1 00:00:01,140 --> 00:00:02,280 Thanks for coming. 2 00:00:02,280 --> 00:00:05,223 Mark Cannella, University of Vermont, Extension. 3 00:00:06,300 --> 00:00:10,740 I'm here in the office in Berlin, Vermont. 4 00:00:10,740 --> 00:00:13,140 Introduction to Maple Business and Transfer Planning. 5 00:00:13,140 --> 00:00:14,040 Let's get into it. 6 00:00:15,690 --> 00:00:18,120 If you signed up for this session, 7 00:00:18,120 --> 00:00:19,350 you've probably been to Maple Manager, 8 00:00:19,350 --> 00:00:20,970 at least for the signup. 9 00:00:20,970 --> 00:00:22,680 Just always encouraging people to go back. 10 00:00:22,680 --> 00:00:26,100 We've added a few more business planning resources 11 00:00:26,100 --> 00:00:28,350 in the past couple months. 12 00:00:28,350 --> 00:00:31,118 We did have a technical report that hit, 13 00:00:31,118 --> 00:00:34,080 which is a survey of northeastern maple producers, 14 00:00:34,080 --> 00:00:37,290 dates back to 2019, 15 00:00:37,290 --> 00:00:39,600 but pretty rich data about some of the trends 16 00:00:39,600 --> 00:00:42,390 in the northeast, which was exciting to put together. 17 00:00:42,390 --> 00:00:44,970 And then the other more recent documents, 18 00:00:44,970 --> 00:00:46,800 there are some startup investment profiles. 19 00:00:46,800 --> 00:00:49,959 If you or anyone you know is looking at getting established 20 00:00:49,959 --> 00:00:51,450 or doing a complete overhaul, 21 00:00:51,450 --> 00:00:56,450 we put together numbers on startup tubing systems, 22 00:00:56,580 --> 00:00:58,530 basic equipment, basic sugar house, 23 00:00:58,530 --> 00:01:01,350 really to put some numbers to how big the investment is 24 00:01:01,350 --> 00:01:02,433 as people get going. 25 00:01:04,950 --> 00:01:07,740 Here we are on the 31st, coming up, 26 00:01:07,740 --> 00:01:09,960 we've got four more sessions. 27 00:01:09,960 --> 00:01:11,970 Next week, the 7th, Marcus Littleheart's 28 00:01:11,970 --> 00:01:14,400 gonna do a presentation on maple syrup quality. 29 00:01:14,400 --> 00:01:18,600 This goes back to about a little over a year ago, 30 00:01:18,600 --> 00:01:20,760 we did an intensive project. 31 00:01:20,760 --> 00:01:24,060 We bought over 200 samples of syrup online 32 00:01:24,060 --> 00:01:26,760 and tested for them for quality standards. 33 00:01:26,760 --> 00:01:29,790 Had some interesting findings from what we saw, 34 00:01:29,790 --> 00:01:31,479 what we graded, what we tasted. 35 00:01:31,479 --> 00:01:33,480 Mark's gonna talk about that next week. 36 00:01:33,480 --> 00:01:34,650 I'll be back on the 14th, 37 00:01:34,650 --> 00:01:37,080 a little bit on national maple market development, 38 00:01:37,080 --> 00:01:40,170 some of the projects going on within the member associations 39 00:01:40,170 --> 00:01:41,460 and a little bit of an overview 40 00:01:41,460 --> 00:01:43,890 of the different market research that's been popping up 41 00:01:43,890 --> 00:01:46,833 in the past couple years, which is exciting. 42 00:01:46,833 --> 00:01:48,210 Then on the 21st, 43 00:01:48,210 --> 00:01:50,400 another maple financial planning session, 44 00:01:50,400 --> 00:01:52,170 and then Chris Lindgren will present, 45 00:01:52,170 --> 00:01:53,003 we'll take a week off. 46 00:01:53,003 --> 00:01:54,330 On October 5th, he's gonna present 47 00:01:54,330 --> 00:01:55,890 on sap business models 48 00:01:55,890 --> 00:01:57,870 and looking at assessment of the sugar bush 49 00:01:57,870 --> 00:01:59,730 before you start and then some of the considerations 50 00:01:59,730 --> 00:02:01,830 of just running a sap-only business, 51 00:02:01,830 --> 00:02:04,560 rather than converting sap completely 52 00:02:04,560 --> 00:02:06,333 into a finished syrup product. 53 00:02:08,430 --> 00:02:09,404 All right. 54 00:02:09,404 --> 00:02:10,237 Transfer planning, succession planning. 55 00:02:10,237 --> 00:02:11,730 I think first I'll start just to say 56 00:02:11,730 --> 00:02:14,913 that the words that I use are, I think, 57 00:02:14,913 --> 00:02:17,287 kind of interchangeable. 58 00:02:17,287 --> 00:02:18,900 I'll say transfer planning. 59 00:02:18,900 --> 00:02:21,622 Coming up in the farm business planning world, 60 00:02:21,622 --> 00:02:23,100 for better or worse, 61 00:02:23,100 --> 00:02:25,680 there's been an assumption of this idea of transfer 62 00:02:25,680 --> 00:02:29,070 within a family and the concept of a family farm. 63 00:02:29,070 --> 00:02:31,380 It's a great concept, but I will in, 64 00:02:31,380 --> 00:02:33,510 I will like interject the word succession. 65 00:02:33,510 --> 00:02:36,180 And I think in tonight's presentation, 66 00:02:36,180 --> 00:02:39,180 you'll hear there's definitely specific dynamics 67 00:02:39,180 --> 00:02:42,630 of the transfer of a family business within family 68 00:02:42,630 --> 00:02:44,160 and there are specific dynamics 69 00:02:44,160 --> 00:02:47,430 to a small family business. 70 00:02:47,430 --> 00:02:50,340 But we certainly know, both in the farm and maple community, 71 00:02:50,340 --> 00:02:53,520 that business transfers do not have to happen 72 00:02:53,520 --> 00:02:54,390 within the family. 73 00:02:54,390 --> 00:02:56,408 And so the idea of succession, 74 00:02:56,408 --> 00:02:59,838 or I may even see exit sale, buy/sell agreements. 75 00:02:59,838 --> 00:03:02,310 Really the concept we're getting at tonight 76 00:03:02,310 --> 00:03:05,875 is the idea of there being current owners or partners 77 00:03:05,875 --> 00:03:10,020 and there is an intent and an outlook for other owners 78 00:03:10,020 --> 00:03:12,146 to come into the business world, 79 00:03:12,146 --> 00:03:14,280 or come into business ownership, 80 00:03:14,280 --> 00:03:16,440 and whatever form that may be, so. 81 00:03:16,440 --> 00:03:18,240 There is some specific reference to family, 82 00:03:18,240 --> 00:03:19,290 but this isn't in the, 83 00:03:19,290 --> 00:03:21,450 this is not on some assumption that there 84 00:03:21,450 --> 00:03:24,526 are younger children that are growing up necessarily. 85 00:03:24,526 --> 00:03:26,253 Maybe, maybe not. 86 00:03:27,586 --> 00:03:28,890 So my experience, 87 00:03:28,890 --> 00:03:30,390 I've been doing transfer planning in Vermont 88 00:03:30,390 --> 00:03:31,800 for 15 years on and off, 89 00:03:31,800 --> 00:03:34,620 mixed in with the business planning I've been doing. 90 00:03:34,620 --> 00:03:36,330 We all know the trends. 91 00:03:36,330 --> 00:03:39,120 The survey that we did with the Northeast producers, 92 00:03:39,120 --> 00:03:43,470 I think our average age was well over 55 or 57 years old 93 00:03:43,470 --> 00:03:45,720 for primary owner of a business. 94 00:03:45,720 --> 00:03:50,520 And it's never too early to start succession 95 00:03:50,520 --> 00:03:51,990 or transfer planning. 96 00:03:51,990 --> 00:03:54,840 Unfortunately, it sometimes can be late 97 00:03:54,840 --> 00:03:58,044 if you don't start until late in your career, 98 00:03:58,044 --> 00:03:59,250 late in your life. 99 00:03:59,250 --> 00:04:00,690 A lot of these things are better 100 00:04:00,690 --> 00:04:02,070 if they're staged over time. 101 00:04:02,070 --> 00:04:05,010 And we'll talk a little bit about that tonight, 102 00:04:05,010 --> 00:04:07,710 we start to get the specifics of some estate planning. 103 00:04:09,030 --> 00:04:11,700 Okay, so what is transfer planning, succession planning? 104 00:04:11,700 --> 00:04:14,910 Really the multi-year process for current farm owners, 105 00:04:14,910 --> 00:04:17,010 family members, and future farm owners, 106 00:04:17,010 --> 00:04:18,360 whether they're family or not, 107 00:04:18,360 --> 00:04:21,420 to discuss the things that need to be discussed, 108 00:04:21,420 --> 00:04:25,200 to analyze the things that need to be analyzed, 109 00:04:25,200 --> 00:04:27,000 some serious looks at the business, 110 00:04:27,000 --> 00:04:28,860 serious looks at the people, 111 00:04:28,860 --> 00:04:31,203 and then to make decisions. 112 00:04:31,203 --> 00:04:34,800 The discussion and the analysis can take years 113 00:04:34,800 --> 00:04:36,090 and it can play out. 114 00:04:36,090 --> 00:04:38,070 Certain decisions can be made early on 115 00:04:38,070 --> 00:04:40,320 and certain other decisions often can get, 116 00:04:40,320 --> 00:04:45,320 kind of pushed off, for good reasons as the process unfolds. 117 00:04:45,803 --> 00:04:47,130 But we're basically talking 118 00:04:47,130 --> 00:04:49,230 about the future ownership framework 119 00:04:49,230 --> 00:04:52,050 and the future management framework of an existing, 120 00:04:52,050 --> 00:04:53,700 an existing business. 121 00:04:53,700 --> 00:04:55,450 I put some pictures up there, 122 00:04:55,450 --> 00:04:58,319 love the free clip art that I can find. 123 00:04:58,319 --> 00:04:59,790 I just wanna highlight, you know, 124 00:04:59,790 --> 00:05:01,563 that idea of a house of cards. 125 00:05:04,290 --> 00:05:07,729 When the situation is shaky at best, 126 00:05:07,729 --> 00:05:12,300 the transference succession planning can become difficult, 127 00:05:12,300 --> 00:05:14,910 or let's just say, vulnerable. 128 00:05:14,910 --> 00:05:19,490 So I've seen some examples of things that can come set up, 129 00:05:19,490 --> 00:05:20,790 you know, a house of cards so to speak 130 00:05:20,790 --> 00:05:23,139 when it comes to business transfer. 131 00:05:23,139 --> 00:05:25,577 One of 'em I think just really generally is, 132 00:05:25,577 --> 00:05:28,350 anyone that has the assumption 133 00:05:28,350 --> 00:05:30,000 that the other people in the process 134 00:05:30,000 --> 00:05:32,010 are gonna think the way that they think 135 00:05:32,010 --> 00:05:34,770 or value things the way that they value them, 136 00:05:34,770 --> 00:05:37,440 that could be a shaky starting ground. 137 00:05:37,440 --> 00:05:41,220 When I've seen parents that assume that the children, 138 00:05:41,220 --> 00:05:44,020 let's say, have the same value framework that they have, 139 00:05:44,910 --> 00:05:46,950 that's an assumption that can sometimes 140 00:05:46,950 --> 00:05:48,810 set things off a little bit. 141 00:05:48,810 --> 00:05:50,550 Other things that can be shaky, 142 00:05:50,550 --> 00:05:52,350 struggling businesses. 143 00:05:52,350 --> 00:05:54,720 That's not to say that business ownership is, 144 00:05:54,720 --> 00:05:55,800 it's always gonna be perfect 145 00:05:55,800 --> 00:05:58,200 and businesses are gonna be clear sailing. 146 00:05:58,200 --> 00:06:00,270 But when businesses are really struggling, 147 00:06:00,270 --> 00:06:02,100 like chronically not profitable 148 00:06:02,100 --> 00:06:05,640 or chronically have challenges financially, 149 00:06:05,640 --> 00:06:06,810 that can be a, you know, 150 00:06:06,810 --> 00:06:11,130 a shaky situation to try to set up to be transitioned 151 00:06:11,130 --> 00:06:13,590 to another owner. 152 00:06:13,590 --> 00:06:15,120 So that's just kind of two examples. 153 00:06:15,120 --> 00:06:17,920 And you know, I think the real emphasis 154 00:06:17,920 --> 00:06:21,240 with the planning process is try to set up that foundation, 155 00:06:21,240 --> 00:06:22,560 both in the process 156 00:06:22,560 --> 00:06:26,040 and to take a hard look at that business or that property 157 00:06:26,040 --> 00:06:28,350 and try to start to find those solid frameworks 158 00:06:28,350 --> 00:06:30,060 that you can work off of, 159 00:06:30,060 --> 00:06:31,500 not only for the planning process, 160 00:06:31,500 --> 00:06:32,940 but also for the future framework 161 00:06:32,940 --> 00:06:35,010 that's actually gonna, that's gonna last, you know? 162 00:06:35,010 --> 00:06:37,650 We're not trying to do some magical thing 163 00:06:37,650 --> 00:06:39,390 when it defies all odds. 164 00:06:39,390 --> 00:06:41,610 We really wanna have a setup for success, 165 00:06:41,610 --> 00:06:42,630 which is long term, you know, 166 00:06:42,630 --> 00:06:44,610 the idea of the transition 167 00:06:44,610 --> 00:06:47,343 and making maybe a legacy out of that enterprise. 