A majority of Minnesota farm families have not named a farm business successor or developed an up-to-date farm business transition and personal estate plan. The collaborative Extension program effort described here focuses on introducing farm families to business transfer and estate planning processes, enabling them to develop and implement such plans. Findings suggest that farm family participants gained increased understanding of farm business transfer and estate planning. Furthermore, a substantive percentage of participants reported completing and implementing a business transfer and personal estate plan as a result of attending a program seminar

Bau, David B

Hachfeld, Gary A

Holcomb, C Robert

Kurtz, James N

Craig, J William

Olson, Kent D.

Clemson University: TigerPrints

The Journal of Extension Volume 47 Number 2 Article 8 4-1-2009 Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops Gary A. Hachfeld University of Minnesota Extension, hach002@umn.edu David B. Bau University of Minnesota Extension, bauxx003@umn.edu C Robert Holcomb University of Minnesota Extension, holcombr@umn.edu James N. Kurtz University of Minnesota Extension, kurtz003@umn.edu J William Craig University of Minnesota Extension, craig030@umn.edu See next page for additional authors This work is licensed under a Creative Commons Attribution-Noncommercial-Share Alike 4.0 License. Recommended Citation Hachfeld, G. A., Bau, D. B., Holcomb, C., Kurtz, J. N., Craig, J., & Olson, K. D. (2009). Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops. The Journal of Extension, 47(2), Article 8. https://tigerprints.clemson.edu/joe/vol47/iss2/8 This Feature Article is brought to you for free and open access by the Conferences at TigerPrints. It has been accepted for inclusion in The Journal of Extension by an authorized editor of TigerPrints. For more information, please contact kokeefe@clemson.edu. Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops Authors Gary A. Hachfeld, David B. Bau, C Robert Holcomb, James N. Kurtz, J William Craig, and Kent D. Olson This feature article is available in The Journal of Extension: https://tigerprints.clemson.edu/joe/vol47/iss2/8 April 2009Volume 47 Number 2Article Number 2FEA8Return to Current IssueFarm Transition and Estate Planning: Farmers'Evaluations and Behavioral Changes Due toAttending WorkshopsGary A. HachfeldExtension Educator, Agricultural Business ManagementMankato, Minnesotahachf002@umn.eduDavid B. BauExtension Educator, Agricultural Business ManagementWorthington, Minnesotabauxx003@umn.eduC. Robert HolcombExtension Educator, Agricultural Business ManagementLamberton, Minnesotaholcombr@umn.eduJames N. KurtzExtension Educator, Agricultural Business ManagementWorthington, Minnesotakurtz033@umn.eduJ. William CraigExtension Educator, Agricultural Business ManagementCrookston, Minnesotacraig030@umn.eduKent D. OlsonProfessor, Applied Economics, and Area Program Leader, Agricultural Business ManagementSt. Paul, Minnesotakdolson@umn.eduUniversity of Minnesota ExtensionAbstract: A majority of Minnesota farm families have not named a farm business successor or developed anup-to-date farm business transition and personal estate plan. The collaborative Extension program effortdescribed here focuses on introducing farm families to business transfer and estate planning processes,enabling them to develop and implement such plans. Findings suggest that farm family participants gainedincreased understanding of farm business transfer and estate planning. Furthermore, a substantive percentage Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:171/7of participants reported completing and implementing a business transfer and personal estate plan as a resultof attending a program seminar.IntroductionIssues surrounding farm transfers between generations and personal estate planning are extremely important.This has been, is now, and will be true into the future. The value of assets to be transferred is very high.The lack of planning is also very high. A survey by Iowa State University found more than 50% of Iowafarmers had no estate plan and 71% had not named a successor (Duffy, Baker, & Lamberti, 2000). They alsofound that a mere 20% had spoken to a banker, 30% to an accountant, and 28% to an attorney aboutsuccession and estate planning. A survey by Successful Farming showed that 30% of farmers had notdiscussed their plan with their family (Tevis, 2003).Farm families expressed a need for information and help with farm transfer and estate planning. Agriculturalprofessionals voiced concern and expressed strong support for programming to help farm families with thetransfer and estate planning process. Farm transfer and estate planning is not a new topic, as shown by a longhistory of Extension programs, sessions at professional meetings, and professional literature (e.g., Hachfeld& Olson, 2006; van der Hoeven, 