While often difficult, estate planning crucial to farm, land transition
By SEAN CLOUGHERTY
(Feb. 14, 2017) When Paul Goeringer gets to the slide in his presentation on estate planning with a picture of Snoop Dogg, he said he usually gets some strange looks from the audience.
“Then I explain why I’m using it and then they’re like, ‘Oh, that makes sense,’” he said.
Goeringer, University of Maryland Extension legal specialist, said after the rapper made headlines for refusing to have a will or any estate plan, he uses his photo and what he now calls “the Snoop Dogg approach” to drive home to farmers the importance of having a plan for transitioning their farm and farmland to family members and other heirs.
While farmers may not be as adamant about not having a plan, the personal and often difficult discussions estate planning requires of a family are a big reason many haven’t done it.
“It’s just a sensitive topic. People don’t like to thing about their own mortality,” Goeringer said. “The kids may not want to think about their parents being gone.
“A lot of it is just figuring out a way to talk about it.”
Even with its challenges, farmers in general have recognized the importance of needing a plan.
When the University of Maryland’s Agricultural Law Education Initiative did an assessment in 2013 of farmers’ legal needs in the state, help with estate planning ranked in the top five.
But on an individual basis, Goeringer said it’s often something farmers and non-farmers alike tend to put off.
“I rarely get inquires on it until problems are developing,” he said. “Part of our goal is to end some of that and get them to start earlier.
It’s certainly not a new topic; Extension has held workshops for years educating farmers about options they have in protecting their farm businesses and land for a younger generation to takeover safely.
But with some 90.5 million acres nationally set to change hands by 2019 according to the USDA’s Economic Research Service, those involved in the education and outreach efforts say it’s no less important to talk about.
“It’s never to soon to start planning,” said Laurie Wolinski, and University of Delaware Extension agent and director of the Northeast Extension Risk Management Center. “The farmers can’t hear this just one time. They have to hear it over and over again.”
Wolinski and Dan Severson, Extension ag agent for New Castle County, recently wrapped up a series of workshops in Delaware focused on estate planning. The workshops focused on ways to open up the lines of communication between family members, forming a mission statement and options in business planning.
“If you talk to most people, that’s the hardest thing is to open the lines of communication between generations,” Severson said, who added he views estate planning as important as farmland preservation programs. “I just hate to see families lose farms just because of a lack of communication.”
Resources used in the workshops are available online at http://extension.udel.edu/ag/agribusiness/farm-succession-and-estate-planning.
In Maryland, the AELI holds workshops around the state on the topic.
“Every year, we’ll hit at least one county in each region,” Goeringer said. “We’re one of the ways trying to at least get farmers to think about what they want to do. These workshops are an opportunity to get into the mindset to think about what they want before they have the talk.”
Recently, farmers in Delaware heard the message from one of their own, when Ken Wicks took the podium at the Delaware Agriculture Industry Dinner.
As the longtime president of the Delaware Council of Farm Organizations, which hosts the annual dinner, Wicks, whose mother, Margaret Wicks, died in March last year, saw the gathering of hundreds of farmers as a good opportunity to urge those who still need to set up a transition plan to get started.
Having just gone through the process of settling his mother’s estate, Ken told the crowd that while it wasn’t easy, not having a transition plan in place would have made a difficult time for their family much harder.
“You just hear the stories of different farmers out there and it’s heartbreaking,” Ken said days later in the farm office at his and brother Chris’ Lazy Boy Farm in Townsend, Del. “There’s a lot of farms that have no planning done. We had just gone through it. It’s truly been seamless.”
Chris and Ken’s parents started their planning process decades ago, first going to Extension meetings.
“They took it upon themselves to go to meetings and start the process,” Ken said. “From there, they found different attorneys and advisors through the University of Delaware Extension.”
After rounds of meeting with attorneys, their plan involved shifting the farm business from a sole proprietorship to an incorporated entity.
After Margaret’s husband, Christopher Sr., died, conversations began between Chris and Ken and their mother about the farmland she owned and how best to keep it in the family.
The sons feared as it was set up then, neither they or their two siblings not involved in the farm would be able to hold onto it.
“In order to pay the taxes, we’d have to sell the property,” Chris said. “Nobody was able to foot the bill on the taxes outright. Even he (Ken) and I had our doubts whether we could hold onto it,” Chris said.
Their choice was to create a separate Limited Liability Corporation for the farmland.
“It isolates it much better,” Chris said. “No one can force the other to sell.”
Ken said even with the help of Extension experts and a patient and dedicated attorney, the process was still fraught with frustration.
“It took years, it wasn’t an easy thing,” he said. “They’re tough conversations. You’re talking about mortality.”
The Extension experts agree the process takes time and money family members may not want to spend but the results beat the alternative of leaving the decision making to the government.
“If you don’t have it, the state has a plan for it and you may not like the way they work,” Goeringer said.
And Severson said though starting the conversation with family is often the biggest hurdle, making progress is crucial.
“Just talking about it doesn’t mean it’s going to happen. Staying on task is a big part of it,” he said.
With a plan established, Goeringer said families can revisit it as issues arise but also recommends having an annual meeting to make sure everyone is still in agreement.
“You try to get them to understand it’s a living document, Periodically it has to be watered and fed,” Goeringer said.
At Lazy Boy Farm, Chris’s son Michael joined the operation nine years ago and Ken’s daughter, Anna, is studying agriculture at the University of Delaware and active one the farm.
Chris and Ken said though the plan for transitioning the farm from their parents to them worked well, it may not be the best route to take in doing it again.
“It’s almost like starting over,” Chris said. “It’s a continuous process.”