Virginia Cooperative Extension -- Farm Profitability & Succession Planning

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Presentation by Virginia Cooperative Extension's Tim Mize on Farm Profitability and Succession Planning. Presentation given at The Piedmont Environmental Council's "Sources of Funding for Land Management and Land Conservation" workshop on April 23, 2014.

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  • Many attorneys would say the ‘Power of Attorney’ is the most critical of the aforementioned documents. They are all important but Power of Attorney is the one we are most likely (statistically) to use first. Farm realestate most vulnerable. Medi-caid won’t pay till assets are sold
  • Virginia Cooperative Extension -- Farm Profitability & Succession Planning

    1. 1. Farm Profitability & Succession Planning Tim Mize Fauquier County, VCE
    2. 2. What is Cooperative Extension? • A local extension of the Land Grant Universities. • Nation wide. • 107 offices in the state of VA. • Program areas: – Agriculture and Natural Resources – Family and Consumer Sciences – 4-H Youth Development – Community Viability
    3. 3. Loss of farmland • Are farms retirement funds? • No dialogue between generations. • Unwilling to transfer management. • No willing future Participants.
    4. 4. Farm Profitability • Are farmers land rich and cash poor? • Farm real estate (land and structures) is the major asset on the farm sector balance sheet, accounting for 84 percent of the total value of U.S. farm assets. • 2 million to produce 20 million/reverse for farming.
    5. 5. Farm Profitability • Fauquier county- 12th biggest agriculture county in state. • Cattle calves is the #1 enterprise, 13th in state, 96th USA(3076)- 434 farms with cattle. • 78% farms have less than 50 cows, average 30? • Gross income- $26,686 (2009 19,356) – $13,136.23= $13,549.77 return to equity, management, and family labor. (50 cows $22,540) • 30 cows =75 acres, 50 cows=125 acres
    6. 6. Farm Profitability • What works for Fauquier? • Get big/ get efficient • Direct market/branded products • Niche/high value • Agritourism • Farms in the middle? 182 acres
    7. 7. Documents for your Estate: Pick the most important • Which is most important? • Advance Medical Directive • Will • Life Insurance Policy • Power of Attorney • Trust • Business Organization (LLC or Corp.) • Estate Tax Management Plan
    8. 8. Power of Attorney • We have a better than 70% chance of going through an extended period of incapacity before we die. • The Executor of your Estate has NO authority whatsoever as long as you are alive.
    9. 9. First Steps in Estate Planning • Owner(s) of the property need to decide what they want to become of the land. – What do I want to happen? – What do I need to happen? – What do I hope happens? – What do I fear may happen? • Establish mission statement/objectives/goals • Evaluate human resources. Be honest.
    10. 10. First Steps in Estate Planning • Communicate that decision: – What makes these conversations so difficult? • Perceived as ungrateful. • One side to the story. • Heritage and an asset. • Generations. • One Truth?
    11. 11. Have a family meeting • Write a shared family vision. • Write shared goals. • Seek the help of competent transition planners. • Maintain open communication. • Make no assumptions about the feelings or plans of others. • Of all the different parts of Estate Planning, the Family Meeting will be the most difficult in almost every single case.
    12. 12. Elements of Your Farm Transition Plan • Family Meeting • Financial Plan for Retirement and Long Term Care • A Plan with Defined Goals for Involving the next generation in our plans and the estate • Legal Instruments (PoA, Will, LLC)
    13. 13. • We all know that preserving our farms means more than permanently protecting the land. We also must ensure that families who want to pass their farms to the next generation have the knowledge and resources to accomplish this important goal.
    14. 14. Programs
    15. 15. Programs
    16. 16. Programs

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