168 00:06:48,990 --> 00:06:50,190 So I mentioned transfer, 169 00:06:50,190 --> 00:06:52,920 I did mention, you know, exit and sale. 170 00:06:52,920 --> 00:06:55,590 The two buckets that I often put this work into is 171 00:06:55,590 --> 00:06:58,080 as I sit, if I sit at kitchen tables with people 172 00:06:58,080 --> 00:07:00,353 and start talking about their business, 173 00:07:00,353 --> 00:07:02,730 we're looking at the transfer, the exit, 174 00:07:02,730 --> 00:07:05,430 the sale or the acquisition of, you know, 175 00:07:05,430 --> 00:07:08,700 the management of business operations and decision making. 176 00:07:08,700 --> 00:07:11,100 That may be a starting point and maybe separate 177 00:07:11,100 --> 00:07:12,510 than what's below it, 178 00:07:12,510 --> 00:07:15,120 which is the ownership of farm assets. 179 00:07:15,120 --> 00:07:17,160 We really do have two different zones in there. 180 00:07:17,160 --> 00:07:18,960 We've got operators, 181 00:07:18,960 --> 00:07:21,600 and some of you on the session tonight 182 00:07:21,600 --> 00:07:23,160 are the actual operators, right? 183 00:07:23,160 --> 00:07:26,430 You've got a certain skill set and you've got authority 184 00:07:26,430 --> 00:07:29,477 and you're making decisions to keep the enterprise running. 185 00:07:29,477 --> 00:07:34,040 That is something that warrants consideration in transfer, 186 00:07:34,040 --> 00:07:36,750 transition, even sales, right? 187 00:07:36,750 --> 00:07:39,480 How will that institutional knowledge transfer 188 00:07:39,480 --> 00:07:40,830 to the next person? 189 00:07:40,830 --> 00:07:43,980 Also, what is the ability for that next person 190 00:07:43,980 --> 00:07:46,323 to take over full decision-making. 191 00:07:47,250 --> 00:07:50,522 That's clearly separate than the ownership of items. 192 00:07:50,522 --> 00:07:53,610 And then the pictures below really emphasize that, 193 00:07:53,610 --> 00:07:54,870 really two classes of items. 194 00:07:54,870 --> 00:07:56,550 You've got some short-term items, 195 00:07:56,550 --> 00:08:00,270 things like equipment, 10 to 20 year lifespan. 196 00:08:00,270 --> 00:08:03,090 They may be a very different framework in the transfer 197 00:08:03,090 --> 00:08:06,840 or the buyout or sell plan compared to property ownership. 198 00:08:06,840 --> 00:08:09,647 And there's some implications, certainly. 199 00:08:09,647 --> 00:08:14,220 Different asset types are gonna stack up differently 200 00:08:14,220 --> 00:08:18,020 from the perspective of both the exiting owners, 201 00:08:18,020 --> 00:08:20,550 in what they need for security now and later. 202 00:08:20,550 --> 00:08:21,930 And then also what the, 203 00:08:21,930 --> 00:08:24,330 what I'll call the acquiring parties, 204 00:08:24,330 --> 00:08:28,233 the different needs that they might have sooner or later. 205 00:08:29,610 --> 00:08:31,200 So with transfer planning, 206 00:08:31,200 --> 00:08:33,360 certainly in the context of a family transfer 207 00:08:33,360 --> 00:08:35,130 or a non-family transfer, 208 00:08:35,130 --> 00:08:36,450 there is the future of the family 209 00:08:36,450 --> 00:08:37,917 that's being discussed, right? 210 00:08:37,917 --> 00:08:40,530 There's this concept that there's individuals 211 00:08:40,530 --> 00:08:43,170 that have been doing this thing for a while, 212 00:08:43,170 --> 00:08:45,360 individuals or teams and they're, you know, 213 00:08:45,360 --> 00:08:47,683 possibly sun-setting on their careers. 214 00:08:47,683 --> 00:08:49,710 Then there's the future of the business. 215 00:08:49,710 --> 00:08:51,930 Is this business sun-setting? 216 00:08:51,930 --> 00:08:54,960 Is this business model sun-setting? 217 00:08:54,960 --> 00:08:57,840 Businesses can adapt and certainly adapt over time, 218 00:08:57,840 --> 00:08:58,800 just like people do. 219 00:08:58,800 --> 00:09:00,540 But I'd say with transfer, 220 00:09:00,540 --> 00:09:02,250 we know that the exiting owners 221 00:09:02,250 --> 00:09:04,410 are clearly sun-setting on their career. 222 00:09:04,410 --> 00:09:07,680 And then the question is often with that business model, 223 00:09:07,680 --> 00:09:09,000 what's the future of this business? 224 00:09:09,000 --> 00:09:11,760 Does it need to be managed or can it be managed 225 00:09:11,760 --> 00:09:13,530 in the same format? 226 00:09:13,530 --> 00:09:15,330 Or is this business going 227 00:09:15,330 --> 00:09:19,260 to look dramatically different over the next 20 years? 228 00:09:19,260 --> 00:09:20,370 That'll have a big impact 229 00:09:20,370 --> 00:09:22,800 on how the planning discussions go, 230 00:09:22,800 --> 00:09:24,941 as it relates to those things like decision making 231 00:09:24,941 --> 00:09:27,780 and asset ownership. 232 00:09:27,780 --> 00:09:29,160 We've got legacies on the line here, 233 00:09:29,160 --> 00:09:32,670 especially if we've got family decisions to be making. 234 00:09:32,670 --> 00:09:33,997 There's land, there's wealth, 235 00:09:33,997 --> 00:09:37,050 equity hopefully built up in property. 236 00:09:37,050 --> 00:09:39,720 There's the vocation, the occupation of farming. 237 00:09:39,720 --> 00:09:42,840 And then this concept of family harmony or conflict 238 00:09:42,840 --> 00:09:45,900 is a big part of this from a family perspective. 239 00:09:45,900 --> 00:09:48,870 And that's both within, if there's exiting owners that are, 240 00:09:48,870 --> 00:09:52,776 say parents and acquiring owners that are children, 241 00:09:52,776 --> 00:09:56,043 could be nieces and nephews, I've seen that for sure. 242 00:09:57,030 --> 00:09:58,530 Also the potential for conflict, 243 00:09:58,530 --> 00:10:00,030 if you've got two owner and partners, 244 00:10:00,030 --> 00:10:02,490 whether they're spouses or brothers 245 00:10:02,490 --> 00:10:04,680 or stepbrothers, cousins. 246 00:10:04,680 --> 00:10:06,180 The family dynamic, 247 00:10:06,180 --> 00:10:10,500 they're bound to this concept of property or family legacy. 248 00:10:10,500 --> 00:10:14,010 We get into some pretty strong emotional territory there 249 00:10:14,010 --> 00:10:15,900 and it's gotta be factored in, 250 00:10:15,900 --> 00:10:17,010 factored into the planning 251 00:10:17,010 --> 00:10:20,580 and factored into how decisions get made. 252 00:10:20,580 --> 00:10:23,370 And we certainly got this opportunity for the new owners 253 00:10:23,370 --> 00:10:24,300 and this vision, you know, 254 00:10:24,300 --> 00:10:26,610 the sun's rising on that next business model 255 00:10:26,610 --> 00:10:29,100 and those next individuals and it could be very different. 256 00:10:29,100 --> 00:10:32,110 So we're kind of trying to manage all those things going on 257 00:10:32,110 --> 00:10:36,773 with the knowledge that we've got different people 258 00:10:36,773 --> 00:10:38,463 in different places. 259 00:10:40,380 --> 00:10:42,320 And that dynamic of people coming and going, 260 00:10:42,320 --> 00:10:43,890 it really came to bear. 261 00:10:43,890 --> 00:10:46,350 I've been a part of the Vermont Farm Viability program 262 00:10:46,350 --> 00:10:47,220 for over a decade, 263 00:10:47,220 --> 00:10:50,253 and we've been doing transfer planning with individuals. 264 00:10:51,510 --> 00:10:53,512 Just to give you a snapshot of what those programs 265 00:10:53,512 --> 00:10:56,680 have done here in Vermont, 266 00:10:56,680 --> 00:10:59,340 their one-on-one planning programs, 267 00:10:59,340 --> 00:11:01,620 and let me say one-on-one's probably a bad acronym, 268 00:11:01,620 --> 00:11:04,020 'cause it's usually one-on-five with a transfer plan. 269 00:11:04,020 --> 00:11:04,980 You've got an advisor, 270 00:11:04,980 --> 00:11:06,930 and you could have exiting owners, 271 00:11:06,930 --> 00:11:08,190 or future exiting owners, 272 00:11:08,190 --> 00:11:10,387 and you could have possibly acquiring parties 273 00:11:10,387 --> 00:11:13,272 or family members in those discussions. 274 00:11:13,272 --> 00:11:17,190 Transfer plans do not develop quickly 275 00:11:17,190 --> 00:11:18,540 and get finished quickly. 276 00:11:18,540 --> 00:11:20,790 For us, from a technical assistance standpoint, 277 00:11:20,790 --> 00:11:23,130 we could be working for 12 to 18 months 278 00:11:23,130 --> 00:11:26,220 with a particular owner or family. 279 00:11:26,220 --> 00:11:28,500 The planning process never really seems to be done. 280 00:11:28,500 --> 00:11:30,510 'Cause there's, it's like kind of incremental. 281 00:11:30,510 --> 00:11:32,670 There might be some decisions that get made early on, 282 00:11:32,670 --> 00:11:35,546 but often these things play off or play out over, 283 00:11:35,546 --> 00:11:39,480 could be 5 years, 10 years, 15 years. 284 00:11:39,480 --> 00:11:42,030 Ideally owners are starting to have these conversations 285 00:11:42,030 --> 00:11:46,740 in their 50s and the "transfer" may stage over time 286 00:11:46,740 --> 00:11:47,730 and certain aspects, 287 00:11:47,730 --> 00:11:50,520 especially like a real estate transition, 288 00:11:50,520 --> 00:11:53,070 those things may not occur until death. 289 00:11:53,070 --> 00:11:55,410 So, you could have a stage transfer 290 00:11:55,410 --> 00:11:58,586 and the actual "transfer" of the property of the farm, 291 00:11:58,586 --> 00:12:02,673 it may not happen 15, 20 years out. 292 00:12:03,510 --> 00:12:06,150 This idea of people coming and going really 293 00:12:06,150 --> 00:12:07,560 became important within our program, 294 00:12:07,560 --> 00:12:08,790 because what we found was, 295 00:12:08,790 --> 00:12:11,460 if we sometimes tried to have this kumbaya moment 296 00:12:11,460 --> 00:12:13,050 and as an advisor, 297 00:12:13,050 --> 00:12:15,300 as me to come into a kitchen table and sit with, 298 00:12:15,300 --> 00:12:17,310 say mom and dad and daughter 299 00:12:17,310 --> 00:12:19,950 and then maybe a son that lives in DC 300 00:12:19,950 --> 00:12:21,990 that's got a great federal government career 301 00:12:21,990 --> 00:12:23,310 that doesn't farm, 302 00:12:23,310 --> 00:12:25,152 to facilitate that conversation, 303 00:12:25,152 --> 00:12:27,233 pretty exciting, pretty dynamic. 304 00:12:27,233 --> 00:12:29,460 But what we found was, 305 00:12:29,460 --> 00:12:30,900 sometimes you need different advisors 306 00:12:30,900 --> 00:12:31,860 for different parties 307 00:12:31,860 --> 00:12:34,650 and the parents often needed a split advisor 308 00:12:34,650 --> 00:12:36,630 to specifically talk about exiting the business, 309 00:12:36,630 --> 00:12:38,170 retirement estate planning, 310 00:12:38,170 --> 00:12:40,410 and then say that daughter as an example, 311 00:12:40,410 --> 00:12:43,860 actually needed an advisor to talk about the specifics 312 00:12:43,860 --> 00:12:45,570 of coming into the business, 313 00:12:45,570 --> 00:12:48,990 what was needed on her part to come in. 314 00:12:48,990 --> 00:12:51,630 So I'm gonna really hit on that a little bit tonight. 315 00:12:51,630 --> 00:12:53,040 This idea of exiting owners 316 00:12:53,040 --> 00:12:55,080 and what'll call these acquiring parties 317 00:12:55,080 --> 00:12:56,760 or prospective owners 318 00:12:56,760 --> 00:13:00,660 and really recognition that they need different things. 319 00:13:00,660 --> 00:13:02,251 And this is really gonna be the, you know, 320 00:13:02,251 --> 00:13:03,084 the building blocks. 321 00:13:03,084 --> 00:13:04,890 We will talk a little bit about some legal dynamics, 322 00:13:04,890 --> 00:13:07,170 but really general tonight really, 323 00:13:07,170 --> 00:13:09,992 to kind of set the stage for the process, 324 00:13:09,992 --> 00:13:12,810 knowing that there's gonna be a lot of technical things 325 00:13:12,810 --> 00:13:14,190 that come up and you know, 326 00:13:14,190 --> 00:13:15,960 I'd be glad to share resources with people 327 00:13:15,960 --> 00:13:17,910 if you're moving into those next steps. 328 00:13:19,080 --> 00:13:22,200 Basic elements in a maple business transfer. 329 00:13:22,200 --> 00:13:24,270 Like I said, these things may not happen first, 330 00:13:24,270 --> 00:13:25,980 but let's look at the hard assets. 