Have You Prepared for Your Farm Business for Life After You?

by David Marrison, Associate Professor & Extension Educator

During the past winter, one of the farm management workshops we conducted across Ohio was the “Passing on the Family Farm” series.  In fact, almost 400 individuals were able to attend these workshops and other special presentations to learn how to plan for the future of their farms.  These workshops were a great way for families to grow together by develop a farm succession game-plan and to begin to have crucial conversations.

Each farm family is different in regard to its goals for transition planning. Family dynamics, physical resources, financial position, and managerial styles vary from operation to operation.  As farmers plan to transfer the family business to the next generation, there are a myriad of decisions to be made. One of the most difficult is determining how to be fair to off-farm heirs without jeopardizing the future of the heirs who have remained with the family business. Other decisions include deciding who will manage the business in the future, how to distribute assets, how and when the senior generation will retire, and how the business will deal with the unexpected.

So has your family discussed the future of your farm business?  Seven years ago this May, our dairy farm was rolling along nicely and then my father was diagnosed with pancreatic cancer.  My dad fought a courageous battle against this disease for seven weeks before passing away. His diagnosis came right during planting season which is one of the busiest times on a farm.

Two of the major questions I pose in our farm succession workshops are “What knowledge would you need to pass on if you knew you had only 2 months to live?” and “How would your farm react to the loss of the principle operator?”   As you jump in the tractor this spring, I challenge you to think about the future of your farm.  Many of us do our best thinking in the tractor, so challenge yourself to think about what knowledge and skills need to be transferred to the next generation so they can be successful without you.

Opossum Approach – I have often said the senior generation should “play possum” during planting or harvest season.  What does this mean?  Just as an opossum plays dead, so too should the principle operator.   Take an unannounced week away from the farm during one of the busiest times of the year for your farm and allow the junior generation to take over with no communication from the senior generation.  I know this sounds crazy but how else will you know what knowledge and skills have been transferred and which ones still need to be?  It is a lot easier to come back after a short vacation and be able to answer the questions your son or daughter has.  You won’t have this opportunity when you pass away.

365 Day Challenge- Outside of using the opossum approach, it should be the goal of the senior generation to transfer at least one knowledge point or skill to the next generation each day.  In fact, have you asked the next generation what they need to be schooled up on? It is a great idea to ask the next generation what additional responsibilities they believe they should be taking on and what changes they would like to see made for them to be successful in the future.  Have you completed a skills assessment with each son or daughter to see what training they need to be successful in the future?

Our farm succession team is here to help you. In addition to our one day or two day workshops, we are also available to speak at other events and to conduct kitchen-table meetings with your farm family.  If you are interesting in learning more about how to successfully transition your farm to the next generation, please email me at marrison.2@osu.edu and I will be happy to dialogue with you! Our team also has a series of factsheets on farm transition planning and other planning documents available for your use.

 

Ohio Legislature Changes Transfer on Death Designations Following Certain Life Events

By: Peggy Kirk Hall, Asst. Professor, Agricultural & Resource Law

This is a re-post from the original article posted at: http://aglaw.osu.edu/

Many Ohioans choose to avoid the probate process by using a transfer on death designation. Since 2000, Ohio has permitted property owners to use transfer on death designations to transfer property upon the owner’s death. Since 2009, Ohio law has required property owners to make transfer on death designations by using an affidavit instead of a survivorship deed. Under a new Ohio law, transfer on death affidavits may automatically terminate after certain life events.

The new changes took effect on December 13, 2016 when the Governor signed Senate Bill 232 into law. Under Senate Bill 232, a transfer on death designation made either by a deed or by an affidavit to an owner’s spouse terminates if the property owner obtains a divorce, dissolution, or annulment.  The new law applies to new and pre-existing transfer on death designations.

Because the law applies to pre-existing transfer on death designations, it may be a good time for property owners to revisit their estate plans. Property owners should be aware of the effect of divorce, dissolution, or annulment on their transfer on death designations.

