A few weeks ago, I blogged a top-five list of things to consider when creating an estate plan for a ranching operation. This spurred an email from Springdale, AK beef producer John Steen, who knows a thing or two about estate planning. While he always planned to take over the family cattle business, he took a job with Tyson more than two hours away from the ranch. He figured things would work themselves out eventually, but what he didn’t plan on was his father’s losing battle with cancer, which ended two years ago, leaving the ranch to his step-mom Linda and himself. I had the opportunity to follow up with Steen in response to his email, and he offered some insights and advice on the estate-planning process for producers to consider.
Steen said that while a will gives the best intentions of the recently deceased, it doesn’t always answer the tough questions for how these assets will be transferred to the ranch heirs. Having gone through this, Steen hopes to help producers across the country facing similar situations. His goal is to assist others going through a difficult time and to encourage producers to make a plan before it’s too late.
“I’m sure there are a lot of producers all across the U.S. in the same boat as me,” said Steen, who raises Charolais and Limousin cattle on a 700-acre ranch. “I never looked far enough ahead to make a concrete plan with my dad. He asked what my intentions were from time to time, but we never sat down to work things out. Then, it was too late. When my dad passed away, there it all was for me to face. I had to start making those big decisions that we should have made together."
Steen admitted that the questions he faced were overwhelming at times. Who gets the money from the first calf crop? Is there enough money to keep operating? Will we have to sell the business? Who gets the equipment? What is the next step? He said that nobody ever wants to plan for what happens after parents die, but it’s a conversation that ranchers have to have. His best advice is for families to put together a legal, binding document that puts everyone on the same page for what will happen to the operation. Once that is established, the tough questions for how it’s going to happen will start to be answered.
“Look at your options and keep yourself grounded. Know the cost of production, and be prepared to handle numbers that may be overwhelming to deal with at first. Remember, you’re not the first person to transition a family farm. You aren’t alone in the process. Others have succeeded and continued on.”
Currently, Steen is working on a book covering this topic in an effort to save folks the grief he had to endure upon taking over the family farm without a concrete plan in place. Steen’s book project will focus on the issues families face in having the conversation and making a plan for the future, before it's too late. Have you gone through a similar situation before? What advice do you have for others going through this process? What does the future of the cattle industry look like as operations change hands in the next 10 years?
There's a wealth of information on this topic in a special issue developed by the editorial staff of BEEF in 2007. Find that package of articles here. By the way, do you realize that while the federal estate tax exemption for 2009 was $3.5 million, it is completely repealed in 2010. However, in 2011, as the law is currently written, the exemption is reinstated at just $1 million with a 55% tax rate. At today's land values, it doesn't take much of a farm/ranch operation to eclipse $1 million. Be sure to protect yourself and your family against the unforseeable.