After many years in private law practice, OSU’s Robert Moore knows the unique estate planning challenges farm families face. The capital-intensive nature of farming and the family legacy associated with it are just two of the many issues that contribute to those challenges. But Moore also knows there are legal strategies that can help farm families meet their estate planning needs.
Join Moore as he reviews both the challenges of farm family estate planning and ways to address those challenges in a webinar this Wednesday at Noon. The webinar offers a chance to learn more about topics such as dealing with on-farm and off-farm heirs, distribution plan ideas, and how trusts can benefit a farm estate plan. The National Agricultural Law Center will host the webinar as part of its free monthly webinar series. Registration is necessary and is available online at https://nationalaglawcenter.org/webinars/estate-planning/.
The webinar represents an ongoing partnership between OSU’s Agricultural & Resource Law Program and the National Agricultural Law Center. For eight years, the two institutions have worked together to bring agricultural law research and information to the nation’s agricultural community with support from the USDA’s National Agricultural Library. Our agricultural law library on farmoffice.osu.edu contains many resources developed through this partnership, including recent publications on Planning for the Future of Your Farm, Keeping Farmland in the Family, and Long-Term Care and the Farm. Those and a multitude of other agricultural law resources are also available on the National Agricultural Law Center’s website at nationalaglawcenter.org.
If you’re not available to attend the webinar this Wednesday, find a recording of it and all other webinars in the monthly series at https://nationalaglawcenter.org/webinars.
We're happy to announce our popular “Planning for the Future of Your Farm” webinar series for 2023. The four-part online series will be on January 23 and 30 and February 6 and 13 from 6:30 to 8:00 p.m. This workshop will help farm families learn strategies and tools for transferring farm ownership, management, and assets to the next generation.
Here's what the webinar will cover:
- Developing goals
- Planning for the transition of management
- Planning for the unexpected
- Communication and conflict management during farm transfer
- Legal tools and strategies
- Developing your team
- Getting your affairs in order
- Selecting an attorney
You and your family will learn from two of Ohio's top farm transition experts:
- Robert Moore, Attorney with our Agricultural & Resource Law Program. If you didn't already know, Robert was in private practice for 18 years before joining our program. He provided legal counsel to farmers and landowners across Ohio on business, farm transition, and estate planning.
- David Marrison, OSU Extension Field Specialist in Farm Management. David has been with OSU Extension for 25 years and is nationally known for his teaching in farm succession. He has a unique ability to intertwine humor when speaking about the difficulties of passing the farm on to the next generation.
Because of its virtual nature, you can invite your parents, children, and grandchildren to the webinar, regardless of where they live in Ohio or across the United States. The webinar offers an easy way to include all family members in learning about how to develop a plan for the future of your family farm.
Families must pre-register for the workshop by January 16, 2023 at go.osu.edu/farmsuccession. We appreciate the support of the Ohio Corn & Wheat Growers Association in sponsoring the workshop and helping us keep the cost at $75 per farm family. The registration includes one printed set of materials that we'll mail to a family member, and other members will have access to electronic copies of the materials.
In-person workshops planned also
Several of our OSU Extension county educators are also hosting day-long in-person versions of the workshop on these dates:
- December 15, 2022 in Auglaize County at The Palazzo in Botkins. Find more information here.
- January 19, 2023 in Fairfield County at the Fairfield County Agricultural Center in Lancaster. Find more information here.
Don't miss out
We hope you'll join us for this important series! Even if you already have an estate plan or have begun one, this workshop should help you learn more and ensure that you're effectively addressing your goals for the future of your farm and farm family.
For additional information David Marrison at email@example.com or 740-722-6073.
Long-term care costs are a threat to family farms. In fact, we predict that long-term care costs are the biggest financial threat to farm families, even more so than federal estate taxes. That’s because long-term care can affect every farm--and when cash or insurance runs out, farm assets may have to be sold to pay for long-term care. With an increasing elderly population and rising health care costs, the financial pressure of long-term care on family farm succession will probably grow in future years.
What can farm families do to protect farm assets from the risk of long-term care? Our latest publication by attorney Robert Moore, Long-Term Care and the Farm, addresses this question. The publication begins with an important first step: understanding long-term care risk. What is the chance that a farmer will require long-term care, what kind of care is most common, and what how much will it cost? Robert presents data and statistics that help us predict the expected type, length, and costs of long-term care services a farmer might require.