The Ohio Legislative Service Commission’s analysis of Senate Bill 232 is available at: https://www.legislature.ohio.gov/download?key=5461&format=pdf

More information on transfer on death designations is available from the Ohio State Bar Association at: https://www.ohiobar.org/ForPublic/Resources/LawYouCanUse/Pages/LawYouCanUse-195.aspx

Planning for the Future of Your Farm Workshop to be held in Darke County on February 15 & 22, 2017

By Sam Custer, Darke County Extension Educator

Darke County – OSU Extension will be hosting a farm success and estate planning workshop titled “Planning for the Future of Your Farm” on Wednesday, February 15 & 22, 2017 from 9:30 a.m. to 4:00 p.m. at Romers located at 118 East Main Street in Greenville, Ohio.   If you are thinking of how and when to transfer your farm business to the next generation, then this workshop is one which you will not want to miss.

This intensive workshop is designed to help farm families develop a succession plan for their farm business.  Attend and learn ways to successfully transfer management skills and the farm’s business assets from one generation to the next.  Learn how to have the crucial conversations about the future of your farm.  This workshop will challenge farm families to actively plan for the future of the farm business.  Farm families are encouraged to bring members from each generation to the workshop. Plan today for the future success of your family business!

The featured speakers for this event will include: Robert Moore, Attorney at Law, Wright & Moore Law Company; Peggy Hall, Assistant Professor for the OSYU Agricultural & Resource Law Program; David Marrison, Extension Educator for Ashtabula County; and Sam Custer, OSU Extension Educator for Darke County.

Registrations are limited to the first 60 persons.  The fee for this workshop is $40 per person with a registration deadline of February 8, 2017.  The fee includes lunch and program materials.  This workshop is sponsored in part by Second National Bank and Greenville National Bank.  More information about this program can be obtained by calling Sam Custer at the Darke County Extension office at 937-548-5215 and a program flyer can be found at: http://darke.osu.edu/events/farm-transition-succession-workshop.

Planning for the Future of Your Farm Workshop to be held on February 14, 2017 in Medina, Ohio

By Ashley Kulhanek, Medina County Extension Educator

OSU Extension will be hosting a farm success and estate planning workshop titled “Planning for the Future of Your Farm” on Tuesday, February 14, 2017 from 9:30 a.m. to 4:00 p.m. at the Medina County Extension office located at 120 West Washington Street in Medina County.  If you are thinking of how and when to transfer your farm business to the next generation, then this workshop is one which you will not want to miss.

This workshop is designed to help farm families develop a succession plan for their farm business.  Attend and learn ways to successfully transfer management skills and the farm’s business assets from one generation to the next.  Learn how to have the crucial conversations about the future of your farm.  This workshop will challenge farm families to actively plan for the future of the farm business.  Farm families are encouraged to bring members from each generation to the workshop. Plan today for the future success of your family business!

The featured speakers for this event will include: Robert Moore, Attorney at Law, Wright & Moore Law Company, David Marrison, Extension Educator for Ashtabula County and Ashley Kulhanek, OSU Extension Educator for Medina County.  The fee for this workshop is $25 per person with a registration deadline of February 3, 2017.  The fee includes lunch and program materials. More information about this program can be obtained by calling the Medina County Extension office at 330-725-4911 Ext 106 and a program flyer can be found at: http://medina.osu.edu/events/planning-future-your-farm-succession-planning

USDA Makes it Easier to Transfer Land to the Next Generation of Farmers and Ranchers

DES MOINES, Iowa, Dec. 29, 2016 – Agriculture Deputy Under Secretary Lanon Baccam today announced that beginning Jan. 9, 2017, the U.S. Department of Agriculture (USDA) will offer an early termination opportunity for certain Conservation Reserve Program (CRP) contracts, making it easier to transfer property to the next generation of farmers and ranchers, including family members. The land that is eligible for the early termination is among the least environmentally sensitive land enrolled in CRP.

This change to the CRP program is just one of many that USDA has implemented based on recommendations from the Land Tenure Advisory Subcommittee formed by Agriculture Secretary Tom Vilsack in 2015. The subcommittee was asked to identify ways the department could use or modify its programs, regulations, and practices to address the challenges of beginning farmers and ranchers in their access to land, capital and technical assistance.

