Episode 7 - Protecting the Farm Legacy Through Estate & Transition Planning

Estate and transition planning can be one of the hardest conversations farm families face, but it is also one of the most important. In this episode, host Ahlishia Shipley sits down with Paul Goeringer, Principal Faculty Specialist and Extension Legal Specialist at the University of Maryland, to discuss how producers can begin planning for the future of their operations. Paul breaks down key estate planning tools, shares insight into the family dynamics and communication challenges that often arise during succession planning, and offers practical advice for getting started. He also highlights resources and professional networks available to help farm families protect both their operations and their legacy for future generations. To learn more about this work, please visit: Agriculture Law Education Initiative

Transcript

00;00;01;07 - 00;00;45;16
Ahlishia Shipley
You're listening to the FARM Champion podcast, where we champion farmer and rancher success. In each episode, we sit down with a FARM champion, trusted professionals committed to helping producers navigate the business side of agriculture. If you're a farmer, rancher, or agriculture professional working to build a stronger, more resilient operation, you are in the right place.

00;00;45;19 - 00;01;13;14
Ahlishia Shipley
I’m Dr. Ahlishia Shipley, your host. So today, I'm going to start us off with a not so fun fact that 45% of Americans age 55 or older report not having an estate plan. And for farm families, that can put not only personal assets at risk, but the future of the operation itself. And so today we're going to dive into this important and often difficult topic in agriculture, which is estate and transition planning.

00;01;13;14 - 00;01;40;24
Ahlishia Shipley
And so to unpack that today, joining me is Paul Gehringer, who is a principal faculty specialist and extension legal specialist with the University of Maryland Department of Agricultural and Resource Economics and the Agricultural Law Education Initiative. Paul’s work focuses on agriculture law, estate planning, farm transition planning, and helping producers navigate the legal and business realities that impact the future of their operations.

00;01;40;25 - 00;01;45;04
Ahlishia Shipley
Paul, thank you so much for joining me today. I'm really excited about my time with you.

00;01;45;08 - 00;01;46;19
Paul Goeringer
Happy to be here today.

00;01;46;20 - 00;01;59;23
Ahlishia Shipley
So before we dive into today's topic, I would love to hear, and I'm sure our listeners would too, what led you into agricultural law and estate planning and working with farm families? Just tell us what that journey look like.

00;01;59;26 - 00;02;21;20
Paul Goeringer
So it's a weird journey. I'm here at the University of Maryland, but I grew up on a farm in Oklahoma that is still going today. My parents still there, and I am a child of the 80s and 90s, where I was told never to come back to the farm and get a job and do something else. So I went and did my undergrad at Oklahoma State in ag economics and decided to go to law school,

00;02;21;20 - 00;02;45;13
Paul Goeringer
for some reason, I still don't understand. And I did two years at Oklahoma City University, then University of Oklahoma to focus in on ag law while I was there, and then ended up at the University of Arkansas getting an LLM in ag law and then a master's in ag economics, and have been here ever since, and helping start a program here in extension outreach doing that.

00;02;45;13 - 00;03;18;21
Paul Goeringer
And when I got here, they said, oh, you're a lawyer. You can go out and talk to farm families about estate planning. I had done a little bit in private practice, but had not done a lot of and at first it was, they wanted me to go out and just talk about wills and trust and do all this stuff. And then I realized this is a lot more in depth of a topic than just saying, like, here's what a will is, here's what a trust is, and it's really trying to get them to focus in on holistically how to do this as a process and work with our families to sort of transition the business to next

00;03;18;21 - 00;03;24;14
Paul Goeringer
generation. Or if there's nobody coming back, figure out what is going to happen to this farm business.

00;03;24;16 - 00;03;44;20
Ahlishia Shipley
That sounds like an incredible journey from, you know, the heartland over to the mid atlantic seaboard, bringing all of that knowledge out here to the families that reside in Maryland. And I know your work is nationwide, a lot of it, but it's concentrated there in Maryland. So thank you for, for sharing that. I think it was important about your work.