Once we assess long-term care risk, the next important question is how to pay for long-term care while keeping farm assets secure. Robert explains how Medicare and Medicaid programs can apply to long-term care costs. He then presents several legal strategies to mitigate long-term care risk and protect farm assets. The guide wraps up with a process a farm family can follow to assess long-term care risk for their individual situation.
It's possible to keep family farmland and the family farm businesses safe from the risk of long-term care. If long-term care is a concern for your farm family, be sure to read this important new publication and talk with an agricultural attorney about protection strategies. The publication is available at no cost through our funding partnership with the National Agricultural Law Center and the USDA National Agricultural Library. Read Long-Term Care and the Farm here.
Farmland can be a family's most important asset, recognized for both its heritage and financial value. Here's some proof: over 1,900 "Century Farms" in Ohio have been in the same family for over 100 years. And 130 of those farms have been in the same family for over two centuries -- testaments to the importance of farmland to Ohio families.
But there are threats that can cause farmland to leave a family despite its value to family members. Long-term care costs, divorce, debt, co- ownership rights, poor estate planning -- these are situations that can put family farmland at risk. The good news is that legal strategies can counter these threats.
In our new publication, Keeping Farmland in the Family, we offer five legal tools that can help keep farmland in a family:
- Agricultural or conservation easement
- Right of First Refusal
- Long-term lease
- Limited Liability Company
These legal tools offer a range of protection for family farmland, allowing a family to use a highly restrictive strategy that protects land for many generations or a less restrictive approach that secures land only for a generation or two. Examples provided throughout the publication can help farm families see how different scenarios play out. The guide does not intend to substitute for individual legal advice, but offers a family a starting point for discussion and decisionmaking with an agricultural attorney.
By Robert Moore, Attorney and Research Specialist, OSU Agricultural & Resource Law Program
There is no doubt that Long-Term Care (LTC) costs are a financial threat to many farms. Some farmers go to great lengths to protect their farm assets from potential LTC costs. Protection strategies include gifting assets to family members, transferring farm assets to irrevocable trusts and buying LTC insurance. But what do the statistics say about the actual risk to farms for LTC costs?
According to the Administration for Community Living, someone turning age 65 today has an almost 70% chance of needing some type of long-term care services in their remaining years. Due to women having longer life expectancies, predictions are that women will need an average of 3.7 years of care and men will need 2.2 years. While one-third of today's 65-year-olds may never need long-term care support, 20% will need it for longer than 5 years. The following data from the ACL provides more details as to the type and length of care needed:
This table shows that of the three years of LTC needed on average, two of those years are expected to be provided at home and one year in a facility. It is noteworthy that a majority of LTC services are typically provided at home because most people do not want to leave home for a facility, some at-home care isn’t paid for, and home care is less expensive than facility care. Many people may think all LTC will be provided in a facility, but as the data shows, this is not usually the case.
The next important statistic is cost. The following are costs of various LTC services from the 2021 Cost of Care Survey provided by Genworth Financial, Inc.
Nursing home costs are significantly higher than in-home services. People may think of LTC costs in terms of nursing homes, but as discussed in the previous paragraph, the majority of LTC services are the less expensive, in-home type. So, while all LTC costs are significant, they might not be as high as commonly thought.
Let’s use this data to come up with some possible numbers for an Ohio farmer. Assume the following:
- A 65year-old farmer has a 67% chance of needing LTC
- The length of that care will be around 3 years
- 1 year of care will be unpaid inhome services
- 1 year of care will be paid, inhome services at around $60,000/year
- 1 year of care will be in a nursing home at around $90,000/year
Based on the above assumptions, a 65-year-old Ohioan, on average, can expect about $100,000 in LTC care costs ($60,000 + $90,000 x 67%). Keep in mind that these costs are per person and a married couple will have double these potential costs. The next question is, can the average farmer absorb LTC costs without jeopardizing the farm? That's a question we'll examine in a future post in the Legal Groundwork Series.
Ohio State Extension will host a virtual three part "Planning for the Future of your Farm" webinar series. The webinar series will span over three Monday evenings from 6:30 to 8:30 p.m. starting on February 15, 2021 and concluding on March 1, 2021. This workshop is designed to help farm families learn strategies and tools to successfully create a succession and estate plan that helps transfer the farm's ownership, management, and assets to the next generation.
