Ties to the Land Succession Planning for Livestock

Ties to the Land Succession Planning for Livestock (and other Ag. ) Producers Bart Eleveld, OSU Extension Economist USDA—Risk Management Agency Private Lands Committee

Outline for the day • • 9: 30 10 am Registration/Check-In Case Example Ranch and Financial Analysis – Bart Eleveld, Oregon State University • 10: 30 Succession Planning Process, Fair vs. Equal, Conflict Resolution – Steve Hopkins and Doug Sippel, Titan Financial Associates • 11: 15 Appraisal, Valuation Discount Issues – Randy Guyer, CPA • • 12 noon 12: 30 Lunch Land Trusts – Frank O’Leary, Oregon Rangeland Trust • 1 pm Legal Issues—LLC, FLP, Buy-Sell Agreements – George Guyer, Attorney • 1: 30 Charitable Remainder Trusts – Harold Weight, Multiplan Financial Services • • 2: 15 3: 00 Panel Discussion, Q&A Closing and Evaluations

Succession planning ≠, > Estate Planning • Need to think about what happens if you live as well as what happens if you die • How to transfer control, decision making and operation of the business if that is an objective • If the business is not to continue, who gets what, and when?

Inventory of the Legacy: Case Study and Financial Analysis Of Future Alternatives Dr. Bart Eleveld Extension Economist, Farm & Ranch Management Agricultural & Resource Economics Department

Ray and Reba Rancher • Ray and Reba are mid 60’s, still active on ranch but moving towards retirement. • Reba had full-time job with no retirement benefits, Max had parttime job in winter. • 3 children, aged 36 – 41. • 800 Cow-calf pairs • 400 ac. Irrigated alfalfa • 100 ac. Winter wheat rotation crop • 300 ac. Native grass hay (baled) • 100 ac. Irrigated pasture • 3500 ac. Deeded rangeland • 4650 AUM Public rangeland pasture

Family Dynamics • Ray and Reba want to ease into retirement but stay on ranch. – Have started drawing SS – Fairly good health for now. • Oldest son, Ray Jr. (41), joined ranch management after college graduation. – Divorced from Rosie (39) and has 3 kids, aged 10 – 14. Oldest already works on ranch and wants in someday. • Second son, Roy (37), has professional career in NYC, is estranged from family. • Daughter Rita Wrangler (36), married to Rudy who has professional, 6 figure income. – Has daughter (12) who is interested in ranching. – Lives in town, but wants to have a house on the ranch.

Current Financial Status • Balance Sheet is pretty healthy but cash flow and income is tenuous. • Current ratio = 1. 88 • Farm debt to asset ratio = 37% (33% total) • Farm equity to asset ratio = 63% • Rate of return on farm assets = 1. 7% • Term debt coverage ratio = 103%

Balance Sheet (Details in hand-out)

Income and Cash Flow (Details in Handout) YMMV !!!

Resources for Balance Sheet Income Statement & Cash Flow • FINPACK financial analysis software – Center for Farm Financial Management @ U. of MN. – Does balance sheet plus feasibility and cash-flow budgeting for whole farm/ranch management plans – Free trial download available: • http: //www. cffm. umn. edu/ – Can “rent” an annual license for ~ $100/yr. • 2 spreadsheet formats – Montana State University’s – OSU/WSU Integrated Financial Statements – Both on Succession Workshop website: • http: //arec. oregonstate. edu/succession. html

Prineville Keywords • Mellow • O on h (brand? ) • Blank— 11 several pasture • Alder • Blue & red • Key • Family • Lock & key • • Saving the ranch MAC Angus 1 Midori JCN Ford 250 Sukey

Baker City Keywords • • • Blank—(211 wheat) Blackbulls Sam Blank—(221 Potatoes/cattle) Forty seven Z Blitz Bing 01 ? ? Kathryn Sutton • • • 10 dalton Badger Busy Gus )( HD host (or Lost) Red Rock Dogger Cooper 50

Burns/Hines Keywords • • Covert Steers Rodeo 1 Plan Family Ruby Lyle ? ? ? Rex • • • Cottonwood Hank CAB Iris Lester Blank— 420 cattle Blank— 420 beef Meat hook cattle

Klamath Falls Keywords • • Blank— 110 hay grain Rabbit BVR Maxcat “? ” FPI Blank— 220 cattle Tyler • • Marie Wheatgrass Angus Roseblossem 21 Molly Gramma Hereford

Eugene Keywords • • • SLF Symphony Extension Diamond 2 Beef G&C Farms 2 Horse Blank—(411 Beef/Timber) Diamond Heritage • • • Jake Bellatrace Hermitage Douglas Fir Ponderosa Pine Oscar dog Calpooia Checkers Kieth Red 1