331 00:13:25,980 --> 00:13:28,080 Someone owns the forest property, 332 00:13:28,080 --> 00:13:30,480 somebody owns and has invested in buildings, 333 00:13:30,480 --> 00:13:32,520 someone's made improvements, 334 00:13:32,520 --> 00:13:37,520 those improvements, we know 15, 20, 30-year lifespan. 335 00:13:38,400 --> 00:13:39,660 Have you built roads in the woods? 336 00:13:39,660 --> 00:13:41,191 Have you established culvert systems, 337 00:13:41,191 --> 00:13:43,440 following forestry practices? 338 00:13:43,440 --> 00:13:45,870 And you've maybe done some things to set up 339 00:13:45,870 --> 00:13:49,560 that's gonna have a lasting impact on that property. 340 00:13:49,560 --> 00:13:53,910 A home on the property or houses on the property, 341 00:13:53,910 --> 00:13:58,590 I'll even add potential house sites on the property. 342 00:13:58,590 --> 00:14:02,025 Those can be key bargaining chips in estate planning, 343 00:14:02,025 --> 00:14:04,320 as you start to think about what you pass 344 00:14:04,320 --> 00:14:06,960 on to individuals within the family, 345 00:14:06,960 --> 00:14:08,790 and they have significant values, 346 00:14:08,790 --> 00:14:10,920 you start to add up, you know, 347 00:14:10,920 --> 00:14:13,800 the value of goods, equipment. 348 00:14:13,800 --> 00:14:15,032 If you're in the sugaring business, 349 00:14:15,032 --> 00:14:18,840 we know there's a lot of equipment there. 350 00:14:18,840 --> 00:14:20,493 A lot of shiny stainless steel. 351 00:14:21,420 --> 00:14:23,914 So the other bucket, the management responsibilities, right? 352 00:14:23,914 --> 00:14:27,270 We've gotta figure out the transition of making decisions 353 00:14:27,270 --> 00:14:29,073 and who gets to make decisions when, 354 00:14:30,270 --> 00:14:32,490 debts and obligations, investments, 355 00:14:32,490 --> 00:14:34,200 prior investments in the business, 356 00:14:34,200 --> 00:14:38,040 debts out in banks or other capital providers. 357 00:14:38,040 --> 00:14:38,873 Capital access, 358 00:14:38,873 --> 00:14:43,530 especially for that younger generation or newer owners. 359 00:14:43,530 --> 00:14:45,330 How are they gonna access the capital 360 00:14:45,330 --> 00:14:47,400 to run the business? 361 00:14:47,400 --> 00:14:48,750 And compensation for sure. 362 00:14:48,750 --> 00:14:51,030 If these are business models that we think 363 00:14:51,030 --> 00:14:54,480 are viable employment opportunities for people, 364 00:14:54,480 --> 00:14:57,750 then we start to look at compensation/profitability 365 00:14:57,750 --> 00:15:02,250 to understand the outlook for those new owners, 366 00:15:02,250 --> 00:15:03,550 what they're getting into. 367 00:15:07,320 --> 00:15:09,990 Looking at family transfer here, 368 00:15:09,990 --> 00:15:11,433 a little more specifically, 369 00:15:14,040 --> 00:15:18,660 And even if the business is going to be shifted 370 00:15:18,660 --> 00:15:19,822 to a non-family member, 371 00:15:19,822 --> 00:15:22,320 I'm gonna assume there's owners that 372 00:15:22,320 --> 00:15:24,810 have a family dynamic potentially to be sorted out. 373 00:15:24,810 --> 00:15:27,150 Especially when we're talking about land equity 374 00:15:27,150 --> 00:15:30,540 and any long term wealth you've generated. 375 00:15:30,540 --> 00:15:32,130 So here are the things that come up 376 00:15:32,130 --> 00:15:35,469 when I'm visiting with family on transfer things. 377 00:15:35,469 --> 00:15:38,940 Parents need to decide about their estate plan 378 00:15:38,940 --> 00:15:40,320 and inheritance. 379 00:15:40,320 --> 00:15:43,560 They need to be thinking about the progression 380 00:15:43,560 --> 00:15:45,840 of them sun-setting in their lives 381 00:15:45,840 --> 00:15:48,960 and whatever they've built up or whatever opportunities 382 00:15:48,960 --> 00:15:52,950 they want to impart on children or other family members 383 00:15:52,950 --> 00:15:54,900 or within the broader community. 384 00:15:54,900 --> 00:15:56,070 You know, charitable giving, 385 00:15:56,070 --> 00:15:57,919 things like that, all get factored in 386 00:15:57,919 --> 00:16:01,500 and they need to be thought about 387 00:16:01,500 --> 00:16:03,213 and need to be thought hard about. 388 00:16:03,213 --> 00:16:05,568 Farming and non-farming children, 389 00:16:05,568 --> 00:16:10,020 a key factor in a family situation for sure. 390 00:16:10,020 --> 00:16:11,130 Is there a member of the family 391 00:16:11,130 --> 00:16:12,813 that's already been involved in the business 392 00:16:12,813 --> 00:16:14,700 and what have they been putting in, 393 00:16:14,700 --> 00:16:16,680 potentially uncompensated? 394 00:16:16,680 --> 00:16:18,690 What have they been putting into the business? 395 00:16:18,690 --> 00:16:20,490 And you have other family members 396 00:16:20,490 --> 00:16:22,530 that are not active in the business, 397 00:16:22,530 --> 00:16:27,120 but they may be getting some form of share of inheritance 398 00:16:27,120 --> 00:16:28,410 or that would be the intention, 399 00:16:28,410 --> 00:16:30,720 so navigating that. 400 00:16:30,720 --> 00:16:31,980 You'll see fair versus equal 401 00:16:31,980 --> 00:16:33,210 come up a lot in the literature, 402 00:16:33,210 --> 00:16:34,800 if you start reading any worksheets, 403 00:16:34,800 --> 00:16:38,880 if you check out out any of the links that we pop up here. 404 00:16:38,880 --> 00:16:40,563 This is a real important concept. 405 00:16:41,490 --> 00:16:43,143 And really what's, 406 00:16:43,980 --> 00:16:44,813 let's see, 407 00:16:44,813 --> 00:16:48,600 the best example for this is fair is not always equal. 408 00:16:48,600 --> 00:16:51,780 And the classic example could be the story, 409 00:16:51,780 --> 00:16:53,561 let's go with a stereotypical story, 410 00:16:53,561 --> 00:16:58,561 of a family dairy farm and a daughter that stays on the farm 411 00:16:58,647 --> 00:17:02,790 and works and is under-compensated for 15 years 412 00:17:02,790 --> 00:17:05,143 and the parents are still involved into their 70s 413 00:17:05,143 --> 00:17:06,540 'cause it's the love of their life. 414 00:17:06,540 --> 00:17:08,067 And then you come to the transfer plan 415 00:17:08,067 --> 00:17:09,720 and you try to figure out, 416 00:17:09,720 --> 00:17:13,200 now how in fact is this daughter going 417 00:17:13,200 --> 00:17:18,200 to buy out the other brothers that potentially 418 00:17:18,300 --> 00:17:20,610 want an equal share of $1 million property? 419 00:17:20,610 --> 00:17:22,087 And you start to look at the numbers and you say, 420 00:17:22,087 --> 00:17:24,750 "Oh well this person put a lot of sweat equity in 421 00:17:24,750 --> 00:17:26,310 and wasn't compensated, 422 00:17:26,310 --> 00:17:31,310 so can we just split the property into three dollar amounts 423 00:17:31,410 --> 00:17:33,180 and you know, deal with buyouts?" 424 00:17:33,180 --> 00:17:35,160 And it's like, well no, fair is not equal. 425 00:17:35,160 --> 00:17:37,320 So you start to factor in some of those things. 426 00:17:37,320 --> 00:17:39,450 And I mean there's guidance, 427 00:17:39,450 --> 00:17:41,040 I don't know that there's a rule book on this, 428 00:17:41,040 --> 00:17:44,190 but just the concept that the dollar values 429 00:17:44,190 --> 00:17:47,730 don't necessarily match up to what we would consider fair, 430 00:17:47,730 --> 00:17:50,610 when you start to think about the dynamics of agriculture, 431 00:17:50,610 --> 00:17:52,053 dynamics of sugaring here. 432 00:17:53,460 --> 00:17:54,293 Different opinions, 433 00:17:54,293 --> 00:17:56,850 we're gonna have different opinions in family. 434 00:17:56,850 --> 00:17:59,012 I don't think anyone's surprised by that. 435 00:17:59,012 --> 00:18:01,530 And then the big thing often happens 436 00:18:01,530 --> 00:18:04,170 is the current owners being able to let go. 437 00:18:04,170 --> 00:18:07,290 This is a big, a big issue. 438 00:18:07,290 --> 00:18:09,540 Often a big problem in certain projects 439 00:18:09,540 --> 00:18:12,180 I see that don't tend to move forward, 440 00:18:12,180 --> 00:18:16,050 the concept of everyone liking the idea of transfer, 441 00:18:16,050 --> 00:18:18,300 but when it gets down to it, certain people, 442 00:18:18,300 --> 00:18:20,250 potentially founders of a business, 443 00:18:20,250 --> 00:18:22,530 having a very difficult time letting other people 444 00:18:22,530 --> 00:18:24,600 make management decisions, 445 00:18:24,600 --> 00:18:27,390 getting out of the way for that next generation 446 00:18:27,390 --> 00:18:30,360 of ownership to come into management. 447 00:18:30,360 --> 00:18:33,750 And those are big, big factors 448 00:18:33,750 --> 00:18:34,890 and you can imagine we're starting 449 00:18:34,890 --> 00:18:39,066 to kind of push on family dynamics through a lot of this. 450 00:18:39,066 --> 00:18:41,880 That idea of letting go is often a little cleaner 451 00:18:41,880 --> 00:18:44,553 in non-family, non-family buyouts for sure. 452 00:18:45,861 --> 00:18:49,293 But it needs to be, needs to be addressed for sure. 453 00:18:51,540 --> 00:18:56,540 All right, so why do people avoid transfer succession, 454 00:18:57,731 --> 00:18:59,190 exit planning? 455 00:18:59,190 --> 00:19:00,750 No one likes the word exit planning. 456 00:19:00,750 --> 00:19:03,150 I think they don't wanna admit 457 00:19:03,150 --> 00:19:06,663 that they're getting out or giving up. 458 00:19:07,544 --> 00:19:08,607 Here's what I've seen, 459 00:19:08,607 --> 00:19:12,210 people that really avoid this to potentially 460 00:19:12,210 --> 00:19:14,610 to the problem level where it gets too late. 461 00:19:14,610 --> 00:19:16,620 I don't have time. We're always busy. 462 00:19:16,620 --> 00:19:18,750 Yeah, life's busy, right? 463 00:19:18,750 --> 00:19:20,083 This is really busy. 464 00:19:20,083 --> 00:19:22,113 The business is struggling. 465 00:19:22,950 --> 00:19:24,840 When the business is struggling, 466 00:19:24,840 --> 00:19:27,000 it's certainly difficult to sort of get out of it 467 00:19:27,000 --> 00:19:28,920 and start doing long-term planning. 468 00:19:28,920 --> 00:19:31,140 Often when the business is struggling 469 00:19:31,140 --> 00:19:33,420 that can put up so many hurdles 470 00:19:33,420 --> 00:19:36,720 to transfer or succession planning 471 00:19:36,720 --> 00:19:39,780 that the members often don't really fully engage 472 00:19:39,780 --> 00:19:42,930 or they sort of maybe know what the outcome will be. 473 00:19:42,930 --> 00:19:44,700 This is when the younger generation clearly 474 00:19:44,700 --> 00:19:45,780 doesn't show interest, 475 00:19:45,780 --> 00:19:48,930 because they know there's maybe no future compensation 476 00:19:48,930 --> 00:19:51,852 or livelihood from that particular property. 477 00:19:51,852 --> 00:19:55,020 This is often maybe where existing owners 478 00:19:55,020 --> 00:19:56,790 have a real difficult time even engaging 479 00:19:56,790 --> 00:19:59,160 in transfer or succession of sale. 480 00:19:59,160 --> 00:20:01,950 'Cause it's painful to be a part of a business 481 00:20:01,950 --> 00:20:03,300 that's been struggling for years 482 00:20:03,300 --> 00:20:06,720 or maybe has been profitable and viable 483 00:20:06,720 --> 00:20:08,070 for a couple decades, 484 00:20:08,070 --> 00:20:09,753 but then having a bad trend. 485 00:20:10,710 --> 00:20:11,580 People get embarrassed, 486 00:20:11,580 --> 00:20:14,913 people feel vulnerable talking about struggling businesses. 487 00:20:16,260 --> 00:20:18,840 Other reasons to avoid transfer planning, 488 00:20:18,840 --> 00:20:22,315 it's difficult to talk about death, yes. 489 00:20:22,315 --> 00:20:25,530 Family tension, competing interests. 490 00:20:25,530 --> 00:20:28,916 Yes, the fair versus equal dilemma. 