Quote for the Day

After years of studying family businesses, we believe it’s possible to identify one just by walking into the lobby of its headquarters. Unlike many multinationals, most of these firms don’t have luxurious offices. As the CEO at one global family-controlled commodity group told us, “The easiest money to earn is the money we haven’t spent.” While countless corporations use stock grants and options to turn managers into shareholders and minimize the classic principal-agent conflict, family firms seem imbued with the sense that the company’s money is the family’s money, and as a result they simply do a better job of keeping their expenses under control. If you examine company finances over the last economic cycle, you’ll see that family-run enterprises entered the recession with leaner cost structures, and consequently they were less likely to have to do major layoffs.

Nicolas Cacher, George Stalk, and Alain Bloch, “What You Can Learn from Family Business,” Harvard Business Review

Quote for the Day

The bottom line today is that water continues to be an under appreciated and under-valued asset. But water prices will eventually start to rise more quickly – as a result of on-going population and demand growth, drought and increasing scarcity. More and more major urban areas are beginning to bump up against the challenges of true scarcity. And as water prices increase, we will gradually pay more attention and modify our behavior – toward improved conservation and more efficient use. As prices inexorably rise, we will eventually be forced to confront and solve these problems, and truly recognize water’s fundamental value. But we aren’t there yet.

Steve Maxwell, “Talk is Cheap, Water is Cheaper,” 2014 Water Market Review

An Estate Planning Guide for Farmers and Ranchers




The University of Wyoming Extension office provides some good estate planning advice for farmers and ranchers in its online offering, Passing It On: An Estate Planning Resource Guide for Wyoming’s Farmers and Ranchers. Check it out.

By the way, my use of their logo doesn’t imply their endorsement, nor does it imply my endorsement of what they’ve written. What I’ve read of the guide, I like; however, estate planning is a complex area. It will come as no surprise that I recommend you consult with an attorney who practices in that area.

Quote for the Day

“Creative solutions to common problems will be found. The potential is limitless, needing only–as has always been the case in the West–the people to match the challenges: ‘a society to match the scenery,’ as Wallace Stegner expressed it.”

Teno Roncalio, Special Master of the Bighorn Adjudication of water rights, quoted in Wyoming’s Big Horn General Stream Adjudication, Wyoming Law Review (Vol. 15, No. 5, 2015).

Quote for the Day

Plans to continue the [farming] firm may be frustrated by the lack of a competent management team. This situation may be avoided by taking steps, such as the following, to prepare for the future:

  • Stressing the idea of a team approach to making decisions.
  • Focusing on developing management skills.
  • Emphasizing cross-training.
  • Developing a system of routine communications.
  • Implementing routine, nonthreatening evaluations.
  • Agreeing to share in the general work load of running a farm or ranch.

In one instance, a highly promising plan for the three sons and a son-in-law of a generous father, who was able to pass 160 acres of land to each one debt-free, fell apart in less than a year because none of the four anticipated having to do the laborious work in producing crops, feeding and caring for livestock, and doing the marketing and record keeping involved in a sizeable operation.

Neil E. Harl, attorney, “Farm and RanchEstate (and Business) Planning—Part 1,” Farms and Ranches, (March 2015)

What’s on Your Family’s Wish List?

I listened to an interesting seminar yesterday titled “Estate Planning in Agriculture: Protecting a Way of Life” sponsored by WealthCounsel.com. Stan Miller and Robert Serio were the presenters. Serio covered the Farm Service Agency (FSA) Subsidy Programs and the Natural Resource Conservation Service (NRCS) Programs. He cautioned attorneys to be careful to not to do anything in an estate plan that would cause their farmer and rancher clients to lose benefits under those programs. Quite interesting. I briefly reported on the take-a-way yesterday. 

