Senior Partners - 4

Hire a Quarterback for Your Estate Plan

Elizabeth Williams
By  Elizabeth Williams , DTN Special Correspondent
Alan Hojer works as a legacy consultant with Keep Farmers Farming, a division of First Dakota National Bank in Yankton, S.D. The bank was frustrated that too many farmers failed to complete estate plans. (DTN photo by Elizabeth Williams)

YANKTON, S.D. (DTN) -- Farmers can spend years attending estate planning seminars and reading magazine articles about succession planning. Then decisions often devolve into all talk and no action.

What frustrated Nate Franzen, president of the agri-business division at First Dakota National Bank in Yankton, S.D., is that so few farmers moved to the implementation stage. His bank's agriculture advisory board suggested farmers needed a service to help them walk through each step of the process. They started a program in May.

"My dad and I talked about it for years," said Steve Eichacker, a Salem, S.D., farmer who is in the Keep Farmers Farming program at First Dakota National Bank. "We knew we needed to do something about our estate plan. We'd say we'll visit about it 'next week' but that never happened."

Steve and his wife, Cathy, are now midway through the estate planning process which they started in September. What makes the First Dakota National program unique is it walks families through the process step-by-step.

"They do all the leg work, making sure ownership titles are transferred and they take the paperwork to the county register of deeds," explained Eichacker. "When you sign up with these guys, you know it's going to happen."

Alan Hojer, First Dakota National Bank's legacy consultant, agreed. "Our goal is to help them find peace of mind. It's really that simple," he said.

A handful of agricultural succession and estate planning consultants nationwide walk farmers through the entire process start-to-finish, but they are rare. Besides affiliations with some banks and Farm Credit institutions, providers include psychologists and family business advisers. Fees can vary widely among consultants. But cost should not be the main determining factor. How complicated and large your operation is and family dynamics all play into the consultant's bill.

Johnne Syverson, a fee-only succession and estate planning consultant with Transition Point Business Advisors in West Des Moines, Iowa, said you want to find a consultant who will act as the "quarterback" of a complete collaborative team which includes the farmer's current advisers (such as lawyer and CPA). This quarterback then manages the team to orchestrate the process, not push a product.

"If a so-called 'consultant' has a 'package' to sell you, whether it's a certain type of trust or life insurance policy, that's not the consultant you need," warned Syverson. "Certain less-than-qualified life insurance agents are jumping on the need out there offering 'planning' services at no charge and do not have the expertise that is needed. They end up selling the farmer a large policy and leave the rest of the planning undone," said Syverson. "If all you have is a hammer, everything looks like a nail!"

Syverson's company first interviews everyone in the family, including spouses and key personnel. He then surveys the personality traits of all the key stakeholders in the farm business, while also analyzing the farm's financial and legal documents for complete understanding. He then works with all the farmer's professional advisers to discuss options that can work for that farmer's individual situation.

"The process can take a year," noted Kevin Mills, an estate planning/family business consultant with Kennedy and Coe in Kansas City. "The important thing is keeping the farm together for most families," added Mills. That takes time, expertise and implementation.

First Dakota's legacy team first helps families define what they want to accomplish, then moves forward with the how. "We go through an in-depth discussion about the family's wishes, legacy, background of their farm, size of estate and the family tree. We find out what they want and how they want to achieve that," explained Hojer. "We spend a lot of time defining the legacy they want to leave and how it applies to their children both on and off the farm."

It's not easy for some farmers to get to this step. "One client wouldn't even look me in the eye when we shook hands at first," Hojer recalled. "The farmer said, 'I can't believe it has come to this -- I need to ask for help to help ensure that my kids will get along on the farm.' I told him he was normal and experiencing growing pains like many farm families. But he was also above the norm because he was taking the initiative to lead his family through this difficult period. It's just so hard to get farmers to talk."

Joe Kluender, an agricultural business consultant, started Farm Family Dynamics in Mankato, Minn., because he saw farm families needed someone to help facilitate estate plans and exit strategies for retiring farmers and to work on strategic planning.

"There are a handful of independent consultants out here who specialize in agricultural transition planning," said Syverson. In addition to Kluender, colleagues such as Dick Wittman with Wittman Consulting in Culdesac, Idaho, and Barb Dartt with GROW: The Family Business Advisors in Olivet, Mich., collaborate with him.

Wittman has been advising farm clients on succession for over 30 years and now focuses on family business consultant training. He encourages farmers to make a clear distinction between estate planning and succession planning. "Many farmers do this backwards," he said. "They start out focusing on estate planning tools and strategies for minimizing estate tax."

Wittman encourages farmers to start the process by convening family meetings to address questions like: What are everyone's goals? What is the vision for this business for future generations? Are there potential successors who share a common vision and values and can work together? Who wants to work in the business? Who is interested in owning farm assets or an interest in the business beyond our tenure?

"Once answers to these questions are vetted, farmers can convene advisers to define succession and estate planning implementation strategies that optimize everyone's goals," Wittman said.

After the farm family agrees to work on a plan, First Dakota's consultant puts together a report summarizing what the farm couple wants to do. After the farm couple approves it or makes changes, the consultant accompanies the couple to meet with an attorney (either recommended by the bank or the client's attorney).

"The estate attorneys really like the report we put together. It saves them a tremendous amount of time," explained Franzen.

The bank's legacy consultants know how to put the farmer's wishes in specific legal terms and can phrase an attorney's question in words the farmer understands. "We all have our own elements -- our own way of talking and thinking about things," said Hojer. "We are there to reduce the intimidation factor when talking with an attorney that the farm couple may not have met before." Not all lawyers do farm estate plans and expert advice is key to a successful plan.

Communication is one of the biggest problems with families who need to go through the estate planning process. "What we've found is once they get a plan together and really find peace of mind with their decisions, they are more comfortable discussing it with their children," Hojer explained. "They are willing to talk about their legacy and how family and farm fit into the big picture."

Eichacker appreciated that clarity. "My dad thought about this every day until the day he died a year and a half ago," he said. "You work your whole life to put together the farm operation. You'd hate to see it fall apart after you've gone. Knowing that we're putting all the steps in place to leave the legacy we want to our kids... that peace of mind is huge."

EDITOR's NOTE: DTN's on-going Senior Partners series examines the financial, legal and emotional hurdles families face as they transition farm ownership from the senior to junior partners. To read other features in the package, go to InDepth at…


Elizabeth Williams