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by Garnet Perman
March 2022
We recently attended the ND Grazing Lands Coalition Succession Planning Workshop. This event was sponsored by the National Grazing Lands Coalition and the ND Grazing Lands Coalition. Marissa Nehlsen’s Freedom Financial Group and Starion Bank were sponsors and participants along with Alfredo Delgado, a communications specialist with Brain Masters Life Coaching. One of the highlights was a panel of producers who shared their stories which helped illustrate the scope of issues to be addressed.
Bill Barby
(past chair of Kansas Grazing Lands) and his wife, Debbie
Was in the process of transitioning the ranch that’s been in their family for 50 years to non-family heirs. Their situation is more common than one might think. Only 30% of family farms/ranches survive to the second generation. Twelve percent make it to the third and only 3% survive to the fourth generation. Bill would have been content to ranch forever, but serious health events made him realize that he needed to wind down the daily work. When their children decided against taking over the B Bar B, Bill and Debbie wanted to see the regenerative practices they’ve worked so tirelessly to implement continued. Rather than sell to the highest bidder, they decided to look for a non-family heir to work into the operation. They wrote down the traits of the person they wanted to work with and how that transition might look. They started their search with members of the Ranching for Profit Executive Link program. Candidates they thought were promising didn’t work out. It took most of a year to find a young family looking for the type of opportunity they were offering. In what Bill describes as a “God thing” they are now working with a young family according to a plan both parties agree on.
The planning process is involved and requires frequent quality communication. Bill commented that he’s also working on figuring out what to retire to which is as important as all the legal and financial plans. He also made the observation that this arrangement takes the pressure of continuing the family ranch off his children, as they felt guilty about the decision.
Vern Terrell
(past chair of the Nebraska Grazing Lands Coalition)
Talked about their family ranch that involved him, his brother and their sons. The untimely death of his 30 something nephew was a hard blow that eventually led Terrell’s brother to leave the operation. Figuring out how to keep the ranch together with his family bearing the financial burden was challenging.
Brian Alexander
(Ranching Reboot Podcast and 2019 Kansas Leopold Conservation Award winner) and Aaron Subart, a young producer from North Dakota
Both ranch with their fathers but are at different stages in life. In his early 20’s, Subart described the opportunities his father provided that made him want to choose ranching as an adult. Simple things like letting him help with chores, or giving him ownership of a cow are things he is doing with his own little boy now. Alexander focused on the importance of communication between all parties and taking the time to keep plans current, especially in our changing and challenging times.
Thirty years in the insurance business gave Lyle Perman, Lowry SD, an opportunity to witness how many families handled transition and wealth management and influenced the transition plan on his own ranch. Too often dad was in his 80’s, still making the decisions and not sharing his reasons. Bad communication and an inability to relinquish control left a legacy of hurt feelings and financial burdens. “Let the young guy take over!” he said.
Other good take-aways from the event included:
- Start with the end game in mind. Knowing what you want to have happen makes decision making today easier.
- Does your financial and business team understand regenerative ag? Understanding your motivation and goals will aid them in coming up with a plan that does what you want it to do. To that end have you considered having a sit down planning session with your lender, attorney, insurance agent and accountant all present? Teams work together.
- ALL ducks need to be in a row in order for a succession plan to succeed. These include transition plans, updated estate management, strategic tax planning, and risk and wealth management.
- Where and how are your documents stored? Who has access to them? Can they be easily retrieved in an emergency? These include your power of attorney, living will, insurance and financial account numbers, lenders and their institutions, and legal documents. Having a copy of everything in an easy to grab metal file box might be a good first step.
- Communication between all involved parties is essential. The more people involved, the more necessary a facilitator or mediator might be to enable good communication. Jerry and Renae Doan brought all three of their sons back to Blackleg Ranch at Sterling, ND, building a very diversified operation with spouses actively participating in the business ventures. They are working through a succession plan with a third party mediator from the Freedom Financial Group. Jerry noted,” The process is really hard, but what good is it if you spend Christmas alone?”
- Recording wills, setting up trusts or limited liability companies or hiring a facilitator all cost money. An investment of several thousand dollars now is minor to the cost in taxes and legal fees later which can run into the tens and hundreds of thousands of dollars. The current average cost of setting up a succession plan is between $3-5,000.
Where are you at with your transition plan? What needs to be done? Who will help you? When will you talk to them? Make the appointment today!
There was a succession planning workshop during the National GLC meeting that featured Barby, Doan and others. It is available for viewing on the National GLC website. The NDGLC hopes to have their event online at a future date.
Garnet Perman is a freelance writer and ranches with her husband, Lyle, near Lowry, SD.
Source: SDGC Newsletter