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2016 Farm and Ranch Financial Management

2016 State Winner and National Finalist

Design Your Succession Plan

North Dakota State University Extension Service

Crystal Schaunaman, Lori Scharmer, Willie Huot, Joel Lemer, Randy Grueneich, Paige Brummund, and Ashley Ueckert

Educational Objectives

Farm and ranch succession planning is a critical need for America’s producers. In the United States 77% of farm assets are owned by those 70 year old and older. North Dakota’s farmers and ranchers now average roughly 60 years of age, and many are looking toward retirement and transitioning their businesses. Are today’s owners ready to transfer assets to whom they want, how they want and when they want? Will they transfer a viable business to the next generation? Aside from the age of land owners, surveys completed by commodity groups, producers and financial institutions place a high priority on meeting the need for educational programs addressing farm and ranch transition planning.

NDSU Extension Service has developed Design Your Succession Plan, a program with tools and resources for North Dakota farm and ranch producers to begin the succession planning process. This multisession workshop is designed to help families: get started by beginning work on their plan at the workshop, open lines of communication in the family to create a shared vision for extending the family business into the next generation, and work with professionals to construct a plan and documents that put the family’s vision into action.

Program Activities

This curriculum was designed to be delivered by FCS Agents in partnership with ANR Agents at the local level. When developing this curriculum we identified Extension’s unique role in addressing this critical issue. North Dakota Extension educators are not legal or tax advisors so the program was developed around what Extension Agents are better able to discuss which are oftentimes the pieces that need to be determined before visiting the professionals anyway and often are difficult for families to discuss. The workshop is divided into five modules: starting your succession plan, determining what you want, developing the next generation and your legacy, holding family meetings and conversations, and choosing and working with professionals. The workshop is designed to be a one, two, or three day program depending on the needs of the local community.

Teaching Methods

We envisioned Extension’s role as helping families actually get started in the process of succession planning as they do many pages from their workbook during the program to get participants started. Extension educators assist families to open the lines of communication within the family to create a shared vision for the family business. This program also provides tools and resources for communicating when the issues are sensitive or there is conflict. Extension educators assist families by offering tips on how to choose competent professionals and how to prepare to meet with legal and tax professionals, including family visioning, assessing the business’s finances and gathering documents and information needed to draw up a succession plan. Information on key concepts is presented to participants via the presenter and video clips and then participants further explore the key concepts through small and large group discussion, self-reflection, journaling, and goal-setting. This program was deliberately designed to have participants actually begin their succession plan by recording thoughts in their workbook to be shared with other family members to begin to create a shared vision.

Results

Design Your Succession Plan has been delivered in 25 North Dakota sites to over 290 people. Agents were trained in the program materials during the fall of 2014 with further Agent trainings planned. The program was piloted at sites around North Dakota the winter of 2014/2015 and was offered more widely the winter of 2015/2016. About 41% of participants were 54 years or younger, 41% of participants were 55-64 years old, and 18% of participants were 65 years and older. About 60% of participants were male and 40% were female. When asked when they were planning to transition their farm/ranch business 33% of participants wanted to transition within the next five years.

Evaluation

This program uses a post workshop evaluation tool and a 1 year follow up survey to assess knowledge gained, behavior changed, and impact on family succession plans.

Surveys from the pilot session show the following:

  • Most participants reported the workshop was useful to very useful (M=4.33, SD=.72).
  • Most participants reported the workshop materials were useful to very useful (M=4.46, SD=.67).
  • Most participants indicated they were likely to work on their succession plan in the next six months. (M=4.34, SD=.84).
  • An increase in knowledge of information and documents needed prior to meeting with a professional (Before M=2.45, SD=1.11; After M=4.41, SD=.59)
  • An increase in ability to define terms used in succession planning (Before M=3.11, SD=.99; After M=4.30, SD.59)

“It is often hard to start the conversation and through this workshop we now have the tools.” Participant

“Very interesting, made me so much more aware of the importance of planning.” Participant

“Excellent and valuable info, love the workbook and tools we can take back to family.” Participant

Professionals reviewing this program have applauded NDSU Extension Service for giving families a roadmap to communicate together before visiting a professional.

Impacts from a follow-up survey done 1 year after the pilot program

  • 75% of those responding to our follow-up survey have taken steps to work on their succession plan.
  • 81% of those responding to our follow-up survey reported they had talked with family about their succession plans after attending DYSP workshop.
  • 56% of those responding to the follow-up survey indicated they have found the materials received at the DYSP workshop helpful.
  • 53% of those responding to our follow-up survey reported they had chosen and met with a professional about their succession plan following the workshop.

Participant responses when asked….

What steps have you taken during the past several months to continue work on your succession plan?

  • “I have taken my succession plan to the next level with following up with more paperwork and talking with professionals regarding taking the farm over from my grandmother.”
  •  “We have had a couple of meetings to figure out where we all are at in the process which has been a bigger step than we were originally anticipating that we would make. Figuring out what everyone’s expectations along with their ideas of how the transfer is going to look like, gathering information so far...”

What resources, from the Design Your Succession Plan workshop materials, have you found to be helpful?

  • “Reading more details in some of the documents from the different Extension services has been helpful. The spreadsheet on how to put a number/value on sweat equity was interesting to use and know. I do look at the binder for general topics about what we need to talk and think about so just reading the thorough docs on succession planning from the NDSU website was helpful.”
  • “The ideas and the pages in the workbook involving communication, how to conduct meetings, and what to expect that type of pages have been helpful. We actually wrote our personal vision statements down during the last meeting and then we shared that with each other.”
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