491 00:20:28,916 --> 00:20:30,958 You know, I mentioned that, 492 00:20:30,958 --> 00:20:33,570 won't get into it too much. 493 00:20:33,570 --> 00:20:36,870 It's just difficult stuff, especially for people, 494 00:20:36,870 --> 00:20:38,460 if you're in the forestry world 495 00:20:38,460 --> 00:20:42,690 and you've sort of thrived on being active and resilient 496 00:20:42,690 --> 00:20:46,260 and able to tolerate climb up and on steep slopes, 497 00:20:46,260 --> 00:20:48,072 with or without snowshoes, 498 00:20:48,072 --> 00:20:52,140 this idea of aging is difficult for sure. 499 00:20:52,140 --> 00:20:54,270 And then having those discussions with, 500 00:20:54,270 --> 00:20:55,710 not just family members, 501 00:20:55,710 --> 00:20:57,510 but outside advisors and bankers 502 00:20:57,510 --> 00:21:01,080 can take it to the next level, right? 503 00:21:01,080 --> 00:21:01,923 Estate planning. 504 00:21:03,295 --> 00:21:05,970 So I'm gonna use the estate planning in a real general term. 505 00:21:05,970 --> 00:21:06,990 I'm an extension guy, right? 506 00:21:06,990 --> 00:21:10,230 So I got enough knowledge to hopefully not be dangerous, 507 00:21:10,230 --> 00:21:11,520 but maybe to be informative. 508 00:21:11,520 --> 00:21:13,230 I'm not an estate attorney, 509 00:21:13,230 --> 00:21:15,960 I'm not an estate tax planner, 510 00:21:15,960 --> 00:21:18,510 but I've certainly been at that kitchen table 511 00:21:18,510 --> 00:21:21,090 or been on the phone with people that are in this process. 512 00:21:21,090 --> 00:21:22,723 So in my role, 513 00:21:22,723 --> 00:21:24,930 this is the things that I think are important 514 00:21:24,930 --> 00:21:27,420 and if you talk to a tax or a legal professional, 515 00:21:27,420 --> 00:21:31,140 they're gonna give you a much more, much more specific list. 516 00:21:31,140 --> 00:21:32,789 So this is the entry level for me 517 00:21:32,789 --> 00:21:36,180 in a technical assistance role. 518 00:21:36,180 --> 00:21:38,167 When I come to the table with people that are saying, 519 00:21:38,167 --> 00:21:40,350 "We gotta start working on this concept of succession 520 00:21:40,350 --> 00:21:41,937 or transfer or sale." 521 00:21:42,777 --> 00:21:45,360 What's important for the current owners? 522 00:21:45,360 --> 00:21:46,890 Well, first of all, you gotta develop your vision 523 00:21:46,890 --> 00:21:48,330 and your goals for the future. 524 00:21:48,330 --> 00:21:49,980 If you're a husband and wife team, 525 00:21:49,980 --> 00:21:50,910 your partner, your brothers, 526 00:21:50,910 --> 00:21:51,780 you gotta talk together 527 00:21:51,780 --> 00:21:54,900 and you gotta figure out what it is that's important, 528 00:21:54,900 --> 00:21:56,310 because those are the things that are gonna start 529 00:21:56,310 --> 00:21:58,920 to set this process in motion, 530 00:21:58,920 --> 00:22:01,937 and they're gonna be sort of the guide rails, so to speak, 531 00:22:01,937 --> 00:22:05,160 on what you wanna see happen 532 00:22:05,160 --> 00:22:07,470 or possibly draw some lines in the sand 533 00:22:07,470 --> 00:22:10,080 of things you can't see happen 534 00:22:10,080 --> 00:22:13,083 or maybe when you've crossed like a timeframe. 535 00:22:14,131 --> 00:22:16,500 Next, determining your future needs, 536 00:22:16,500 --> 00:22:18,060 income, housing, basic needs. 537 00:22:18,060 --> 00:22:20,520 This gets mostly into personal living, 538 00:22:20,520 --> 00:22:24,060 but the assumption that if you're living on a house 539 00:22:24,060 --> 00:22:25,950 that's on a property with an active business, 540 00:22:25,950 --> 00:22:30,030 hmm, that's getting into interesting situation. 541 00:22:30,030 --> 00:22:32,440 What's gonna happen for the future owners? 542 00:22:32,440 --> 00:22:34,351 Will you still live in that property? 543 00:22:34,351 --> 00:22:38,579 Are they going to want to live in that home? 544 00:22:38,579 --> 00:22:41,760 In either situation it has to be accounted for, 545 00:22:41,760 --> 00:22:42,720 for the acquiring party 546 00:22:42,720 --> 00:22:44,880 to have enough money to live someplace, 547 00:22:44,880 --> 00:22:47,040 potentially, or for the exiting party 548 00:22:47,040 --> 00:22:49,890 to have a future residence or the means 549 00:22:49,890 --> 00:22:51,120 to live where they need to live. 550 00:22:51,120 --> 00:22:53,430 So, you're thinking about your retirement budget 551 00:22:53,430 --> 00:22:55,320 and you're thinking about some of those things 552 00:22:55,320 --> 00:22:58,320 like medical planning that you weren't thinking about 553 00:22:58,320 --> 00:22:59,730 in your younger years. 554 00:22:59,730 --> 00:23:01,920 So you can really understand as an owner, 555 00:23:01,920 --> 00:23:03,693 what you need to get out. 556 00:23:05,850 --> 00:23:07,350 You're gonna organize the information, right? 557 00:23:07,350 --> 00:23:08,910 Resources and assets. 558 00:23:08,910 --> 00:23:10,800 Try to figure out what you own, 559 00:23:10,800 --> 00:23:13,798 titles, get those things in order for property, 560 00:23:13,798 --> 00:23:16,022 debts, obligations, 561 00:23:16,022 --> 00:23:18,630 I don't generally do, you know, 562 00:23:18,630 --> 00:23:21,570 I don't see people do professional paid appraisals 563 00:23:21,570 --> 00:23:22,403 right off the bat. 564 00:23:22,403 --> 00:23:25,590 Often in my role as an extension business person, 565 00:23:25,590 --> 00:23:27,750 we can do evaluation on business property 566 00:23:27,750 --> 00:23:29,520 from a management perspective, 567 00:23:29,520 --> 00:23:31,050 that's not something that's gonna get stamped 568 00:23:31,050 --> 00:23:33,420 by a licensed or certified appraiser, 569 00:23:33,420 --> 00:23:35,370 but it's good enough to get people started. 570 00:23:35,370 --> 00:23:36,630 We get you in the right ballpark. 571 00:23:36,630 --> 00:23:39,420 Do you got $500,000 worth of stuff that's paid for? 572 00:23:39,420 --> 00:23:40,830 Do you have 3/4 of a million? 573 00:23:40,830 --> 00:23:42,780 Do you have $1 million worth of stuff? 574 00:23:42,780 --> 00:23:44,190 You at a level where you may start 575 00:23:44,190 --> 00:23:46,170 to push on thresholds for, you know, 576 00:23:46,170 --> 00:23:48,563 federal tax exemptions wherever they are 577 00:23:48,563 --> 00:23:51,540 at certain points in history. 578 00:23:51,540 --> 00:23:52,590 So we can do some of that, 579 00:23:52,590 --> 00:23:54,690 and you can certainly do some of that on your own 580 00:23:54,690 --> 00:23:57,060 before a professional gets involved. 581 00:23:57,060 --> 00:23:58,740 And then another basic thing that's important 582 00:23:58,740 --> 00:24:00,450 for current owners obviously, 583 00:24:00,450 --> 00:24:02,542 is getting input from the family members. 584 00:24:02,542 --> 00:24:05,370 If we're dealing with a business family dynamic here, 585 00:24:05,370 --> 00:24:08,790 we gotta start talking about both family stuff, 586 00:24:08,790 --> 00:24:11,124 family property, and business property. 587 00:24:11,124 --> 00:24:12,930 And if we're talking about just business, 588 00:24:12,930 --> 00:24:15,360 we still are getting input from family members, 589 00:24:15,360 --> 00:24:17,280 certainly on if there's other people that 590 00:24:17,280 --> 00:24:20,824 had an expectation of being involved in the future business. 591 00:24:20,824 --> 00:24:23,340 But let's be clear, like right off the bat, 592 00:24:23,340 --> 00:24:26,760 do they have an interest or a need or a want 593 00:24:26,760 --> 00:24:30,635 or an expectation to be involved in the decisions? 594 00:24:30,635 --> 00:24:32,250 At least giving their input 595 00:24:32,250 --> 00:24:34,803 so that the current owners can make decisions. 596 00:24:36,120 --> 00:24:37,620 So a real basic starting point, right? 597 00:24:37,620 --> 00:24:39,210 Get your needs in order, 598 00:24:39,210 --> 00:24:40,590 get some of your records in order, 599 00:24:40,590 --> 00:24:42,600 get your resource assessments in order, 600 00:24:42,600 --> 00:24:43,860 and get your family in order 601 00:24:43,860 --> 00:24:46,083 if there's more people involved. 602 00:24:47,610 --> 00:24:48,690 Family communication, right? 603 00:24:48,690 --> 00:24:49,740 Taking it to the next level, 604 00:24:49,740 --> 00:24:51,030 getting everyone's input, 605 00:24:51,030 --> 00:24:54,540 or attempting to get everyone's input. 606 00:24:54,540 --> 00:24:58,595 I've worked with families where the senior owner 607 00:24:58,595 --> 00:25:01,897 didn't necessarily get along very well 608 00:25:01,897 --> 00:25:04,440 with one of his children, 609 00:25:04,440 --> 00:25:06,264 and it became clear 610 00:25:06,264 --> 00:25:08,730 that the transfer planning really couldn't go forward 611 00:25:08,730 --> 00:25:09,563 without getting, 612 00:25:09,563 --> 00:25:13,110 without sharing information back to the children. 613 00:25:13,110 --> 00:25:15,990 And this individual actually cut videos, cut these, 614 00:25:15,990 --> 00:25:17,940 we cut these 40, 50-minute videos 615 00:25:17,940 --> 00:25:20,340 where the owner just basically talked 616 00:25:20,340 --> 00:25:23,340 about what was important to him, his wife, 617 00:25:23,340 --> 00:25:25,230 and the future of the business. 618 00:25:25,230 --> 00:25:27,037 And it wasn't even an invitation to say, 619 00:25:27,037 --> 00:25:28,140 "Hey daughter, I want your input." 620 00:25:28,140 --> 00:25:28,980 It was just, 621 00:25:28,980 --> 00:25:30,737 we haven't talked in years and I need you to know 622 00:25:30,737 --> 00:25:33,780 where I'm at and what's important to me, 623 00:25:33,780 --> 00:25:36,774 because I'm gonna be making some pretty serious decisions. 624 00:25:36,774 --> 00:25:39,720 So you got this idea of getting people's input, 625 00:25:39,720 --> 00:25:41,944 sharing information and figuring out, honestly, 626 00:25:41,944 --> 00:25:43,830 are you asking for people's input 627 00:25:43,830 --> 00:25:46,445 or do you just need to share what you have to say? 628 00:25:46,445 --> 00:25:48,240 One of the things that can be really difficult 629 00:25:48,240 --> 00:25:50,880 for the exiting owners, the parents often, 630 00:25:50,880 --> 00:25:54,306 is there are difficult decisions to make. 631 00:25:54,306 --> 00:25:57,264 And granted, if you've had children 632 00:25:57,264 --> 00:25:59,970 and if you've kind of worked your best to support kids, 633 00:25:59,970 --> 00:26:02,070 sometimes people are waiting for the feedback 634 00:26:02,070 --> 00:26:04,110 from the children to guide the process. 635 00:26:04,110 --> 00:26:06,060 And I've often seen that as a real sticking point 636 00:26:06,060 --> 00:26:09,303 when the current owners haven't really owned their, 637 00:26:10,350 --> 00:26:12,270 their responsibility to make decisions to move, 638 00:26:12,270 --> 00:26:13,263 to move it forward. 639 00:26:14,430 --> 00:26:16,710 So difficult decisions to make, 640 00:26:16,710 --> 00:26:19,041 communication needs to continue. 641 00:26:19,041 --> 00:26:23,373 The next generation can often find it pretty difficult to, 642 00:26:24,810 --> 00:26:25,643 to wait. 643 00:26:25,643 --> 00:26:30,090 If this process doesn't show action, like I said, 644 00:26:30,090 --> 00:26:30,990 it could take years, 645 00:26:30,990 --> 00:26:33,030 but even the idea of having progress 646 00:26:33,030 --> 00:26:35,160 where people can communicate, it can drive, 647 00:26:35,160 --> 00:26:36,810 it can drive the younger generation nuts. 648 00:26:36,810 --> 00:26:40,530 It can also drive new parties nuts 649 00:26:40,530 --> 00:26:42,420 if they're thinking this is not going anywhere. 650 00:26:42,420 --> 00:26:46,173 So I think that's important just to keep in mind that, 651 00:26:47,700 --> 00:26:48,533 hold on one second, 652 00:26:48,533 --> 00:26:51,030 I'm just gonna do a little clicking here. 653 00:26:51,030 --> 00:26:52,083 Okay. 654 00:26:52,083 --> 00:26:53,750 It can be difficult 655 00:26:53,750 --> 00:26:56,250 to be stuck with difficult decisions, 656 00:26:56,250 --> 00:26:58,746 not be necessarily making progress or maybe, 657 00:26:58,746 --> 00:27:01,646 but knowing that other people could be frustrated by that. 658 00:27:02,700 --> 00:27:03,840 Productive family meetings. 659 00:27:03,840 --> 00:27:05,820 No different than business meetings with employees. 660 00:27:05,820 --> 00:27:06,810 How do you set up the framework? 661 00:27:06,810 --> 00:27:08,560 How do you move this thing forward? 