Succession Planning Preparing the Family Farm

Preparing the Family Farm

BY LISA S.T. DOSS

Jill Ransom’s story is familiar. She spent her adulthood living apart from the family business, visiting the farm several times a year. At the reading of the will, arrangements provided Jill five years to decide. Within two years and a series of unexpected events, Jill’s family farm became another statistic. Only 20% of family farms survive the transfer to the second generation, and far fewer arrive at the third. Few farmers know the steps or how to implement an exit strategy. Without a viable plan in place, heirs are forced into poor decisions.

What is a Farm Succession Plan?

The farm is a legacy of name, reputation, and goods. It’s more than a piece of land; it comprises a business with viable assets like a home, barns, equipment, valuable property, and quite possibly livestock. The memories, good times and bad, add to the sentimental value. The solution is to create well in advance a succession plan, which includes financial goals upon retirement, a pre-determined income, and a time frame for transition. Open communication helps resolve concerns and expectations with the people involved and prevents misunderstandings.

Questions to ponder:

• How much income is needed for retirement? • Do I want the farm to remain in the family? • Is there an individual or are there multiple people who can take over operations? Could they work as a team approach? • Do I remain involved in business decisions after the transition occurs?

Taxes and Gifts

A will is one security of a family business. The legal document aptly names conditions of the property and its contents to declared members of the testator. Fortunately, North Carolina residents are not penalized by an instate inheritance or estate tax, unless it exceeds $12.06 million. Additionally, if the recipient(s) decides to keep the farm, they benefit from reduced capital gains taxes.

Other ways to transfer land:

• GIFTS: More complicated than it initially sounds. Land can be gifted from the owner at any time or documented through a will, termed a “bequest.” Among the four different types, the residuary clause identifies a recipient to receive the estate.

Whether as a whole or divided, gifting assets can be a valuable tool to help beginning farmers acquire land, farm equipment, assets, or money. Keep in mind, as families plan for the future, it’s vital not to rely on current-year exemptions. Additionally, gifts may impact control over assets, Medicare eligibility, and estate taxes. • LIFE ESTATES: A popular option for farmers whose successor is willing to hold the property for their lifetime. The “life estate” applies to real property, such as land, buildings, and equipment. Through a deed, the property owner has full use of their property and is protected against the inclusion of a Medicaid recovery process. Upon death, the estate is automatically transferred to the beneficiary. • CREATING A TRUST: In addition to the will, a trust is a legal document outlining the terms of a property and the distribution of revenue to beneficiaries. Easily manageable by adding or removing assets, changing intentions, or, if needed, dissolving the trust. Upon death, the “irrevocable trust” bequeaths the legal ownership to a trustee, separating the trust’s assets from the estate. Selling, on the other hand, may be a restriction; it’s not indefinite. Initiating a trust is ideal for anyone who seeks to transfer the family farm without fear of estate taxes.

Contacting the Experts

The best source for answers is a local accountant who has specialized estate planning experience. Before scheduling a consultation, think about the most relevant information, such as defining the plan, a tentative date to transition, and identifying the successor. Ascertain your financial picture and tax situation, too. By having documents ready, you’ll be able to get started planning your future.

Mindful of What Matters Most

While Debbie Stokes has worked in the insurance industry for 21 years, she is most proud of having successfully owned her own agency for the past 11 years. And with a convenient new location on Shallowford Road in Lewisville, the Stokes Insurance Group, an independent North Carolina insurance agency, is poised to keep growing!

“Now that we’re past the 10-year mark, and with the visibility of my new location, I’m excited to push my goals even more!” says Debbie. Lucky to represent the most reputable insurance carriers in the business, she knows the importance of having amazing support from her insurance carriers, who provide online and phone assistance when she needs it most.

The Stokes Insurance Group offers products for families of all sizes in the home, auto, life, and specialty categories, as well as the commercial arena, including general liability, property, worker’s compensation, professional liability and more. Debbie is also especially proud to assist equine and farm owners with all their insurance needs.

“My passion is horses,” she explains. “So, I wanted to integrate another product into my agency to be easily accessible for local horse and farm owners.”

She’s also blessed to have loyal commercial accounts whose owners—and employees—integrate their personal lines into her business for auto, home, motorcycle, boats, and ATVs, which was a real boost when she first started her business. She also loves her role as an independent agent and that she is a proven, trustworthy asset to clients.

BY MARTIE EMORY / PHOTO BY DAWN LINEBERRY

needs, so they don’t have to do the “shopping” for what products work best for them,” she says. “I only contract with carriers who have a high financial rating and are ideal for my clients, but who also offer their full support to my agency.”