2003; Heleba, Parsons, & Sciabarrasi, 2004; DeVaney, 2004; Fetsch, 1999;Weigel, Blundall, & Weigel, 1986).The objectives of this article are to describe a farm transition and estate planning program's development,content, delivery, and evaluation process including results. Also discussed are some lessons learned for all ofus involved in helping farm families in this process.Program Development, Content, and DeliveryTo address the apparent lack of planning and the demand for information, the Agricultural BusinessManagement program group of University of Minnesota Extension developed a farm transition and estateplanning program building on the experience of others across the nation (as cited above). Program goalsincluded (1) introducing farm families to farm transition and estate planning laws, guidelines, concepts andtechniques; (2) outlining potential strategies and procedures they can consider when developing a transferand estate plan; (3) identifying risks arising from lack of succession planning, intergenerational goal setting,and implementing a farm transfer and estate plan; and (4) ending with farm family participants developingand implementing their own farm transfer and personal estate plan. The program was not intended to answertheir specific legal and financial questions.Program topics included establishing personal, family, and business goals; transfer strategies, includingexamples strategies; financial considerations when transferring the farm business; tax considerations duringthe transfer process; treatment of heirs; estate planning issues and strategies; developing a written transferplan; and establishing a transfer and estate planning team. These topics were selected based on the needsinitially identified by and further discussions with farm families and agricultural professionals.Program curriculum and promotional materials were developed and delivered by University of MinnesotaExtension educators. The team included three educators with background in farm transfer and estate planningand two educators with agricultural tax and farm management background. The team formed collaborationswith other professionals to ensure up-to-date program content and accuracy. These collaborations included acertified financial planner; an attorney concentrating in business transfer, estate planning, and elder law; andlocal farm management instructors for assistance with long-range farm business analysis. The business Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:172/7analysis would help families assess whether or not their farm business will financially support multiplefamilies during the transfer process.Program content was delivered via face-to-face workshops by Extension educators. Local businesses whowork with farm families sponsored the programs and recruited participants. Participants received acomprehensive workbook that included all PowerPoint slides; information sheets on farm transition, estateplanning, and farm financial management; Web site addresses for additional information; and a set ofworksheets used during the presentation.Evaluation ResultsTwelve workshops were held from November 2005 through April 2006. Five hundred twenty-four (524)Minnesota farm family members from 191 communities, representing 301 farm business units, attended oneof the 12 workshops. Ages ranged from 22 to 89 years. The audience was 33% female and 67% male; 49%were over the age of 55. Twenty-three (23) local businesses were program sponsors.End-of-Meeting Evaluative Results: Documenting Knowledge ChangeFollowing each workshop, participants were asked to complete an evaluation focused on whether or not theyhad a better understanding of farm transfer and estate planning concepts and strategies as a result of attendingthe workshop and whether they currently have an up-to-date estate and farm transfer plan. Two hundredninety-six (296) end-of-meeting surveys were completed, a 56.5% response rate.Most of the participants indicated their understanding of the main educational points of the workshopimproved due to attending the workshop (Table 1). Fifty-eight percent of the participants said they did nothave an up-to-date estate plan, and 89% did not have an up-to-date farm business transfer plan (Table 2).However, 81% stated that, as a result of attending the workshop, they would begin the farm transfer processby developing a transfer and estate plan.Table 1.Participants' Self-Reporting Evaluation of Whether Their Understanding of Educational Points Was BetterDue to Attending a WorkshopEducational PointMedianScore*AverageScore*StandardDeviation% Indicating"StronglyAgree" or"Agree"1. The need for clear goalsand communication as partof the transfer process.4.5 4.5** 0.53 99.02. The strategies availablefor use in a transfer plan.4 4.3** 0.56 95.63. The importance ofassessing the financialstrength of the farmbusiness.4 4.3** 0.61 92.2 Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:173/74. Tax issues related to thefarm transfer process.4 4.2** 0.67 87.25. Wills, trusts, and estateplanning strategies.4 4.3** 0.60 93.96. Life insurance,power-of-attorney, andhealth care issues as part ofthe process.4 4.3** 0.63 89.9* Participants used a Likert scale numerical rating system of 1 for strongly disagreethrough 5 for strongly agree.