“The average age of principal farm operators is 58,” said Baccam.  “So, land tenure, succession and estate planning, and access to land is an increasingly important issue for the future of agriculture and a priority for USDA. Access to land remains the biggest barrier for beginning farmers and ranchers.  This announcement is part of our efforts to address some of the challenges with transitioning land to beginning farmers.”

Baccam made the announcement while touring the Joe Dunn farm in Warren County, located in central Iowa near Carlisle. Dunn is the father-in-law to Iowa native and former Marine Aaron White, who with his wife, are prospective candidates for the early termination program.  Baccam was joined by Farm Service Agency Iowa State Executive Director John Whitaker when meeting with Dunn and White.

“The chance to give young farmers a better opportunity to succeed when starting a farming career makes perfect sense,” said Baccam. “There are Conservation Reserve Program acres that are rested and ready to be productive, an original goal of CRP. The technical teams at USDA will tell us which ones can terminate from the program with little impact on the overall conservation efforts. When they do, we’ll be ready to help beginning farmers like military veteran Aaron White.”

Normally if a landowner terminates a CRP contract early, they are required to repay all previous payments plus interest.  The new policy waives this repayment if the land is transferred to a beginning farmer or rancher through a sale or lease with an option to buy.  With CRP enrollment close to the Congressionally-mandated cap of 24 million acres, the early termination will also allow USDA to enroll other land with higher conservation value elsewhere.

“Starting the next generation of farmers and ranchers out with conservation and stewardship in mind is another important part of this announcement,” Baccam said.  “The land coming out of CRP will have priority enrollment opportunities with USDA’s working lands conservation programs through cooperation between the Farm Service Agency and the Natural Resources Conservation Service.”

Acres terminated early from CRP under these land tenure provisions will be eligible for priority enrollment consideration into the CRP Grasslands, if eligible; or the Conservation Stewardship Program or Environmental Quality Incentives Program, as determined by the Natural Resources Conservation Service.

According to the Tenure, Ownership and Transition of Agricultural Land survey, conducted by USDA in 2014, U.S. farmland owners expect to transfer 93 million acres to new ownership during 2015-2019. This represents 10 percent of all farmland across the nation. Details on the early termination opportunity will be available starting on Jan. 9, 2017, at local USDA service centers. For more information about CRP and to find out if your acreage is eligible for early contract termination, contact your local Farm Service Agency (FSA) office or go online at www.fsa.usda.gov/crp. To locate your local FSA office, visit http://offices.usda.gov/.

Since 2009, USDA has invested more than $29 billion to help producers make conservation improvements, working with as many as 500,000 farmers, ranchers and landowners to protect over 400 million acres nationwide, boosting soil and air quality, cleaning and conserving water and enhancing wildlife habitat. For an interactive look at USDA’s work in conservation and forestry over the course of this Administration, visit http://medium.com/usda-results.

Western Ohio 2017 Agriculture Outlook Meeting

by Sam Custer, Extension Educator

What does 2017 look like for Western Ohio farmers and agricultural businesses?

Learn what to expect this year during an agricultural outlook meeting February 3 at noon presented by agriculture economists and swine specialist with the College of Food, Agricultural, and Environmental Sciences at The Ohio State University.

The presentation is part of the 2017 Agricultural Policy and Outlook series offered by The Ohio State University Extension, the outreach arm of the college. The meeting is being hosted by the Agriculture and Natural Resources Educators from Auglaize, Darke, Miami, Mecer and Shelby Counties.

The meeting is partially sponsored by Farm Credit Mid America Merchants Bank of Indiana, Minster Bank, Second National Bank, The Andersons and Ohio’s Country Journal and Ohio Ag Net.

The meeting will feature presentations on matters the agricultural community should expect in 2017, including policy changes, key issues and market behavior with respect to farm, food and energy resources, and the environment, said Sam Custer, OSU Extension, Darke County Educator.