662 00:27:09,510 --> 00:27:10,486 Okay, values. 663 00:27:10,486 --> 00:27:12,000 what's important and why? 664 00:27:12,000 --> 00:27:14,418 I'm gonna go through a couple examples 665 00:27:14,418 --> 00:27:15,368 of things I've seen 666 00:27:16,245 --> 00:27:21,245 and how people have had different perspectives on that. 667 00:27:24,900 --> 00:27:26,460 At the end of the session, I'll send some, 668 00:27:26,460 --> 00:27:28,680 I'll put some links in the chat and people can email me. 669 00:27:28,680 --> 00:27:29,910 We've got a couple worksheets 670 00:27:29,910 --> 00:27:31,560 and often in my early meetings 671 00:27:31,560 --> 00:27:33,012 I'm either giving people worksheets 672 00:27:33,012 --> 00:27:35,940 if I don't think I'll be back again, 673 00:27:35,940 --> 00:27:37,860 or we're just having these conversations 674 00:27:37,860 --> 00:27:39,780 and I'm asking questions like this. 675 00:27:39,780 --> 00:27:43,920 What's important to you about the farm today in general? 676 00:27:43,920 --> 00:27:45,510 Some people will get right into the business 677 00:27:45,510 --> 00:27:47,970 and how it's important to have a, you know, great business. 678 00:27:47,970 --> 00:27:49,567 Other people will say things like, 679 00:27:49,567 --> 00:27:50,550 "Well, I just, 680 00:27:50,550 --> 00:27:52,560 it's really important for me to look out my back window 681 00:27:52,560 --> 00:27:54,660 and not see a parking lot." Right? 682 00:27:54,660 --> 00:27:57,450 If you've got forested land or meadows, whatever it is, 683 00:27:57,450 --> 00:28:00,660 you're gonna get so many different opinions from people. 684 00:28:00,660 --> 00:28:02,940 And I encourage you to start really big like that. 685 00:28:02,940 --> 00:28:05,461 Like what is important about this maple operation 686 00:28:05,461 --> 00:28:06,719 for you today? 687 00:28:06,719 --> 00:28:09,720 What are the hopes over the next 10 years? 688 00:28:09,720 --> 00:28:12,780 I've had a lot of elder farm owners come to me 689 00:28:12,780 --> 00:28:16,410 and say, they've got a certain date in mind. 690 00:28:16,410 --> 00:28:17,483 You know, I, 691 00:28:17,483 --> 00:28:19,830 I intend to not be involved in the farm 692 00:28:19,830 --> 00:28:22,560 by the time I'm 75 or 70. 693 00:28:22,560 --> 00:28:26,250 And they've got some kind of clear timeframes going on. 694 00:28:26,250 --> 00:28:28,980 So thinking about where you're at in that timeframe, 695 00:28:28,980 --> 00:28:31,170 in being being 45 or 50, 696 00:28:31,170 --> 00:28:32,550 and setting up buy/sell agreements 697 00:28:32,550 --> 00:28:34,440 is different than being 70 698 00:28:34,440 --> 00:28:36,840 and kind of thinking where you'll be in 5 years. 699 00:28:38,220 --> 00:28:40,110 What are the things you want other family members to know? 700 00:28:40,110 --> 00:28:42,033 Back to those things I said before, right? 701 00:28:42,033 --> 00:28:44,670 There are things to be said, 702 00:28:44,670 --> 00:28:46,410 and there's also time for listening, 703 00:28:46,410 --> 00:28:47,243 if you've got 704 00:28:47,243 --> 00:28:50,423 to facilitate this kind of ongoing family process 705 00:28:50,423 --> 00:28:51,840 and believe it or not, 706 00:28:51,840 --> 00:28:53,130 you're talking about a business legacy, 707 00:28:53,130 --> 00:28:55,590 but you're certainly leaving a family legacy, 708 00:28:55,590 --> 00:28:58,312 especially when you start moving around property ownership. 709 00:28:58,312 --> 00:28:59,430 Like it or not, 710 00:28:59,430 --> 00:29:01,650 there's gonna be people that they're gonna have 711 00:29:01,650 --> 00:29:04,290 to live beyond you and you wanna be thoughtful. 712 00:29:04,290 --> 00:29:08,310 I think about what you leave for them both materially, 713 00:29:08,310 --> 00:29:10,833 but also that that dynamic of, 714 00:29:12,829 --> 00:29:15,990 you know, not everyone getting what they want, 715 00:29:15,990 --> 00:29:18,150 but the dynamic of people sort of understanding 716 00:29:18,150 --> 00:29:19,900 where other people are coming from. 717 00:29:21,420 --> 00:29:23,400 So let's look at a few more of these values, right? 718 00:29:23,400 --> 00:29:25,830 I know people where the idea of a paid job 719 00:29:25,830 --> 00:29:28,737 for that maple business, that's an important thing, right? 720 00:29:28,737 --> 00:29:30,921 And that's a real important factor 721 00:29:30,921 --> 00:29:33,720 in the whole decision making. 722 00:29:33,720 --> 00:29:34,860 And then for others, 723 00:29:34,860 --> 00:29:37,110 maple may be a little bit of a sideline, 724 00:29:37,110 --> 00:29:39,360 maybe more of a lifestyle or a hobby, 725 00:29:39,360 --> 00:29:40,680 based on the scale of the business. 726 00:29:40,680 --> 00:29:43,260 So we've got kind of two opposites there. 727 00:29:43,260 --> 00:29:45,090 Paid job, lifestyle, hobby, 728 00:29:45,090 --> 00:29:47,180 very important to get that cleared up early on 729 00:29:47,180 --> 00:29:48,441 in the process. 730 00:29:48,441 --> 00:29:53,441 That could set a certain trajectory for the succession 731 00:29:54,480 --> 00:29:56,760 or potentially sale or exit. 732 00:29:56,760 --> 00:29:57,810 Okay, land ownership, 733 00:29:58,650 --> 00:30:01,410 can be critical for collateral for borrowing, 734 00:30:01,410 --> 00:30:03,330 can be critical for long term security 735 00:30:03,330 --> 00:30:04,380 for people thinking that, you know, 736 00:30:04,380 --> 00:30:07,380 they're gonna be there on the property forever. 737 00:30:07,380 --> 00:30:09,330 For others it's just access to land. 738 00:30:09,330 --> 00:30:10,714 It may be rental agreements, 739 00:30:10,714 --> 00:30:12,240 may be long term lease, 740 00:30:12,240 --> 00:30:14,250 so two different distinctions there. 741 00:30:14,250 --> 00:30:16,577 Land ownership has a certain factor 742 00:30:16,577 --> 00:30:18,270 or certain value in this. 743 00:30:18,270 --> 00:30:20,400 And then we've got just access in general 744 00:30:20,400 --> 00:30:23,370 for people that potentially want to operate 745 00:30:23,370 --> 00:30:25,800 but don't necessarily feel like they need to 746 00:30:25,800 --> 00:30:29,250 or maybe can't own the property outright. 747 00:30:29,250 --> 00:30:31,110 We got decision making control. 748 00:30:31,110 --> 00:30:33,120 People love to have decision making control. 749 00:30:33,120 --> 00:30:35,222 And then there's this concept of teamwork partnerships, 750 00:30:35,222 --> 00:30:37,350 multi-member entities, 751 00:30:37,350 --> 00:30:39,810 and let's understand that dynamic as well 752 00:30:39,810 --> 00:30:41,760 and understand where you think you can play 753 00:30:41,760 --> 00:30:43,713 into either one of those. 754 00:30:45,150 --> 00:30:47,370 And then I mentioned before, business and family, right? 755 00:30:47,370 --> 00:30:49,980 Two different things often interwoven there, 756 00:30:49,980 --> 00:30:52,200 either with intergenerational items 757 00:30:52,200 --> 00:30:54,630 or just the idea of a single business owner 758 00:30:54,630 --> 00:30:57,630 that's got a spouse or partner involved 759 00:30:57,630 --> 00:30:59,707 in either the estate planning 760 00:30:59,707 --> 00:31:04,140 or involved in the idea of long-term family planning, 761 00:31:04,140 --> 00:31:05,490 inheritance, things like that, 762 00:31:05,490 --> 00:31:06,663 wills and testaments. 763 00:31:08,250 --> 00:31:11,343 All right, so what could go wrong, right? 764 00:31:12,780 --> 00:31:14,520 I don't know how many of you have sat 765 00:31:14,520 --> 00:31:16,410 through other business presentations 766 00:31:16,410 --> 00:31:18,010 where we talk about the five Ds: 767 00:31:19,290 --> 00:31:21,990 death, the disability, 768 00:31:21,990 --> 00:31:24,516 disaster, divorce, 769 00:31:24,516 --> 00:31:27,480 disagreements is like the softest one of those, right? 770 00:31:27,480 --> 00:31:29,940 I think the first four are the ones 771 00:31:29,940 --> 00:31:34,535 that can be difficult, emotionally for people. 772 00:31:34,535 --> 00:31:38,700 Often in, in most cases, 773 00:31:38,700 --> 00:31:41,673 a lot of these can be difficult to plan. 774 00:31:42,720 --> 00:31:45,510 They can come up unexpectedly 775 00:31:45,510 --> 00:31:50,340 and they can have massive impacts on ownership, 776 00:31:50,340 --> 00:31:51,990 on relationships. 777 00:31:51,990 --> 00:31:52,823 And let's face it, 778 00:31:52,823 --> 00:31:55,410 they can have drastic impacts on ownership. 779 00:31:55,410 --> 00:31:58,470 So, as you're going about transfer planning, 780 00:31:58,470 --> 00:32:01,020 as you're go going about legal planning in general 781 00:32:01,020 --> 00:32:04,470 for a business, these are the five Ds, right? 782 00:32:04,470 --> 00:32:06,300 Be aware of them and then ask yourself, 783 00:32:06,300 --> 00:32:07,661 how likely is this risk? 784 00:32:07,661 --> 00:32:11,397 How likely is it that this risk can occur to me? 785 00:32:11,397 --> 00:32:16,050 How significant could it be if it were to occur to me? 786 00:32:16,050 --> 00:32:17,760 You know, are we protected? 787 00:32:17,760 --> 00:32:19,077 And this planning process, 788 00:32:19,077 --> 00:32:21,960 transfer planning is the recognition that, 789 00:32:21,960 --> 00:32:23,610 well, the big one at the top, 790 00:32:23,610 --> 00:32:25,830 the death, like death could happen, 791 00:32:25,830 --> 00:32:28,170 disability could happen as people age. 792 00:32:28,170 --> 00:32:31,320 Is this business positioned to be available 793 00:32:31,320 --> 00:32:32,798 to somebody else? 794 00:32:32,798 --> 00:32:35,280 And the recognition that, you know, 795 00:32:35,280 --> 00:32:37,890 if you're the owner, we want your input now 796 00:32:37,890 --> 00:32:39,780 when you're thinking clearly 797 00:32:39,780 --> 00:32:42,743 if it's gonna be about the direction of where this is going. 798 00:32:45,120 --> 00:32:45,953 All right. 799 00:32:45,953 --> 00:32:47,880 And then we've kind of thought about what's going 800 00:32:47,880 --> 00:32:51,540 on with the likelihood of this risk 801 00:32:51,540 --> 00:32:53,160 and then what are the steps needed to manage this, 802 00:32:53,160 --> 00:32:56,490 and talk a little bit about some of the legal frameworks 803 00:32:56,490 --> 00:32:58,740 that certainly people hear about and are relevant 804 00:32:58,740 --> 00:33:00,300 for transfer planning. 805 00:33:00,300 --> 00:33:01,470 But across the board, right? 806 00:33:01,470 --> 00:33:04,140 Legal agreements, insurance, again, 807 00:33:04,140 --> 00:33:05,190 just family communication, 808 00:33:05,190 --> 00:33:08,100 people knowing what the expectation is, 809 00:33:08,100 --> 00:33:09,900 knowing what the intent is 810 00:33:09,900 --> 00:33:11,613 can often be very important. 811 00:33:14,520 --> 00:33:15,509 All right, 812 00:33:15,509 --> 00:33:17,580 that's a little bit on the exiting owners 813 00:33:17,580 --> 00:33:21,750 and now we're gonna look at the future owners, 814 00:33:21,750 --> 00:33:22,770 acquiring parties. 815 00:33:22,770 --> 00:33:27,024 What is it that they need out of this planning process? 816 00:33:27,024 --> 00:33:29,970 They often wanna know the business situation now. 817 00:33:29,970 --> 00:33:34,970 They really want some clarity on records, 818 00:33:35,004 --> 00:33:38,070 profitability, financials, 819 00:33:38,070 --> 00:33:40,560 what is this thing that they're considering? 820 00:33:40,560 --> 00:33:43,260 Workload I think is another real big factor, 821 00:33:43,260 --> 00:33:46,140 especially inter-generationally here. 822 00:33:46,140 --> 00:33:48,446 We've got people in different ages 823 00:33:48,446 --> 00:33:50,760 that have a different mindset 824 00:33:50,760 --> 00:33:52,800 on how much work is appropriate. 825 00:33:52,800 --> 00:33:55,770 Also, if you've got people with different family statuses, 826 00:33:55,770 --> 00:33:58,932 they have different ability to put in hours, right? 827 00:33:58,932 --> 00:34:02,580 So young, I won't say younger generation all the time, 828 00:34:02,580 --> 00:34:04,200 let's call it the acquiring parties. 