effective choice today. People live longer. Producers receive a smaller % profit from their goods than 30 years ago. “People change when they see a dollar sign followed by 6 zeros. They either get better or bitter,” Johnston noted.

Third, Johnston recommends hiring an attorney experienced in farm estate planning. “It’s the difference between having a neurosurgeon and a general practitioner doing your brain surgery.” The lawyer you choose should have a list of information they need to help accomplish your goals. Important information includes family demographics, information about applicable life insurance, and key people who could be enlisted to act as fiduciaries (trustee, personal representative, attorney-in-fact, etc.). The legal plan has to fit the family. Planning considerations include how to deal with divorce, death, disability, retirement and nursing home costs in South Dakota as laws vary between states. Be prepared to expose family skeletons, such as addictions or disabilities that can impact the situation.

Planning costs depend on the size and complexity of the operation. Expect to spend $5000-$10,000 or more. The more questions answered ahead of time, the fewer lawyer fees. The University of Minnesota website, can help with goal setting and pre-lawyer planning. Your insurance agent may also have a good inventory questionnaire. If not, Farm Bureau Financial Services does:

Finding the right resources for your situation may take some effort. The most logical places to start include your current lender, CPA, insurance agent and lawyer. Some South Dakota businesses/ institutions that deal with this issue are Prosperity Wealth Management & Consulting in Aberdeen and Sioux Falls ( Prairie Family Business Association in Sioux Falls,, and First Dakota National Bank,, the SD Center for Farm/Ranch Business Management, Contact: Will Walter, 605-995-7191, SDSU Extension can also point to appropriate resources. Contact Heather Gessner, 605-782-3290, County FSA offices offer programs for those enrolled in FSA programs. Johnston said the new farm bill allows Department of Agriculture mediators to help with transition mediation and not just financial issues, but neither the SD Dept. of Agriculture nor SD FSA had any information when contacted.

Don’t wait! In Johnston’s experience, getting started has a snow ball effect, making the rest of the process easier. At the very least start putting things on paper (include dates) and make sure whoever has power of attorney knows where to find it. For those that already have plans, revisit them periodically to make sure they address your current situation.

Source: SDGC Newsletter

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