One of Debbie’s earliest business philosophies was to be intent on sharing her knowledge about the products she offered with clients, and of course, how the coverage protects them, while not focusing entirely on the premium cost of a particular policy.

“One choice makes the world of difference!” she adds. “I try to really think through the policy a client has just purchased and not focus totally on price.”

Something else that sets the Stokes Insurance Group apart—and that ongoing customer feedback has reflected—is that Debbie is accessible to her clients after hours, and on some weekends, to address any questions or concerns. “Most agencies close at 5:00 p.m., Monday through Friday, and I’ve been available nights, and to answer calls on weekends,” she explains. “I started this earlier on in my career to try and compete with the huge agencies. I’ve been blessed to stay busy on a referral system based on my book of business from the past, as well as currently, so I try to be available when it makes sense. Other times, my insurance carriers are set up to assist as needed.”

Debbie is also mindful of her clients’ valuable time, and can provide you with a relatively quick, no-obligation insurance quote. You can reach the Stokes Insurance Group at 336-946-6179, e-mail them at debbie@stokesinsurancegroup.com, or visit the new office at 6758 Shallowford Road in Lewisville, NC. Learn more about their services and carriers at stokesinsurancegroup.com.

the BATHROOM A History of Designs and Customs BY KAREN COOPER

The bathroom has come to have a high status in the home. For most of us, it’s not only a place of rest and rejuvenation, the bathroom is also a room we like to make beautiful with fixtures and countertops, charmingly tiled showers and floors, plush rugs, and anything else that makes us feel calm and surrounded by comfort. What was once called the “necessary” has gone through so many changes over time that it can be hard to believe how those before us took care of their most basic needs.

Before the Bathroom

While indoor plumbing wasn’t widely seen until the latter part of the 19th century, indoor and outdoor plumbing have both been around since ancient Roman times (and really, even long before…we just have more information about the Romans). You’ve probably heard of the public baths that provided a way for Romans to get clean, while also enjoying a social experience. Even though wealthier citizens had their own private baths, they still came to the public baths in order to see and be seen. It was the place to be! The baths offered hot and cold water and steam rooms, often coming from local hot springs.

At that time, getting clean was completely separate from using the toilet. Public facilities were common in ancient Rome, where toilets were built over a running stream of water. There was even a separate stream of clean water for hand washing in some places. Although they may not have fully understood why, the people of that time seemed to recognize that it was important to keep the different water uses separate. There is also historic evidence of the importance of ritualistic bathing in the Middle East, Israel, and Turkey, where the “Turkish baths” are well known for their beauty and admired to this day. In Japan, the steam baths have been in use for centuries, as well. It seems everyone loves a good bath.

However, the popularity of cleanliness and bathing went through phases over the centuries. With the plague hitting England seven times in 200 years, the public opinion of bathing, hygiene, and cleanliness took a nosedive. In 1546, King Henry VIII shut down public bathhouses in England for good, blaming them for sickness. During the Renaissance, water was feared to be a carrier of disease…and it most definitely was a carrier at times, due to mixing clean water with sewage. For this reason, many people became fearful of bathing and water in general.

Evolution of the modern bathroom

The first toilet with the ability to flush was invented in England in 1596 by Sir John Harrington. His invention didn’t attract many followers in England or the rest of Europe, and it wasn’t until the 19th century that several inventors got a patent on a toilet system. The end of the 19th century was an elegant time for toilets, in terms of shape and decoration. They were so ornately decorated and beautiful, we can see where the love of the bathroom may have started.

Thanks to the Industrial Revolution, bathrooms could be outfitted with the mechanics needed to make them functional. Hot water could be produced for use in the home and having a bath was much easier due to the development of gas water heaters. Personal bathing and indoor flush toilets became much more common.

In America, the National Public Health Act of 1848 created a plumbing code for the country and many bigger city homes, especially those of the more affluent, began to feature toilets, bathtubs, and sinks. The standard bathroom as we know it had had arrived.

In the beginning of the 20th century, inventions for the bathroom were on the rise and catalogues became available to advertise the latest and greatest features available. For the customers, it was highly desired to have a first-class modern bathroom, with all comforts, in their newly built houses. This trend has continued throughout the decades, through changing styles and fashions. The basic function of the room, however, has stayed the same as a place of comfort and respite. A place to wake up to, to put on our face for the day…or a place to come home to, knowing relaxation awaits us.