Farm Transition
Generation transition and estate planning is really about stewardship.
“You do not owe your children an inheritance, but you do owe them a plan.”
According to attorney, estate planner and Harrisburg, Neb., rancher Pamela Olsen, those words sometimes offend the children of clients for which she provides counsel. Many of those clients are farmers and ranchers for whom estate planning or planning for generational transition of business ownership can be complicated.
Olsen talked about the mechanics of estate planning during Range Beef Cow Symposium XXV, hosted Nov. 28-30 in Cheyenne, Wyo. She talked about how she and her husband are raising three sons to be the fifth generation to operate their western Nebraska ranch. At least their boys will have the opportunity. She understands how important stewardship is to sustaining multigenerational farms and ranches.
“All of the topics on this symposium agenda are really about stewardship,” said Olsen, “and so is transition and estate planning. It’s just good stewardship.”
Olsen talked about tools for planning the continuation of a family farming or ranching business, emphasizing the need to develop a plan long before the estate owner’s death. She recommended establishing a timeline for transitioning control or management of the business, as well as transitioning ownership. She advised estate owners to consider whether heirs will be capable of managing the business.
Too often, lamented Olsen, heir-children spend most of their adult lives as “glorified hired hands,” never having any real management responsibility until their parents’ deaths thrust it upon them. The heirs may not have the needed skill sets and experience to be good stewards of the family business. A transition plan, with a timeline, can help parents equip heirs for the future.
Olsen said estate planning is necessary for determining distribution of assets, with consideration for surviving spouse, off-ranch heirs and on-ranch heirs having “sweat equity” in an operation. Estate planning also helps minimize federal and state estate taxes, avoid probate and save estate settlement costs.
“Get help and make a plan that you want,” advised Olsen. “If you don’t do something intentional, the state has a plan for you and will decide what happens to your estate. Either you think about this stuff and make a plan, or the state will do it for you.”
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