**Significantly higher than a score of 3 with p<0.01.Table 2.Participant's Self-reporting Status of Their Current Farm Transfer and Personal Estate PlanResponse PercentageQuestion Yes No NA*Do you currently have an up-to-date estate plan? 42.2% 57.8% 0.0%Do you currently have an up-to-date farm transfer plan? 5.4% 88.9% 5.7%If no transfer plan, as a result of attending this workshop, Iplan to begin the farm transfer process by developing atransfer and estate plan this year?81.4% 4.3% 14.3%*Note: NA for the transfer plan was due to some participants being the youngergeneration just entering farming and thus had no farm to transfer. NA for beginningthe process was a result of participants who did not have a farming heir.Post-Meeting Evaluative Results and Program ImpactSix months following the final workshop, a mail-out survey was sent to the 301 farm family businessesattending a workshop. A total of 152, or 50.4%, completed and returned a survey.After 6 months, 59.4% of the respondents reported having started developing their farm business transferplan, compared to 81% at the end of the meetings who said they planned to begin the process. Of those whohad started developing a plan, 12.5% reported having developed and implemented their transfer plan. Ofthose completing the post-meeting survey, 57.3% reported they had begun developing their personal estateplan, with 7.3% of those having completed and implemented their plan.Participants were asked to list the barriers they encountered while working to develop and implement theirfarm business transfer and personal estate plans. Listed below, in order of frequency cited, are the barrierscited by farm families. After the problem of time (or allocation of time), three of the barriers can be traced toproblems due to lack of family communication and unification about goals. Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:174/7Finding time to complete the process.1. Difficulty developing farm, family, and personal goals.2. Lack of family consensus and disagreement among heirs.3. Difficulty finding the right professionals for our transfer/estate planning team.4. Parents not ready to retire and give up control.5. The majority of those indicating time was a problem or obstacle had not started the transition or personalestate planning process. For those who had begun the process, developing goals and consensus among familymembers were the two most prevalent barriers or obstacles. Other problems and obstacles were scatteredacross those who had started or not started the process. For participants who had completed the process,barriers and obstacles were scattered and less prevalent.Lessons LearnedThe workshops were successful in that most participants indicated improvement in their knowledge of theprogram's key educational points. Given the complexity of transferring a business and estate planning, the99% agreement or strong agreement with the need for clear goals and communication as part of the transferprocess is very good, although the cited barriers still include problems caused by lack of communication.The development team also learned several lessons for future programming. These are summarized below.Working with an attorney who understands agriculture, business transfer, estate planning, and elderlaw was critical, rather than an attorney who is a generalist. Farm business transfer and the associatedaspects of estate planning and elder law are very complicated. The laws change frequently, soaccurate, up-to-date information is crucial.• Working with an accountant or tax consultant who understands agriculture and all aspects of tax lawis crucial. Again, working with a specialist in this area is very important because the laws arecomplicated and they change frequently.• While working with an attorney and accountant/tax preparer is crucial in development of theprogram materials, it was just as crucial not to have them as presenters for the program. The programis 5 hours in length, with lots of information to cover. The workbook serves as a follow-up reference.Participants are strongly encouraged to take the next step of talking with professionals such as anattorney. To include an attorney in the program would most likely cause a vast amount of time beingused for specific questions and answers, decreasing the amount of time available for the basiceducational program material. It is critical, therefore, that presenters be well versed in these areas ofexpertise. Because Extension is seen as not selling anything, we can present the educational materialand be judged unbiased. An attorney or accountant, as a presenter, is often perceived as selling his orher services.