829 00:34:04,200 --> 00:34:05,760 What's the business situation now? 830 00:34:05,760 --> 00:34:06,900 What are the business inventories? 831 00:34:06,900 --> 00:34:08,310 What is this business? 832 00:34:08,310 --> 00:34:09,870 How much equipment is there? 833 00:34:09,870 --> 00:34:11,340 How much did this equipment cost? 834 00:34:11,340 --> 00:34:13,230 If we're talking about buying in, 835 00:34:13,230 --> 00:34:15,300 what is the value of these things? 836 00:34:15,300 --> 00:34:17,970 Market outlook, a huge factor. 837 00:34:17,970 --> 00:34:20,520 Earlier I said that the business model of 10 years 838 00:34:20,520 --> 00:34:23,310 is not necessarily the business model of today. 839 00:34:23,310 --> 00:34:25,620 So that market outlook and the feasibility plan 840 00:34:25,620 --> 00:34:27,930 for this business is very important 841 00:34:27,930 --> 00:34:29,460 for that next generation 842 00:34:29,460 --> 00:34:31,530 that's gonna be stepping into ownership. 843 00:34:31,530 --> 00:34:35,580 And then property ownership outlook really can't be ignored. 844 00:34:35,580 --> 00:34:37,290 This is where the rubber hits the road often 845 00:34:37,290 --> 00:34:38,520 where people are saying, 846 00:34:38,520 --> 00:34:41,426 I wanna buy property or I need to have collateral. 847 00:34:41,426 --> 00:34:44,983 I'm thinking about making improvements in this property. 848 00:34:44,983 --> 00:34:47,940 Nobody wants to make 20-year improvements on a property 849 00:34:47,940 --> 00:34:51,012 that they don't think they're going to own. 850 00:34:51,012 --> 00:34:53,843 Those are some of the factors that can go into this 851 00:34:53,843 --> 00:34:56,130 from the younger generation, 852 00:34:56,130 --> 00:34:57,720 the acquiring party saying, 853 00:34:57,720 --> 00:34:58,980 I'm interested in this, 854 00:34:58,980 --> 00:35:01,320 these are the things that we gotta talk about 855 00:35:01,320 --> 00:35:03,210 for me to know if I can step forward 856 00:35:03,210 --> 00:35:07,413 and negotiation or structuring some sort of deal. 857 00:35:10,139 --> 00:35:12,090 Future farmers gotta have a plan, right? 858 00:35:12,090 --> 00:35:14,580 So, do they have the skills? 859 00:35:14,580 --> 00:35:18,180 Can they step in and manage this 10,000 tap operation? 860 00:35:18,180 --> 00:35:19,013 Can they step in? 861 00:35:19,013 --> 00:35:21,720 Do they know how to manage websites, online maple sales, 862 00:35:21,720 --> 00:35:22,708 all those dynamics? 863 00:35:22,708 --> 00:35:24,150 So you've got skills, 864 00:35:24,150 --> 00:35:25,830 potentially a training plan. 865 00:35:25,830 --> 00:35:27,510 I always ask the younger generation, 866 00:35:27,510 --> 00:35:29,580 what's their professional development plan? 867 00:35:29,580 --> 00:35:32,340 Like how do they expect to acquire enough information 868 00:35:32,340 --> 00:35:34,770 to move into the business and move the business 869 00:35:34,770 --> 00:35:37,470 to where it maybe needs to be again in 10 years? 870 00:35:37,470 --> 00:35:40,410 Readiness to take ownership, both from a work perspective, 871 00:35:40,410 --> 00:35:42,491 but capital access. 872 00:35:42,491 --> 00:35:45,690 Do they have the money that it's gonna take 873 00:35:45,690 --> 00:35:47,160 if there's gonna need to be a buy-in 874 00:35:47,160 --> 00:35:51,720 or even just to maintain the property? 875 00:35:51,720 --> 00:35:54,180 And then if they're coming from situations 876 00:35:54,180 --> 00:35:56,323 where they've had wages, 877 00:35:56,323 --> 00:35:59,460 are they prepared to move into ownership of a, 878 00:35:59,460 --> 00:36:00,840 called owner-operated business 879 00:36:00,840 --> 00:36:02,880 where they may not be getting a paycheck. 880 00:36:02,880 --> 00:36:04,260 It's a different format, 881 00:36:04,260 --> 00:36:07,290 how you recoup or you know, draw value, 882 00:36:07,290 --> 00:36:10,710 draw profits out of a business. 883 00:36:10,710 --> 00:36:12,750 So those are really important factors, 884 00:36:12,750 --> 00:36:16,683 especially for that younger owner or that entering owner. 885 00:36:18,970 --> 00:36:23,430 Okay, so big picture, talked about being an owner, 886 00:36:23,430 --> 00:36:27,300 talked about what that next acquiring owner 887 00:36:27,300 --> 00:36:28,620 may be interested in. 888 00:36:28,620 --> 00:36:31,440 And transfer planning certainly wouldn't be possible 889 00:36:31,440 --> 00:36:33,393 without other advisors. 890 00:36:35,640 --> 00:36:37,170 So, who are they? 891 00:36:37,170 --> 00:36:38,520 Facilitators, like myself, 892 00:36:38,520 --> 00:36:40,941 might have someone who's clearly a third party, 893 00:36:40,941 --> 00:36:42,570 knows something about your family, 894 00:36:42,570 --> 00:36:46,200 knows something in my case about maple and farm finances. 895 00:36:46,200 --> 00:36:48,510 Someone that can convene the meeting, 896 00:36:48,510 --> 00:36:50,970 someone that can establish some homework 897 00:36:50,970 --> 00:36:53,700 or manage some information back and forth. 898 00:36:53,700 --> 00:36:56,520 That certainly, there's a value in that. 899 00:36:56,520 --> 00:36:58,860 In some cases, mediator counselors are needed. 900 00:36:58,860 --> 00:37:00,480 You need other advisors, 901 00:37:00,480 --> 00:37:03,060 especially when it gets into heated communication 902 00:37:03,060 --> 00:37:05,040 between family members, 903 00:37:05,040 --> 00:37:06,903 potentially conflict may come up. 904 00:37:07,740 --> 00:37:11,610 This is not not uncommon, not uncommon, 905 00:37:11,610 --> 00:37:14,700 especially beautiful mountainside property here 906 00:37:14,700 --> 00:37:15,900 with a couple family members 907 00:37:15,900 --> 00:37:18,240 that are not into maple sugaring. 908 00:37:18,240 --> 00:37:20,610 Believe me, the opportunity for a mediator 909 00:37:20,610 --> 00:37:23,310 to help kind of smooth out expectations 910 00:37:23,310 --> 00:37:26,340 for what happens to the future value of that property 911 00:37:26,340 --> 00:37:28,590 is a real deal. 912 00:37:28,590 --> 00:37:29,802 Legal professionals. 913 00:37:29,802 --> 00:37:32,640 In a second, I'll give a little bit overview on legal, 914 00:37:32,640 --> 00:37:35,610 but clearly we're talking about business entity formations. 915 00:37:35,610 --> 00:37:39,780 So you're either in sole proprietor or LLCs, 916 00:37:39,780 --> 00:37:43,050 S-corp, C-corps, those are the business entities. 917 00:37:43,050 --> 00:37:46,590 Then we move into the instruments of moving money, 918 00:37:46,590 --> 00:37:48,810 moving value, moving ownership. 919 00:37:48,810 --> 00:37:51,437 Lawyers certainly involved in operating agreements 920 00:37:51,437 --> 00:37:54,870 and transfers that include those. 921 00:37:54,870 --> 00:37:56,220 So we got legal professionals, 922 00:37:56,220 --> 00:37:58,120 and then last here, tax professionals. 923 00:38:00,180 --> 00:38:02,610 Super important, it's super important for taxation. 924 00:38:02,610 --> 00:38:05,250 And I'm also gonna throw in elder care, 925 00:38:05,250 --> 00:38:08,220 call it, elder care financial planners, 926 00:38:08,220 --> 00:38:09,870 certainly I know it's there. 927 00:38:09,870 --> 00:38:11,730 I've been to meetings enough of 'em 928 00:38:11,730 --> 00:38:14,007 and I've even, I can't remember the the specifics, 929 00:38:14,007 --> 00:38:19,007 but the idea of understanding the dynamics of money, 930 00:38:19,260 --> 00:38:21,270 taxes, legal agreements, 931 00:38:21,270 --> 00:38:24,510 when it comes to estate planning is gonna be essential. 932 00:38:24,510 --> 00:38:26,070 It's essential for the exiting owner 933 00:38:26,070 --> 00:38:30,480 and it's also essential for the acquiring party. 934 00:38:30,480 --> 00:38:32,340 If you've got an ownership of a business 935 00:38:32,340 --> 00:38:34,950 and you've been in denial of federal taxes 936 00:38:34,950 --> 00:38:38,193 or you've been strategically pushing off on capital gains, 937 00:38:39,120 --> 00:38:44,120 the future acquiring party is gonna be implicated 938 00:38:44,550 --> 00:38:46,350 in the outcomes of that, potentially, right? 939 00:38:46,350 --> 00:38:48,900 So we've gotta be able to connect those dots. 940 00:38:48,900 --> 00:38:51,900 It's not just about trying to pay the lowest amount 941 00:38:51,900 --> 00:38:54,840 of taxes for the exiting owners. 942 00:38:54,840 --> 00:38:57,270 The younger generation here needs a viable 943 00:38:57,270 --> 00:38:58,320 starting point too, right? 944 00:38:58,320 --> 00:38:59,190 So we've gotta, 945 00:38:59,190 --> 00:39:00,990 gonna have to balance some of those trade-offs 946 00:39:00,990 --> 00:39:03,390 between those different parties 947 00:39:03,390 --> 00:39:05,250 and then professionals are gonna be, 948 00:39:05,250 --> 00:39:08,628 I've found them always necessary in, 949 00:39:08,628 --> 00:39:11,850 not just planning but certainly implementation 950 00:39:11,850 --> 00:39:15,198 when the decisions have been made 951 00:39:15,198 --> 00:39:18,381 and it's time to actually enact certain agreements, 952 00:39:18,381 --> 00:39:20,104 we need those specialists 953 00:39:20,104 --> 00:39:22,290 and they can be a big part of it. 954 00:39:22,290 --> 00:39:24,150 Doesn't mean they need to be there, you know, 955 00:39:24,150 --> 00:39:24,983 day-in and day-out, 956 00:39:24,983 --> 00:39:28,203 but know that they're gonna be valuable to the process. 957 00:39:29,460 --> 00:39:31,091 All this stuff is about planning, right? 958 00:39:31,091 --> 00:39:33,330 Thinking about values, getting assessments, 959 00:39:33,330 --> 00:39:35,760 inventories, values, getting people together to talk. 960 00:39:35,760 --> 00:39:38,460 So we're talking about all these things to plan. 961 00:39:38,460 --> 00:39:40,530 Theoretically, right, you wanna have some outcomes, 962 00:39:40,530 --> 00:39:43,050 you wanna develop and execute formal agreements, 963 00:39:43,050 --> 00:39:44,816 but I just wanna make it clear that it, 964 00:39:44,816 --> 00:39:46,830 you may be ready to go right off the bat, 965 00:39:46,830 --> 00:39:50,220 it may take a period of time depending on your ownership 966 00:39:50,220 --> 00:39:52,650 and depending who that other party is coming in 967 00:39:52,650 --> 00:39:56,280 to be ready to actually make decisions and then enact them. 968 00:39:56,280 --> 00:39:59,070 So this is gonna be a really quick overview, 969 00:39:59,070 --> 00:40:01,230 'cause I'm not the attorney here, 970 00:40:01,230 --> 00:40:06,230 but some of those core documents or tools 971 00:40:06,690 --> 00:40:08,243 to execute, right? 972 00:40:08,243 --> 00:40:11,730 Wills need to be in place, at the baseline. 973 00:40:11,730 --> 00:40:13,620 Then we start talking about trust planning, 974 00:40:13,620 --> 00:40:14,700 just a couple examples. 975 00:40:14,700 --> 00:40:16,140 Revocable trusts, 976 00:40:16,140 --> 00:40:19,020 living irrevocable trusts, 977 00:40:19,020 --> 00:40:20,970 joint tenancy upon survivorship. 978 00:40:20,970 --> 00:40:23,997 You know, there's different legal instruments 979 00:40:23,997 --> 00:40:27,060 related to transfer of ownership 980 00:40:27,060 --> 00:40:29,310 and understanding when that happens. 981 00:40:29,310 --> 00:40:30,990 Gifting, mentioned the attorneys 982 00:40:30,990 --> 00:40:33,120 or the tax preparers earlier, 983 00:40:33,120 --> 00:40:34,620 if there's gonna be incremental gifting 984 00:40:34,620 --> 00:40:37,440 over 10 or 15 years or 5 years, 985 00:40:37,440 --> 00:40:40,200 working with tax professionals on that. 986 00:40:40,200 --> 00:40:41,430 Business entities, 987 00:40:41,430 --> 00:40:43,320 we could talk about a little bit if people have questions, 988 00:40:43,320 --> 00:40:45,930 but different structures and different business entities 989 00:40:45,930 --> 00:40:47,160 to bring in different members, 990 00:40:47,160 --> 00:40:50,249 certainly tools here, buy/sell agreements. 991 00:40:50,249 --> 00:40:52,620 These are just a couple really quick tools 992 00:40:52,620 --> 00:40:55,140 to understand that they're out there. 