Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and...
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Transcript of Managing for Today and Tomorrow Business, Succession, Retirement and Estate Planning for Farm and...
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
What is Estate Planning?
The overall process of making decisions as to how property is to pass to others, during
one’s lifetime, at death, or after death.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Who Should do Estate Planning?Who Should do Estate Planning?
• Everyone…….It is not just about money
• Unless you are happy with the plan your state has provided
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
We are not giving Legal AdviceWe are not giving Legal Advice
• Just Providing Non Bias Educational Information
• Seek out your own legal council
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Coordinate Your Planning
Retirement Estate Transfer Income Tax Planning Planning Planning Planning
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Who is the Estate Plan for?• Is it to pass a business to the next generation?• Is it to plan for retirement?• Is it to jump start the kids ambitions?• Is it to avoid taxes?
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
What are your most important goals?
• Individual• Family• Retirement• Business• Spiritual• Other
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Key is to Articulate Goals
• The parents together• The parents individually• The on-farm heirs• The off-farm heirs
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Develop Goals under various circumstances
Develop Goals under various circumstances
• What to do if spouse diesReceive Income?Sell interest?Participate in management?
• What to do if both die
• What to do if entire family dies
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Common Estate Planning Goals• Minimize taxes at death• Minimize probate costs and delays• Conserve property during life and after death in
accordance with estate planning goals• Provide financial security
– Parents in retirement– Family member with a disability
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Key Areas of Concern• Guardian for minor children or adult children with special needs.• Providing income for a surviving spouse or children.• Management of estate property, assets and investments.• Minimization of probate and settlement expenses.• Minimization of estate and inheritance taxes.• Flexibility.• Liquidity for necessary and unavoidable expenses.• Gift planning.• Continuation and/or transfer of the business.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Putting together a team of Advisors• Accountant• Banker• Insurance agent• Investment advisor• Lawyer• Others
Take referrals, put through interviews
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Who should be involved?– PARENTS– ASSET OWNERS– IF YOU OWN A BUSINESS - BUSINESS PARTNERS– HEIRS WORKING IN THE BUSINESS– HEIRS NOT WORKING IN THE BUSINESS– NON FAMILY BUSINESS PARTNERS– DAUGHTERS-IN-LAW & SONS-IN-LAW– ATTORNEY KNOWLEDGEABLE IN ESTATE PLANNING– FINANCIAL ADVISORS– INSURANCE ADVISORS– MANAGEMENT CONSULTANTS– LENDERS– MEDIATOR
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Scheduling a Family Meeting• SCHEDULING THE MEETING • How often meetings will be scheduled• Set specific beginning and ending times• Establish a standing agenda• How are items added to the agenda• How are emergency meetings scheduled• How is notice of meetings given• What constitutes a quorum• What happens if someone cannot attend
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
A Process of Decision Making• What criteria will be used;
Financial, values, production, time, family, etc.
• Who will make the decision; Owner/Parents, children, employees, advisors.
• How will decisions be made; Autocratic, democratic, consensus, collaboration.
• How will conflicts be resolved.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
MEETING GROUND RULES• Agree upon the role and authority of the facilitator.• Critique the message, not the messenger.• Everyone must listen to learn.• Do not interrupt. Practice good manners and model good behavior. • Discuss your emotions. Our emotions often drive our decisions. • Expect honest comments from others by being honest in your
comments.• Enthusiastically support decisions made at the meetings. • Trust the process to generate an estate plan that all will agree upon.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Important Considerations• TIMING- Choose the right time for making the decision.
Delaying a decision may be the same as not making a decision, however do not be rushed into making a decision.
• INFORMATION- Remember that there is never the right amount of information for making a decision. One always wishes that more information were available or one feels overwhelmed by the amount of information available.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Getting Started Getting Started • Determine what you own and how much it is
worth.
• Who do you want to receive your bounty?
• Review any past estate planning
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Vocabulary Activity
Take 10 minutes to complete vocabulary activity
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Estate Planning Steps
– Examination of how property is owned or held– Review of family insurance program– Advisability of lifetime gifting– Alternatives for disposing of property during life
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Property
• Real
• Personal
Classifying what you own
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Fair market value of real estate• You may be pleased!• May be one of your greatest stores of wealth
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Ownership
a). Fee simple, life estate, life tenants, leaseholds, remainder interestb). Tenants in commonc). Joint tenants with right of survivorship (car, bank account, simplified estate settlement)
Note: different states may have different forms of ownership
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Forms of Co-ownershipTenancy in common– Each tenant holds an undivided interest in the
property – Upon a tenant’s death, the interest passes in
accordance with the tenant’s will (or state law if no will)
– The decedent’s estate includes only the decedent’s interest
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Forms of Co-ownershipJoint tenancy– Passes by survivorship designation– Precludes use of life estate/remainder
arrangement as to non-marital portion of the estate
– Magic words of conveyance– Takes precedence over the will
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Forms of Co-ownershipTenancy by the entirety (Ex: not allowed in Iowa)– Husband and wife can together convey a fee
simple but neither can unilaterally sever the tenancy
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Estate Planning Implications of Property Ownership Forms
• Non-spousal joint tenancies– Property is taxed in the estate of the first to die
except to the extent the surviving owner proves contribution for its acquisition
– “Consideration furnished” rule– Property included in decedent’s estate receives
a new basis at death
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Estate Planning Implications of Property Ownership Forms
• Spousal joint tenancies– The property is treated at the first death as
belonging 50% to each spouse for federal estate tax purposes• “Fractional share” rule
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Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Important Considerations• Type of Asset– Inventory– Depreciable
• Machinery & Equipment• Permanent Improvements
– Real Estate• Land• Personal Residence
• Tax Basis
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
Financial Statement(Net Worth Statement)
(Balance Sheet)Now that you have inventoried all of your assets, you might just as well make a financial statement. It gives you your financial position as of a certain date.
Managing for Today and TomorrowBusiness, Succession, Retirement and Estate Planning for Farm and Ranch Women
John and MaryAssets:
House $50,0001993 Lumina $1500Personal property $10,000CD’s $20,000
Total assets $81,500
Liabilities:None
Assets $81,500Debts 0
Net worth $81,500