•  Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:175/7Working with local sponsors (such as lenders, financial planners, and insurance agencies) isimportant for marketing the program. Our experience showed that having local sponsors invite theircustomers to the program resulted in much better attendance. The customers felt they were gettingsomething in return for doing business with the sponsors. The sponsors feel good because they areoffering the program as a service to their customers.• The participant workbook was critical as a handout and for future reference because of the largeamount of information on these complex topics.• Because the most often cited barrier to progress was the lack of time (which could be viewed as alack of allocated time), some discussion of the importance of making a plan or the problems of nothaving a plan upon death of a principal should be added to the agenda.• Another agenda item to add is information on how to start conversations within a family and how toreach consensus on family goals, vision, and mission. Because this is a large topic, the best approachmay be to add additional material to the workbook and introduce the topic and material as a smallerpart of the workshop.• To overcome the barrier of not finding the right professional, Web site listings in the resourcessection of the workbook should be discussed more explicitly.• In summary, the participants in Minnesota were not much different from farmers in other states in terms ofthe low level of up-to-date estate and transfer plans. These workshops helped participants increase theirknowledge of farm transfer and estate planning. Given the positive response to these workshops, the obviousneed, the huge amount of farm assets involved, and the aging farm population, we continue to improve andoffer these workshops in the future. The lessons we learned can also help others improve their programs.ReferencesDeVaney, S. A. (2004). A Web site to help farm families communicate about farm transfer. Journal ofExtension [On-line], 42(4) Article 4TOT5. Available at: http://www.joe.org/joe/2004august/tt5.phpDuffy, M. D., Baker, J., & Lamberti, A. (2000). Farm succession in Iowa. Unpublished paper, Department ofEconomics, Iowa State University, Ames, Iowa. Retrieved May 30, 2006 from:www.econ.iastate.edu/faculty/duffy/Pages/farmsuccession.pdfFetsch, R. F. (1999). Some do's and don'ts for successful farm and ranch fmily estate transfers. Journal ofExtension [On-line], 37(3) Article 3IAW2. Available at: http://www.joe.org/joe/1999june/iw2.phpHachfeld, G., & Olson, K. (2006). Farmers' evaluations and behavioral changes due to attending farmtransfer and estate planning seminars. Selected paper at the 2006 Annual Meeting of the AmericanAgricultural Economics Association, Long Beach, California. Retrieved June 30, 2008, from:http://agecon.lib.umn.edu/cgi-bin/pdf_view.pl?paperid=21803&ftype=.pdf Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:176/7Heleba, D., Parsons, R., & Sciabarrasi, M. (2004). Minimizing farm business succession risk in NewEngland: Delivery of transferring the farm workshops. Journal of Extension [On-line], 42(6) Article 6RIB6.Available at: http://www.joe.org/joe/2004december/rb6.phpMinnesota Agricultural Statistics Service. (2006). Minnesota Agricultural Statistics 2006. St. Paul, MN.Tevis, C. 2003. Farm transfer linked to policy. Successful Farming, 101 (December 2003):13.Weigel, D. J., Blundall, J. S., & Weigel, R. R. (1986). Keeping peace on the farm: Stresses of two-generationfarm families. Journal of Extension [On-line], 24(2) Article 2FEA1. Available at:http://www.joe.org/joe/1986summer/a1.phpvan der Hoeven, G. (2003). Estate planning and farm transfer in a changing legislative environment: NorthCarolina, U.S.A. An Example. Conference Paper at the 14th Congress of the International Farm ManagementAssociation, Perth, Western Australia. Retrieved June 30, 2008, from:http://agecon.lib.umn.edu/cgi-bin/pdf_view.pl?paperid=23672&ftype=.pdfCopyright © by Extension Journal, Inc. ISSN 1077-5315. Articles appearing in the Journal become theproperty of the Journal. Single copies of articles may be reproduced in electronic or print form for use ineducational or training activities. Inclusion of articles in other publications, electronic sources, or systematiclarge-scale distribution may be done only with prior electronic or written permission of the Journal EditorialOffice, joe-ed@joe.org.If you have difficulties viewing or printing this page, please contact JOE Technical Support. Farm Transition and Estate Planning: Farmers' Evaluations and Behavioral Changes Due to Attending Workshops04/27/09 12:28:177/7

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