993 00:40:55,140 --> 00:40:57,640 And what I wanna close by saying is that 994 00:40:58,860 --> 00:41:01,170 when you start the transfer planning process, 995 00:41:01,170 --> 00:41:03,600 I don't think anyone should be tool-oriented. 996 00:41:03,600 --> 00:41:04,770 You shouldn't be asking yourself, 997 00:41:04,770 --> 00:41:06,480 what legal tool am I gonna use? 998 00:41:06,480 --> 00:41:07,590 Is it an LLC? 999 00:41:07,590 --> 00:41:08,640 Is it a trust? 1000 00:41:08,640 --> 00:41:09,960 Really what you wanna be able to do is 1001 00:41:09,960 --> 00:41:12,960 start those goals and then hand those things 1002 00:41:12,960 --> 00:41:13,793 to the professional, 1003 00:41:13,793 --> 00:41:14,640 say, these are our goals, 1004 00:41:14,640 --> 00:41:16,110 these are our kind of criteria, 1005 00:41:16,110 --> 00:41:16,950 what's the instrument? 1006 00:41:16,950 --> 00:41:20,010 And then the professional guidance can often say, 1007 00:41:20,010 --> 00:41:21,990 yeah, a trust may be a good option here. 1008 00:41:21,990 --> 00:41:23,490 Or they could say, no, no, no that's not really, 1009 00:41:23,490 --> 00:41:26,340 that's not the way we're gonna do this. 1010 00:41:26,340 --> 00:41:29,610 This is just a single session, hour-session. 1011 00:41:29,610 --> 00:41:31,440 We do have a short course that I'll be teaching 1012 00:41:31,440 --> 00:41:33,990 that starts at the end of September. 1013 00:41:33,990 --> 00:41:37,620 That's gonna be four sessions, 1 1/2 hour each week, 1014 00:41:37,620 --> 00:41:40,061 that's gonna basically take this introduction 1015 00:41:40,061 --> 00:41:41,910 and move it to the next level 1016 00:41:41,910 --> 00:41:43,290 into those different planning steps. 1017 00:41:43,290 --> 00:41:45,210 So I want people to be aware of that. 1018 00:41:45,210 --> 00:41:48,273 And there's a couple prompts while I read some questions. 1019 00:41:50,376 --> 00:41:51,209 So Nick says, 1020 00:41:51,209 --> 00:41:53,640 "Is there a marketplace for available land operations 1021 00:41:53,640 --> 00:41:54,600 or equipment?" 1022 00:41:54,600 --> 00:41:55,837 Let me read all of these. 1023 00:41:55,837 --> 00:41:58,740 "Is there a marketplace for available land operations 1024 00:41:58,740 --> 00:42:01,170 or equipment, best practices, 1025 00:42:01,170 --> 00:42:04,560 top pitfalls and tips for the acquirer?" 1026 00:42:04,560 --> 00:42:05,467 That's a good one. 1027 00:42:05,467 --> 00:42:08,441 "Is it best practice for the acquirer to get a broker 1028 00:42:08,441 --> 00:42:09,897 or an advisor?" 1029 00:42:11,467 --> 00:42:14,070 "Is there a marketplace for available land?" 1030 00:42:14,070 --> 00:42:15,300 I don't know if you're actually saying 1031 00:42:15,300 --> 00:42:16,560 is there an actual platform 1032 00:42:16,560 --> 00:42:18,810 and certainly there's real estate listings. 1033 00:42:18,810 --> 00:42:23,670 I don't know that there's anything specific for maple sales. 1034 00:42:23,670 --> 00:42:26,640 I certainly see like, gosh, is it land vests or something? 1035 00:42:26,640 --> 00:42:28,740 They have like the huge properties. 1036 00:42:28,740 --> 00:42:33,363 Other people please feel free to chat in some answers here. 1037 00:42:35,100 --> 00:42:36,690 So what I would say though, Nick, 1038 00:42:36,690 --> 00:42:39,870 is I don't, aside from the technical platforms, 1039 00:42:39,870 --> 00:42:42,660 knowing that the ownership profile of sugar makers 1040 00:42:42,660 --> 00:42:44,793 in Vermont is probably well over 55, 1041 00:42:45,840 --> 00:42:49,180 there is land operations and equipment that I'd say 1042 00:42:50,522 --> 00:42:54,240 is more and more likely to become available or to be, 1043 00:42:54,240 --> 00:42:56,583 you know, suggested for sale or transfer. 1044 00:42:57,720 --> 00:43:01,050 So just the demographics alone lead us to believe 1045 00:43:01,050 --> 00:43:02,100 that there's just a lot of these, 1046 00:43:02,100 --> 00:43:04,920 kind of pending situations coming up for owners 1047 00:43:04,920 --> 00:43:06,303 as they get older. 1048 00:43:07,295 --> 00:43:10,140 Best practices, pitfalls, tips for the acquirer? 1049 00:43:10,140 --> 00:43:12,573 Well let's see, for Maple, 1050 00:43:13,410 --> 00:43:16,007 I'd say it's always valuable to get experience 1051 00:43:16,007 --> 00:43:17,733 in multiple places. 1052 00:43:18,925 --> 00:43:21,600 One of the best things for a family farm transfer 1053 00:43:21,600 --> 00:43:23,190 is for children that have left the farm 1054 00:43:23,190 --> 00:43:24,120 for a period of time, right? 1055 00:43:24,120 --> 00:43:25,350 They've left the farm, 1056 00:43:25,350 --> 00:43:26,910 they've developed skills elsewhere, 1057 00:43:26,910 --> 00:43:29,580 they've been trained or mentored by other managers, 1058 00:43:29,580 --> 00:43:30,754 other than parents, 1059 00:43:30,754 --> 00:43:32,880 and they've actually intentionally come back. 1060 00:43:32,880 --> 00:43:33,810 So that's like a little bit of a, 1061 00:43:33,810 --> 00:43:35,940 the family thing I would say is, 1062 00:43:35,940 --> 00:43:39,270 get away from that place for a while and then come back, 1063 00:43:39,270 --> 00:43:40,860 come back for all the right reasons. 1064 00:43:40,860 --> 00:43:43,320 Not stay there because that's what you, 1065 00:43:43,320 --> 00:43:44,880 that's what you know, 1066 00:43:44,880 --> 00:43:46,380 I'm not saying there's anything wrong with that, 1067 00:43:46,380 --> 00:43:48,960 but it's often very successful 1068 00:43:48,960 --> 00:43:50,790 when people come back for specific reasons 1069 00:43:50,790 --> 00:43:52,540 and they come back with new skills. 1070 00:43:54,570 --> 00:43:57,330 I think pitfalls for the acquirer, 1071 00:43:57,330 --> 00:43:58,163 I don't know, 1072 00:43:58,163 --> 00:44:00,902 honestly I've seen a lot more, 1073 00:44:00,902 --> 00:44:02,970 I've actually seen a lot more honesty 1074 00:44:02,970 --> 00:44:05,580 from people looking to acquire properties, 1075 00:44:05,580 --> 00:44:06,960 in the sense of like, 1076 00:44:06,960 --> 00:44:09,460 they kind of put the existing owners 1077 00:44:11,400 --> 00:44:12,570 not on the defensive, 1078 00:44:12,570 --> 00:44:13,800 but they're pretty clear in saying, 1079 00:44:13,800 --> 00:44:15,450 well, I need to know what you need. 1080 00:44:15,450 --> 00:44:17,490 I need to know if I need to buy this, 1081 00:44:17,490 --> 00:44:19,920 I need to know the status of the business. 1082 00:44:19,920 --> 00:44:22,620 So often the acquiring party is 1083 00:44:22,620 --> 00:44:24,120 asking really the right questions 1084 00:44:24,120 --> 00:44:25,860 and sometimes it's the exiting owners 1085 00:44:25,860 --> 00:44:28,170 that are kind of stuck because they've owned 1086 00:44:28,170 --> 00:44:29,490 and operated it for 20 years 1087 00:44:29,490 --> 00:44:32,670 and they've never really had to answer those questions 1088 00:44:32,670 --> 00:44:34,380 before to somebody else. 1089 00:44:34,380 --> 00:44:35,700 It's never been necessary. 1090 00:44:35,700 --> 00:44:39,060 So I think it's just key for the acquiring party 1091 00:44:39,060 --> 00:44:41,193 to be honest and ask questions. 1092 00:44:42,840 --> 00:44:46,056 Yeah, and I'm not too familiar with parties 1093 00:44:46,056 --> 00:44:49,170 using brokers or third parties. 1094 00:44:49,170 --> 00:44:50,550 Certainly advisors, like I said, 1095 00:44:50,550 --> 00:44:53,100 like we've definitely dealt with people 1096 00:44:53,100 --> 00:44:56,550 that are farm-seekers in our programs. 1097 00:44:56,550 --> 00:44:58,740 Maybe they've had management jobs on other maple 1098 00:44:58,740 --> 00:45:02,136 or farm operations and it's clear they're looking 1099 00:45:02,136 --> 00:45:04,170 and we've been involved with them, 1100 00:45:04,170 --> 00:45:05,610 because maybe they're already in our network 1101 00:45:05,610 --> 00:45:07,470 and they're working on feasibility plans 1102 00:45:07,470 --> 00:45:10,290 for maybe like a land trust property, things like that. 1103 00:45:10,290 --> 00:45:12,169 So it definitely doesn't hurt to have an advisor, 1104 00:45:12,169 --> 00:45:14,010 in the general sense. 1105 00:45:14,010 --> 00:45:15,169 From a broker perspective, 1106 00:45:15,169 --> 00:45:17,400 I don't have tons of experience on that. 1107 00:45:19,729 --> 00:45:20,562 [Student] That makes sense. 1108 00:45:20,562 --> 00:45:22,863 That actually answers one follow up there. 1109 00:45:24,570 --> 00:45:27,738 The, for the land piece, 1110 00:45:27,738 --> 00:45:29,940 yeah, so for the the land piece, 1111 00:45:29,940 --> 00:45:32,250 it makes sense to use the existing ones, 1112 00:45:32,250 --> 00:45:34,770 but I am more interested in how, 1113 00:45:34,770 --> 00:45:38,625 as a potential acquirer, one would find the opportunities 1114 00:45:38,625 --> 00:45:41,430 of people willing and interested in selling. 1115 00:45:41,430 --> 00:45:46,430 So, do you act as a information source for them? 1116 00:45:46,980 --> 00:45:49,170 Yeah, I certainly, 1117 00:45:49,170 --> 00:45:50,010 I see a lot of stuff come, 1118 00:45:50,010 --> 00:45:51,762 as an extension person, we see a lot of stuff 1119 00:45:51,762 --> 00:45:53,610 come across our desk. 1120 00:45:53,610 --> 00:45:54,660 What I don't do, 1121 00:45:54,660 --> 00:45:56,280 is I try not to get in that kind of role 1122 00:45:56,280 --> 00:45:57,450 of kind of being a broker, 1123 00:45:57,450 --> 00:46:00,033 especially with like private property transfers. 1124 00:46:01,530 --> 00:46:03,270 But yeah, being, yeah, 1125 00:46:03,270 --> 00:46:04,590 having a network, you know, 1126 00:46:04,590 --> 00:46:05,423 let's start off that: 1127 00:46:05,423 --> 00:46:07,050 having a network, right? 1128 00:46:07,050 --> 00:46:09,663 We do hear of things for sure or we know, 1129 00:46:12,913 --> 00:46:13,746 like Dave says, 1130 00:46:13,746 --> 00:46:14,579 yeah, well like the Maple news, right? 1131 00:46:14,579 --> 00:46:15,930 There's a publication where things are gonna be, 1132 00:46:15,930 --> 00:46:17,640 you know, published in a classified. 1133 00:46:17,640 --> 00:46:20,190 So, having those connections. 1134 00:46:20,190 --> 00:46:21,360 And then the other thing about the network, 1135 00:46:21,360 --> 00:46:22,365 I would say, 1136 00:46:22,365 --> 00:46:25,110 from my experience in the Maple community, 1137 00:46:25,110 --> 00:46:28,193 it is a relatively small community and then it, 1138 00:46:28,193 --> 00:46:31,710 and there's opportunities within the producer associations. 1139 00:46:31,710 --> 00:46:35,160 There are member associations in Vermont, 1140 00:46:35,160 --> 00:46:36,300 let's say even for me, 1141 00:46:36,300 --> 00:46:38,400 I've been involved with the state association 1142 00:46:38,400 --> 00:46:40,320 and I've gone to a couple county meetings. 1143 00:46:40,320 --> 00:46:41,820 Some of you, if you're producers, 1144 00:46:41,820 --> 00:46:43,200 you probably have more of a, 1145 00:46:43,200 --> 00:46:45,650 maybe have more relationship at the county level. 1146 00:46:46,740 --> 00:46:49,860 Getting involved in those networks and those associations, 1147 00:46:49,860 --> 00:46:52,440 even if you're not currently sugaring, 1148 00:46:52,440 --> 00:46:54,480 I think is probably potentially the best way 1149 00:46:54,480 --> 00:46:57,603 to have that kind of inside scoop, 1150 00:46:59,370 --> 00:47:01,803 participating with those groups of people. 1151 00:47:02,880 --> 00:47:05,640 And especially I'd say the maple community. 1152 00:47:05,640 --> 00:47:07,830 You know, you may be working for a sugar maker, 1153 00:47:07,830 --> 00:47:09,090 you may volunteer, but gosh, 1154 00:47:09,090 --> 00:47:10,390 it's fair season right now 1155 00:47:11,243 --> 00:47:12,750 and I've got a whole bunch of volunteer requests 1156 00:47:12,750 --> 00:47:16,020 to spin cotton candy or to do maple samples 1157 00:47:16,020 --> 00:47:16,890 at upcoming fairs. 1158 00:47:16,890 --> 00:47:18,930 So I'd say getting involved in the community 1159 00:47:18,930 --> 00:47:21,120 is like probably one of those anchor ways 1160 00:47:21,120 --> 00:47:24,393 to just know what's happening. 