“Participants can listen and learn from Ohio State faculty as they discuss the opportunities and challenges for the agricultural sector as well as interpret the impact of recent policy decisions,” Custer said.

Speakers for the outlook meeting are:

Dale Richer, State Swine Specialist, OSU Extension

Carl Zulauf, Professor Emeritus, Ohio State University

Barry Ward, Asst. Professor, OSU Extension, Production Business Management

David Marrison, Assoc. Professor, OSU Extension

What we’ll cover:

  • Ohio Swine Production Update
  • Speculation on President Trump’s Policy Agenda
  • Examining Land Values, Cash Rents, Input Costs & Potential Crop Profitability in 2017
  • What Are Grain Markets Telling Us?
  • Farm & Estate Tax Laws – Planning for an Uncertain Future

“These presentations will provide excellent information and insights that will benefit farmers and agricultural leaders as they make plans for 2017 and beyond,” Custer said.

The meeting will be held at the Romer’s Party Room, 118 East Main Street, Greenville, Ohio.

Registration for the meeting is $20 (includes lunch) by January 27.  A registration flyer can be downloaded at http://go.osu.edu/2017darkeagoutlook.

For more information about the meeting, contact Custer at custer.2@osu.edu or 937.548.5215.

 

For more detailed information, visit the Darke County OSU Extension web site at www.darke.osu.edu, the OSU Extension Darke County Facebook page.

A New Retirement Account Option for Farm Households

By: Todd Atkinson, Farm Service Agency Director of External Affairs and Jamal Habibi, U.S. Department of the Treasury Director of Outreach, Office of Domestic Finance

Source: http://blogs.usda.gov/2016/12/20/a-new-retirement-account-option-for-farm-households/

In agriculture, retirement can mean something quite different compared with other U.S. households. Often, our parents and senior relatives on the farm or ranch are far from “retired,” and, in fact, remain active participants in daily operations and decisions.

Financially, retirement in agriculture can be different, too. Compared to the general population, farmers and ranchers have a distinctive combination of assets, income sources, and saving habits, with large percentages of their financial portfolios intertwined in the business equity, all which must be carefully considered when planning for intergenerational transfers, and while generating and maintaining retirement income.

As for actual savings accounts, while 60 percent of all households nationwide participate in some type of a retirement account, just 40 percent of eligible farm households do. In fact, only 7 percent of farmers and ranchers contribute to the types of Individual Retirement Accounts (IRA) that can provide helpful tax advantages, with just 3 percent of the general population having an IRA.

That’s why the U.S. Department of the Treasury recently launched a new tool, known as myRA, for anyone interested in a simple, safe, understandable, and affordable method to start saving for retirement.

It costs nothing to open an account, there are no fees, and contributions are invested in a U.S. Treasury security that safely earns interest. You can contribute as little as a few dollars each month, or even create automatic contributions from your bank account or paycheck, up to $5,500 per year. When you’re ready, you can roll over these savings into a private sector Roth IRA at any time to continue growing your savings.

The myRA is not intended to replace existing employer-sponsored retirement plans, such as a 401(k) plan, because those accounts may offer special incentives like an employer matching payment. But if you don’t have access to a retirement savings plan, or excessive fees and complicated investment options are daunting, or perhaps you would like the younger members of your family to have better retirement awareness, then the U.S. Treasury’s myRA savings account might be an option for you?

Even if your future goal is to receive on-farm income, inheritance, or varying degrees of off-farm income such as social security, rental income, or veterans benefits, a myRA account still may be a helpful addition to your portfolio. Plus it is never too early to start saving: if you are 18 or older, not a full time student, and not a dependent, you are eligible.

So as the holidays approach, and the year nears its end, perhaps a new myRA could be a great way to take that first step towards building, or complementing, that retirement nest egg. To learn more about the program and its beneficial tax attributes, visit myRA.gov.

OSU Extension to Hold Women in Agriculture Program on Saturday, January 28, 2017 in Ashtabula County

The Ashtabula County Extension office is pleased to announce to be hosting a “Women in Agriculture” Program on Saturday, January 28, 2017 from 9:00 to 3:30 p.m. at the Ashtabula County Extension office located at 39 Wall Street, in Jefferson, Ohio.

