YOUR LAWYER AS A TEAM MEMBERWHAT DOES A LAWYER NEED TO KNOW

INFORMATION FROM ROBIN KLEMM, OSU MARSHA GOETTING, MSU PRESENTATION DESIGNED BY JOHN FOUTS, WSU AARON ESSER, WSU

January 17, 2008 Wenatchee, WA

AGRICULTURE YOUTH & FAMILIES HEALTH ECONOMY ENVIRONMENT ENERGY COMMUNITIES

PRESENTED BY AARON ESSER, WSU

WELCOME

You are the steward of a legacy that has a life of its own and a value beyond you

WELCOME

Who best can decide the next chapter in your family farm business?

o You o Uncle Sam

IF YOU WANT THE JOB, THAN YOU MUST

Not ignore problems Keep communication lines open Get help from advisors Develop a sensible plan Ask the hard questions

STEPS IN ESTATE PLANNING

1. 2. 3. 4. 5. 6. 7.

Initiate the discussion Take stock of the present Develop objectives Choose professional advisors Consider alternatives Implement the plan Review and modify

SUCCESSION PLANNING TEAM IS NOT A SOLITARY EXPERIENCE

Heirs Key non-family managers Advisors

Accountant Lawyer Financial planner Insurance specialist Planning facilitator

CHOOSING A LAWYER

Have you worked with a lawyer on anything? YES NO

Have you worked with a lawyer on estate planning?

YES

NO

CHOOSING A LAWYER

CHOOSING A LAWYER

CHOOSING A LAWYER

Farm succession planning is a specialized area, your current lawyer may not have the training or expertise to give you the help you need
They may think they know what theyre talking about but they dont necessarily

CHOOSING A LAWYER

Lawyer should have significant experience with multi-generational estate planning, family business structures, estate and trust tax issues
Look for one who has at least 10 years of experience in estate planning!

CHOOSING A LAWYER

Expertise Experience Trust Your past experiences Recommendations Do your research First free consultation

WORD ofMOUTH

WORD-of-MOUTH

Family members Trusted friend or neighbor Accountant

FIRST FREE CONSULTATION

This is a job interview!

Experience Costsmay be some negotiation!
Get it in writing

Dont be afraid to interview multiple candidates

Multiple generations

Gut instinct

PREPARING FOR A MEETING WITH YOUR LAWYER

Im an Agronomist!
Seed rates I too want Herbicide rates a list! Fertilizer rates Seed date Variety Tillage history Crop history Herbicide application history.

PREPARING FOR A MEETING WITH YOUR LAWYER

Gives you clarity and confidence Saves time, money, and frustration Enables your lawyer to best serve you Ensures the final product is complete and what you want Allows you both to get right to the work of succession planning

PREPARING FOR A MEETING WITH YOUR LAWYER

1.

2.

3.

PREPARATION

Personal information
Names Birth dates Addresses Occupations Social security numbers

PREPARATION

Real estate
Type of property Size Location Description Year acquired Cost How titled Market value

PREPARATION

Personal property (cost, value, ownership, how titled)

Vehicles Machinery Livestock Crop inventory Home furnishings Jewelry Art Antiques Personal items

PREPARTATION

Bank accounts
Name and location of institution Account numbers Exact names on accounts Balances How titled on signature card

PREPARATION

Stock, bonds and other securities

Description When purchased Number Exact name of owner Face value Costs

PREPARATION

Life insurance
Company and address Policy number Face amount and supplemental values Cash value and any outstanding policy loan Exact names of owner, insured and beneficiary

EXACT NAME!

PREPARATION

Trusts
Type Location Trustee Who established Exact name of beneficiary Value of trust property

PREPARATION

Notes, mortgages and other accounts receivable

Description Amount Year acquired Person who owes you Repayment plan

PREPARATION

Mortgages and other real estate debts

Description Creditor Due date Remaining balance Individual or joint responsibility? Insured?

PREPARATION

Liens against personal property

Description Creditor Due date Remaining balance Individual or joint responsibility? Insured?

PREPARATION

Other personal liabilities

Unsecured notes Notes endorsed Real estate taxes Personal property taxes State and federal taxes Unsettled claims creditor, due date, remaining balance, individual or joint responsibility?, insured?

PREPARATION

Retirement benefits
Pensions Profit sharing Deferred compensation Individual retirement accounts Social security Qualified domestic relation orders Amount invested Accrued benefits Annual benefits Death benefits

PREPARATION Other financial information

Income last year Current income Salary Qualified domestic relations orders Retirement income Annuities Rents Interest Bonuses Dividends Trust Capital gains

PREPARATION

Taxable gifts
Amounts When made

PREPARATION

Location of important documents

Wills Trust documents Deeds Insurance policies Stock and bonds Financial statements Income tax returns (last 5 years) Buy/sell agreements Conservation and easement agreements

PREPARATION

Location of important documents (continued)

Contracts, partnerships and corporation agreements Gift tax returns Profit sharing plans Marriage dissolution decrees Pre- and post-nuptial agreements Employment contracts Pension benefits Power of attorney Long-term leases

RELEVANT INFORMATION

Family chart (ages, marriages, special needs) Farm operations chart Who owns the farm & in what proportions Organizational chart (if more than farm business) Gifting & asset transfer strategies Long term care policies List of consultants and advisors and contact info. Working statement of net worth

COMMUNICATION

Have you asked each family member where they would like to see the family farm in 10, 20 years? What succession topics are easiest to discuss with family members? What topics are the hardest? Are you willing to get them on the table? Do you need a facilitator to help you?

THINK, PONDER, REFLECT

How do you want to adjust/equalize estate planning? What are your intentions for transfersale, gifting? What are the skill sets of my children, nieces, nephews, etc. who want to continue operating the farm? How do you groom them for ownership? Are there grandchildren that might be interested in the farm, and if so, how do you manage the interim until they are ready?

THINK, PONDER, REFLECT

You will want to plan:

Retirement specifics--$, activities, and ownership? Transition Transfer of ownership Timetable for transition Contingency (for death, divorce, disability)

DRAFT YOUR IDEAS NOTHING FANCY, JUST A STARTING PLACE

What is your vision for your family farm? How and when do you want to retire? Which family members are identified for succession? What do you want for the nonsuccessors? What is important to you about the succession process?

KEYS TO A GOOD WORKING RELATIONSHIP WITH YOUR LAWYER

Plan ahead Be prepared Communicate Trust

TRUST

Cannot be acquired, but only can be given

Questions?