Topics discussed during this series include:
- Developing Goals for Estate and Succession;
- Planning for the Transition of Control;
- Planning for the Unexpected;
- Communication and Conflict Management During Farm Transfer;
- Legal Tools and Strategies;
- Developing Your Team;
- Getting Your Affairs in Order; and
- Selecting an Attorney
This workshop will be taught by members of the OSU Farm Office Team featuring Peggy Hall & Jeffrey Lewis, Attorneys from the OSU Agricultural & Resource Law Program and David Marrison, Extension Educator for Coshocton County.
Because the workshop is online, you can invite your parents, children, and/or grandchildren to join you as you develop a plan for the future of your family farm, regardless of where they live in Ohio or across the United States.
Pre-registration is required. One hard-copy of program materials will be mailed to participating farm families. Electronic copies of the program materials will also be available to all participants. The registration fee is $40 per farm family. The deadline to register for the webinar series is February 10, 2021. You can register online at the "Planning for the Future of Your Farm" webinar registration page.
A three part "Planning for the Future of Your Farm" webinar series.
Monday, February 15, 2021 from 6:30 to 8:30 p.m.
Monday, February 22, 2021 from 6:30 to 8:30 p.m.
Monday, March 1, 2021 from 6:30 to 8:30 p.m.
$40 per farm family.
Registration deadline is February 10, 2021.
You can find more information about the webinar series by visiting the "Planning for the Future of Your Farm" webinar registration page. If you have any questions or concerns, please contact David Marrison by phone at (740) 622-2265 or email at firstname.lastname@example.org.
We look forward to seeing you there!
Sometimes you happen upon a question that you want an answer to, and the answer you find raises more questions. That’s exactly what happened when we started examining Limited Liability Company (LLC) statutes from across the Midwest.
Originally, we wanted to determine whether there are any significant legal differences between the LLC statutes of different states. While we may be based in Ohio, we find projects that examine how different states compare to one another on the same legal topic fascinating. The comparisons allow us to see trends and different ideas, and we had the chance to do this in our recently completed projects on CAUV and agritourism.
Ultimately we found the Midwestern states to have functionally similar LLC statutes, with about half of the Midwest having adopted a uniform statute. When a state adopts a uniform statute, it intends for its law on a given topic to match those of other states with the same uniform statute. There are other examples of these like the Uniform Commercial Code, Uniform Probate Code, and more. Uniform codes are designed to make it easier for people to do business and live their lives across state lines. For Midwestern LLC statutes, even in states that have not adopted a uniform statute, the key elements are still very similar. The statutes have filing procedures for creating the entity, default rules for operating agreements, and rules that govern LLCs in general.
When we answered our questions about the state statutes, we became curious about some of the benefits offered by using an LLC instead of some other business form. We found that LLCs offer great liability protection, with some specific limitations such as the application of piercing the veil from corporate law. Further, pass through taxation can provide great tax benefits and avoid double taxation. Since states allow operating agreements to be highly customizable, LLCs also provide a flexible entity structure that may be adapted to suit the needs of a business or family.
That last word led us to another question: what benefits does the LLC structure offer a family farm in its estate and business transition plan? The previous three benefits are well known and thoroughly discussed; however, this last one, while done a lot in practice, is not commonly mentioned in academic writing. Ultimately, the benefits in estate and transition planning come from the flexible nature of the operating agreement.
How can LLCs be helpful in an estate and business transition plan for a farm? Here’s a few ways:
- Restrict the transfer of an ownership interest through rights of first refusal and buy-out provisions
- Restrict membership and voting power of non-family members
- Transition equity ownership more easily than in a corporation
- Transition the business in relative privacy
Once we learned about these benefits, the question arose of how common farming LLCs now are. Using data from the USDA’s Census of Agriculture, we found that by 2012, there were almost as many farms organized as LLCs as there were farms organized as corporations, while the vast majority of farms remained owned outright by individuals with no formal legal entity. We are waiting for the next Census of Agriculture to spot any trends, because 2012 was the first year that farms were asked to identify whether they were organized as LLCs.
Throughout the paper, we made some observations and predictions for what we expect to see in the future. We are also history buffs, so of course there had to be a section on the origins of the LLC, and why Wyoming was the first state to adopt an LLC statute. It is an interesting and dramatic history that we had not heard about before.
Our project examining farm LLCs is available on our OSU Extension Farm Office website HERE, as well as the National Agricultural Law Center’s website HERE. This material is based upon work supported by the National Agricultural Library, Agricultural Research Service, U.S. Department of Agriculture.