This program is for women who are involved in the many different aspects of agriculture found in northeast, Ohio. This meeting will be our kick-off for a regular program schedule for women involved in agriculture.

Join women for a day of networking and learning about the factors which can make your business thrive. Learn more about personalities and how to work with others. Learn more about goal setting, mission statements, and improving family communication.  Together we will plan for a Women in Agriculture Program Series for 2017. Come help us plan for future programs.

Featured speakers include:

Emily Adams, Agricultural & Natural Resources Extension Educator for Coshocton County;

Abbey Averill, 4-H & Ag Program Assistant for Ashtabula County, and

David Marrison, Agricultural & Natural Resources Extension Educator for Ashtabula County.

Pre-registration is requested by Wednesday, January 18, 2017.  The cost is $20 per person and includes lunch, snacks and program handouts.  More information can be obtained by contacting Abbey Averill at the Ashtabula County Extension office at 440-576-9008.

A program flyer can be also be found at: http://go.osu.edu/ne-events

 

Ag Outlook and Policy Meeting to be held on February 2 in Wooster, Ohio

So what’s ahead for farmers and Ag businesses in 2017?  OSU Extension invites producers to attend the Ag Outlook and Policy meeting on Thursday, February 2, 2017 from 9:30 a.m. to 3:15 p.m. at the Fisher Auditorium OARDC located at 1680 Madison Avenue in Wooster, Ohio. A wide variety of experts will be on hand to share their agricultural outlook for 2017.

The following presentations will be made during the program:

Speculation on President Trump’s Policy Agenda and What Are Grain Markets Telling Us?- By: Carl Zulauf, Ag Policy Specialist and Professor Emeritus from The Ohio State University will provide “

Dairy Economic Update- By: Dianne Shoemaker: OSU Extension Dairy Production Economics Field Specialist

Beef Cattle Outlook- By: John Grimes: Extension Beef Program Specialist

Ten Legal Trends That Could Change Agriculture- Peggy Hall: OSU Extension Ag Law and Resources Program

Crop Budget and Cropland Rental Update- Rory Lewandowski: Extension Educator Wayne County

Farm & Estate Tax Laws – Planning for an Uncertain Future- David Marrison: Extension Educator Ashtabula County

This program is being sponsored by OSU Extension, Farmers National Bank, and Farm Credit.  The registration cost is $15 per person with the deadline of January 26, 2017. Make checks payable to OSU Extension. Please send checks and registration to: OSU Extension- Wayne County, 428 W. Liberty Street – Suite 12, Wooster, Ohio 44691.  More information can be obtained by calling the Wayne County Extension office at 330-264-8722 or email Rory Lewandowski at Lewandowski.11@osu.edu

Planning for the Future of Your Farm Workshop to be held on January 18, 2017 in Jefferson, Ohio

OSU Extension will be hosting a farm success and estate planning workshop titled “Planning for the Future of Your Farm” on Wednesday, January 18, 2017 from 9:30 a.m. to 4:00 p.m. at the Ashtabula County Extension office.  If you are thinking of how and when to transfer your farm business to the next generation, then this workshop is one which you will not want to miss.

This workshop is designed to help farm families develop a succession plan for their farm business.  Attend and learn ways to successfully transfer management skills and the farm’s business assets from one generation to the next.  Learn how to have the crucial conversations about the future of your farm.  This workshop will challenge farm families to actively plan for the future of the farm business.  Farm families are encouraged to bring members from each generation to the workshop. Plan today for the future success of your family business!

The featured speakers for this event will include: Robert Moore, Attorney at Law, Wright & Moore Law Company and David Marrison, Extension Educator for Ashtabula County.  The fee for this workshop is $20 per person with a registration deadline of January 11, 2017.  This class will be limited to the first 40 registrants.  The fee includes lunch and program materials. More information about this program can be obtained by calling the Ashtabula County Extension office at 440-576-9008 and a program flyer can be found at: http://go.osu.edu/ne-events