1161 00:47:25,590 --> 00:47:27,382 [Student] Makes sense. Thanks. 1162 00:47:27,382 --> 00:47:29,253 Yeah, great question. 1163 00:47:32,790 --> 00:47:34,350 Okay, keep 'em coming in the chat or, 1164 00:47:34,350 --> 00:47:35,490 okay, Dave's got one. 1165 00:47:35,490 --> 00:47:37,740 Could you comment on the advantages or disadvantages 1166 00:47:37,740 --> 00:47:40,590 of leasing a sugar house or sugar bush 1167 00:47:40,590 --> 00:47:44,190 rather than transferring them to the next owner? 1168 00:47:44,190 --> 00:47:47,502 Okay, I'll give some ideas and chime in here 1169 00:47:47,502 --> 00:47:49,833 if something more specific comes up. 1170 00:47:51,240 --> 00:47:56,240 I know of maple owners that have family members 1171 00:47:56,310 --> 00:47:58,261 that potentially could be, 1172 00:47:58,261 --> 00:48:02,100 could be getting groomed to take over the business 1173 00:48:02,100 --> 00:48:03,093 and the property. 1174 00:48:04,830 --> 00:48:09,060 The, generally existing owners, 1175 00:48:09,060 --> 00:48:10,830 and this gets into estate planning, 1176 00:48:10,830 --> 00:48:13,560 that real estate is like, so valuable. 1177 00:48:13,560 --> 00:48:16,530 And this depends again on the dynamics 1178 00:48:16,530 --> 00:48:18,450 of your estate planning. 1179 00:48:18,450 --> 00:48:21,390 Often that ownership of property is something 1180 00:48:21,390 --> 00:48:24,810 that can often wait till the end and, 1181 00:48:24,810 --> 00:48:27,300 or needs to wait till the end for certain reasons. 1182 00:48:27,300 --> 00:48:29,097 And this may be coming into the, you know, 1183 00:48:29,097 --> 00:48:30,690 the estate planning inheritance 1184 00:48:30,690 --> 00:48:33,570 of how the property is intended to transfer. 1185 00:48:33,570 --> 00:48:37,560 So in a lot of cases, the exiting owners don't, 1186 00:48:37,560 --> 00:48:41,070 or maybe not, is not advisable to give up ownership, 1187 00:48:41,070 --> 00:48:43,218 and there's a situation where they may 1188 00:48:43,218 --> 00:48:44,793 need to set up a lease. 1189 00:48:46,470 --> 00:48:48,720 Two reasons why you may need to set up a lease. 1190 00:48:48,720 --> 00:48:52,110 Let me just start with the sugar house or sugar bush. 1191 00:48:52,110 --> 00:48:54,510 If you've got a a party there, family or not, 1192 00:48:54,510 --> 00:48:59,490 that's interested and you're unable to transfer ownership 1193 00:48:59,490 --> 00:49:01,410 to them immediately, 1194 00:49:01,410 --> 00:49:03,810 they're gonna need some sort of security, right? 1195 00:49:03,810 --> 00:49:06,450 This is the idea of that younger generation 1196 00:49:06,450 --> 00:49:09,360 or that acquiring party getting kind of antsy 1197 00:49:09,360 --> 00:49:11,100 and feeling like, how am I gonna, 1198 00:49:11,100 --> 00:49:15,000 how can I invest my passion and my time into this thing, 1199 00:49:15,000 --> 00:49:16,890 unless I have some security? 1200 00:49:16,890 --> 00:49:19,800 So, a 10 or 20 year lease could potentially 1201 00:49:19,800 --> 00:49:21,780 be the mechanism to show to 'em, 1202 00:49:21,780 --> 00:49:25,560 hey, we're serious about this and it's formalized, right? 1203 00:49:25,560 --> 00:49:26,393 And that's the key. 1204 00:49:26,393 --> 00:49:28,650 It's not a handshake agreement, it's formalized. 1205 00:49:28,650 --> 00:49:30,810 We have heard stories and I'm sure some of you have, 1206 00:49:30,810 --> 00:49:33,090 about handshake agreements or assumptions 1207 00:49:33,090 --> 00:49:34,680 of access to property. 1208 00:49:34,680 --> 00:49:36,421 Someone dies or is disabled 1209 00:49:36,421 --> 00:49:39,150 and other family members take control of the estate, 1210 00:49:39,150 --> 00:49:41,130 and the people that thought they were gonna 1211 00:49:41,130 --> 00:49:43,770 be having long-term access to the property, 1212 00:49:43,770 --> 00:49:45,900 the sugar house, don't anymore. 1213 00:49:45,900 --> 00:49:50,900 And that is the unfortunate reality of family members 1214 00:49:51,090 --> 00:49:52,080 that maybe have disagreements, 1215 00:49:52,080 --> 00:49:54,210 but it's also the unfortunate reality 1216 00:49:54,210 --> 00:49:58,230 of informal agreements or non-formal agreements. 1217 00:49:58,230 --> 00:49:59,680 So there's one reason, right? 1218 00:50:00,879 --> 00:50:03,210 So owners need to, 1219 00:50:03,210 --> 00:50:05,370 they can't sell, so they've gotta set up a lease. 1220 00:50:05,370 --> 00:50:07,710 Acquiring party needs some sort of security, 1221 00:50:07,710 --> 00:50:09,571 and so it's in everyone's best interest 1222 00:50:09,571 --> 00:50:12,196 to set up something formal. 1223 00:50:12,196 --> 00:50:14,850 Another example I've had, again, 1224 00:50:14,850 --> 00:50:17,340 family members where the parents are saying, 1225 00:50:17,340 --> 00:50:19,410 okay, this, I think this person could 1226 00:50:19,410 --> 00:50:20,610 be potentially an owner. 1227 00:50:21,480 --> 00:50:23,238 I don't really want them to think 1228 00:50:23,238 --> 00:50:24,330 that we're gonna give this place to them. 1229 00:50:24,330 --> 00:50:26,460 So this is again, 1230 00:50:26,460 --> 00:50:28,110 in sort of this weird incentive, 1231 00:50:28,110 --> 00:50:32,414 negotiation like preparatory process of saying, 1232 00:50:32,414 --> 00:50:34,410 well, let's draw some lines here 1233 00:50:34,410 --> 00:50:38,824 and let's see if we can have this other party 1234 00:50:38,824 --> 00:50:40,980 start to rent the property, 1235 00:50:40,980 --> 00:50:44,174 rent the taps, or rent the sugar house, 1236 00:50:44,174 --> 00:50:46,320 and it serves a couple functions. 1237 00:50:46,320 --> 00:50:50,490 A, it starts to put the business pressure 1238 00:50:50,490 --> 00:50:52,950 on that acquiring party to run a business 1239 00:50:52,950 --> 00:50:55,590 that can actually afford these things, right? 1240 00:50:55,590 --> 00:50:58,440 If they can afford lease payments on a regular basis, 1241 00:50:58,440 --> 00:51:00,720 if there potentially needs to be a buyout, 1242 00:51:00,720 --> 00:51:02,910 let's assume that they can have a business now 1243 00:51:02,910 --> 00:51:06,750 that's positioned to pay debt service 1244 00:51:06,750 --> 00:51:08,970 if they actually have to mortgage a portion. 1245 00:51:08,970 --> 00:51:11,370 Not every family can just, you know, 1246 00:51:11,370 --> 00:51:13,590 give the property away. 1247 00:51:13,590 --> 00:51:15,540 And certainly if some of you don't have family members, 1248 00:51:15,540 --> 00:51:16,740 you're expecting to sell, right? 1249 00:51:16,740 --> 00:51:19,530 You've been building value and the idea is, 1250 00:51:19,530 --> 00:51:20,940 I've built some value here, I wanna, 1251 00:51:20,940 --> 00:51:22,950 I'd like to cash in on that value 1252 00:51:22,950 --> 00:51:24,570 and somebody else would love to step 1253 00:51:24,570 --> 00:51:26,880 into an enterprise that's been established 1254 00:51:26,880 --> 00:51:29,550 and they may pay $50,000, $100,000, 1255 00:51:29,550 --> 00:51:32,232 you know, for the ongoing interest of the business, 1256 00:51:32,232 --> 00:51:35,730 let alone the real estate that it stands on. 1257 00:51:35,730 --> 00:51:36,900 So there's a, 1258 00:51:36,900 --> 00:51:38,730 I'm just kind of shooting from the hip 1259 00:51:38,730 --> 00:51:40,893 with a couple examples I've seen. 1260 00:51:43,200 --> 00:51:44,450 One other popped to mind, 1261 00:51:45,870 --> 00:51:49,950 incentivizing, setting up the business for success. 1262 00:51:49,950 --> 00:51:51,690 Oh, and then let's say, 1263 00:51:51,690 --> 00:51:54,090 if there's different entities involved, Dave, 1264 00:51:54,090 --> 00:51:57,510 if in the process of planning there's been a decision 1265 00:51:57,510 --> 00:51:59,790 to hold the real estate and the ownership 1266 00:51:59,790 --> 00:52:03,992 of the current owners and perhaps form an LLC 1267 00:52:03,992 --> 00:52:07,305 that the current owners and the acquiring party 1268 00:52:07,305 --> 00:52:09,870 are shared, have shared ownership of. 1269 00:52:09,870 --> 00:52:14,870 So let me give you an example of a mom, a dad and, 1270 00:52:15,690 --> 00:52:19,950 let's have a mom and dad and a non-related family member 1271 00:52:19,950 --> 00:52:22,710 that's been working with this business for a while 1272 00:52:22,710 --> 00:52:25,950 and the decision maybe is made that the mom and dad 1273 00:52:25,950 --> 00:52:29,070 are gonna split off the real estate into one LLC 1274 00:52:29,070 --> 00:52:31,590 or other sort of entity, 1275 00:52:31,590 --> 00:52:35,970 and they want to bring in that employee as a partial owner. 1276 00:52:35,970 --> 00:52:38,700 And so they establish a separate LLC, 1277 00:52:38,700 --> 00:52:43,700 that's 33% dad, 33% mom, 33% new entrant. 1278 00:52:46,230 --> 00:52:50,040 And here's a situation where this LLC now 1279 00:52:50,040 --> 00:52:52,560 is gonna have to interact with the landowners 1280 00:52:52,560 --> 00:52:55,380 and there's another mechanism or an opportunity 1281 00:52:55,380 --> 00:52:56,610 for there to be split entities 1282 00:52:56,610 --> 00:52:58,260 and then leasing just becomes 1283 00:52:58,260 --> 00:53:02,490 this transactional formal process between multiple entities. 1284 00:53:02,490 --> 00:53:05,490 So I'm just hitting you with a couple things I've observed 1285 00:53:05,490 --> 00:53:08,640 and it's, you know, really case by case, but they're tools. 1286 00:53:08,640 --> 00:53:09,940 These are different tools. 1287 00:53:11,040 --> 00:53:12,300 I could take another question, 1288 00:53:12,300 --> 00:53:15,363 but it's definitely fine for us to wrap up here. 1289 00:53:17,340 --> 00:53:19,170 I told you about the short course. 1290 00:53:19,170 --> 00:53:21,840 Oh, here's one other thing I wanna put in the chat 1291 00:53:21,840 --> 00:53:23,550 before people go. 1292 00:53:23,550 --> 00:53:26,310 UVM, Zach Smith, one of my coworkers, 1293 00:53:26,310 --> 00:53:30,568 he actually is doing some transfer planning, 1294 00:53:30,568 --> 00:53:32,970 like resource assistance. 1295 00:53:32,970 --> 00:53:36,003 And so I'm gonna put this link in the chat box. 1296 00:53:36,930 --> 00:53:38,760 If you're interested in the short course, that's great, 1297 00:53:38,760 --> 00:53:40,020 that's starting in a month. 1298 00:53:40,020 --> 00:53:42,810 But here's another cool option, 1299 00:53:42,810 --> 00:53:45,990 Zach is basically just helping source resources for people. 1300 00:53:45,990 --> 00:53:50,590 So if you're interested in succession planning, 1301 00:53:50,590 --> 00:53:53,820 you can put an inquiry in through this form for Zach 1302 00:53:53,820 --> 00:53:55,410 and he may actually be able to pull some literature 1303 00:53:55,410 --> 00:53:57,390 for you that's a little targeted. 1304 00:53:57,390 --> 00:53:59,640 And then I got one other thing I wanna share. 1305 00:54:02,700 --> 00:54:06,210 We've got some worksheets of our own for exiting owners 1306 00:54:06,210 --> 00:54:08,580 and entering owners that are great ways 1307 00:54:08,580 --> 00:54:10,890 to prep for the process. 1308 00:54:10,890 --> 00:54:13,740 And you can find a lot of these online, 1309 00:54:13,740 --> 00:54:14,700 if you look up, 1310 00:54:14,700 --> 00:54:17,400 I don't know if there's much on maple transition, 1311 00:54:17,400 --> 00:54:18,233 to be honest, 1312 00:54:18,233 --> 00:54:19,620 but if you look up agricultural 1313 00:54:19,620 --> 00:54:22,606 or forestry succession planning, 1314 00:54:22,606 --> 00:54:26,130 that'd be my keyword search, you know, extension, 1315 00:54:26,130 --> 00:54:28,110 which is great cause that's public information, 1316 00:54:28,110 --> 00:54:31,650 extension, forestry succession planning worksheets. 1317 00:54:31,650 --> 00:54:33,210 And you can find a number of these kind of question 1318 00:54:33,210 --> 00:54:34,470 and answer sheets. 1319 00:54:34,470 --> 00:54:36,750 But this is really with the starting point 1320 00:54:36,750 --> 00:54:39,090 that I use if I'm on on site 1321 00:54:39,090 --> 00:54:41,403 with the owner working through it.