Then Miller took over beginning with what he called “The Farm Family Wish List”:

  • Don’t disqualify for USDA subsidy payments and other government benefits,
  • Keep the court system of of the family business,
  • Keep the farm in the family forever,
  • Treat non-farming family members fairly,
  • Avoid the need to liquidate the farm in order to pay for the cost of long-term care, and
  • Avoid estate tax.

To that list, I would add “Avoid capital gains tax on appreciated property.”

Does Stan’s list mirror yours? What would you add to it or subtract from it?

More importantly, what have you done to make sure your wish list becomes a reality?

Farm Service Agency (FSA) Subsidy Programs: When 1 + 1 = 1

I’ll be brief, and in being brief, I’ll gloss over some details. But here’s the low down. A husband and wife farming couple can receive up to $250,000 annually in FSA program subsidies if they grow corn, soybeans, cotton, rice, and the like AND if they are actively engaged in farming AND if they are at risk of loss. Yes, that’s up to $250,000, but only so long as they are not considered “one entity.” (Yes, I realize that most couples don’t qualify for the maximum and that most receive much less, but this is a brief discussion, remember.)

The FSA treats joint trusts–essentially one trust for two spouses–corporations, and LLCs as one entity. Thus farm couples who fit the bill described in the first paragraph DO NOT want the enter into joint trusts, or they could stand to lose up to $125,000–per year. So if your estate planning attorney suggests a joint trust to you. think twice: will you lose out on farm subsidy payments if you go with a joint trust? If you would, then say no.

Water Rights and Water Wrongs

A very interesting article about water at ProPublica.org
. Essentially, the pieces asks whether Wall Street–the good guys on Wall Street, of course–will help us achieve this:


[Hedge Fund manager] Disque Deane . . . supports the idea of setting aside what policy makers call “lifeline supplies” to guarantee households some minimal amount of water. But he says if markets jack up prices on higher levels of consumption, that may not be a bad thing. Anyone who wants to fill a swimming pool, water a golf course, or use billions of gallons of Colorado River water to grow cotton in the Sonoran Desert, he says, should have to pay for that privilege.

without our farmers and ranchers and small town America ending up like this:

Eventually, though, Crowley County passed a point of no return. With so much water gone [because farmers had sold their rights for the high prices offered], the empty irrigation ditches didn’t work; one lonely farmer at the end of the run would see all his water soaked up by the soil long before it ever reached his farm. And with fewer and fewer farmers around to share the expense of maintaining the ditch systems, the cost kept rising. Farmers had little choice but to sell, and all but 11 in the county did. The place literally dried up.

Kneeling in his driveway changing a truck tire last summer, Tomky’s son-in-law Matt Heimerich recalled what the town had lost. Though tens of millions of dollars in water rights were sold, few of the proceeds were reinvested in the community, he said. One by one, families moved away. The tomato and sugar factories shut down, and without goods to ship, the railroad stopped sending trains through town. Ordway’s car dealerships closed, and the tractor store went bankrupt. As though someone had pulled a bottom block out from a Jenga tower, Crowley County fell into an inexorable collapse.

“I couldn’t have eaten enough Prozac,” Heimerich said.

We don’t take water as seriously as we should. I think that’s self-evident. And pricing water differently and more sanely is, in theory, a good idea, so that we begin allocating it better than we do. But. There is always a but. And right now, I don’t know what comes after the but.


I know I don’t want farmers, ranchers, and small town America to disappear. Oh, and water rights are assets, assets that, as this story makes clear, are becoming more and more valuable as I write this. Assets that warrant good estate planning to preserve them for future generations. So there’s that.

On a related note, if you’re interested in water and water issues, may I recommend the always interesting podcast, Water Values hosted by attorney Dave McGimpsey? I discovered about a year and a half ago and listened to it regularly as I ran. As I ramped up my estate and business planning practice, I stopped listening, intending to return after I had things moving along in estate planning. I’m thinking it’s time to begin listening again, especially since farmers and ranchers make up such an important part of the two, dry, Western states that I serve.

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