00;03;44;20 - 00;04;12;13
Ahlishia Shipley
And this work in general is that it really sits at the intersection of family and business and legacy and all the things that are deeply personal for producers. And at the same time, estate and transition planning can feel intimidating or overwhelming, especially when people don't know where to start. So to kind of dive into that a little bit more, can you give our listeners a simple overview of what estate and transition planning means in the context of the farm operation?

00;04;12;14 - 00;04;43;25
Paul Goeringer
I can. So, estate and transition planning. If we were dealing with just a normal individual, technically no small business, we'd be thinking about how do we divide all these assets up among children, maybe a house, some other properties and stuff inside the house? With a farm we're really thinking about how do we divide some of that up, but also at the same time, make sure that if someone's going to take over the farm, there's enough of a farm left that the next generation can take over and can still be profitable

00;04;43;25 - 00;05;11;09
Paul Goeringer
in some of this context. And a lot of this, we always have to talk to farm families about you may have in your head that I want to make this equal among 2 or 3 children. But we're not really talking about equal anymore. If we have somebody staying on the farm, what's equitable to that person that stayed on the farm and helped grow that farm, and what's still equitable to the others that are a part of the family who may think, oh, I'm going to get this big payday someday.

00;05;11;15 - 00;05;34;21
Paul Goeringer
But if they take the big payday, it may hurt a sibling who's helped grow a farm business beyond what mom and dad did and made it bigger. So how do we keep it in a way that keeps everybody communicating together, talking together and just working together and staying a family? The biggest thing I talk about to all of them is, what's your one goal you always have for your children?

00;05;34;21 - 00;06;06;25
Paul Goeringer
And all of them will say different things and I say no. You want them to be able to have holiday watches together and get along, isn't it? Oh yeah, that's what I want. So what we're trying to get into where in the end, they still want to talk together, work together and not fight because we've seen too many families get in feuds over somebody did this or somebody did that when it related to the succession planning process and not having good family dynamics over time and generations, not wanting to speak to the next generation because our parents are fighting.

00;06;06;25 - 00;06;08;21
Paul Goeringer
So now we can't talk to each other.

00;06;08;26 - 00;06;33;13
Ahlishia Shipley
What you're explaining reminds me of one of those elements of risk management, which is human risk, and being able to have that open communication and, you know, learning how to talk these things out with your family because they're not simply financial decisions. There's a lot of history and land and emotions and identity tied up with a farm operation itself.

00;06;33;13 - 00;06;49;00
Ahlishia Shipley
So getting into kind of like the value of this, why is it so important specifically for farmers and ranchers to think proactively about estate and transition planning, instead of waiting until there's a crisis or an emergency?

00;06;49;03 - 00;07;10;14
Paul Goeringer
It is always better to start this process earlier. If my colleague Shannon Ferrell was here from Oklahoma State, they have set up a model to show that if you start this process earlier in your life, it's much easier to make this slightly more equal and help the farm survive to the next generation. That way we have asset pulls we can pull from.

00;07;10;14 - 00;07;28;19
Paul Goeringer
You may invest money, you may not have that much to invest, but over time that will grow to where we may have something that we can say and go, okay, we're going to give this to this, this group of kids that are not going to be on the farm, but we still have the farm over here to help the other kid that wanted to stay and wanted to keep doing this and help them keep growing.

00;07;28;20 - 00;07;45;21
Paul Goeringer
If we wait till the crisis hits, we wait till we get older. We may not have all that to pull upon, and we may just end up having to figure out how we're going to make this work with the limited amount of assets we have, and still try to keep one person farming, that makes it more difficult. So it's always better.

00;07;45;21 - 00;07;50;19
Paul Goeringer
But most people come to us when they're much older and wanting to start this process.

00;07;50;20 - 00;08;11;01
Ahlishia Shipley
Those conversations can be difficult even when a family knows that they need to have it. That is kind of sitting there in their mind, like, I need to talk with my kids about, you know, about the future of this operation because as we mentioned, it is emotionally fraught and there's an uncertainty there. And sometimes, you know, some people just don't know where to start.

00;08;11;02 - 00;08;21;04
Ahlishia Shipley
So with that, what are some of the the biggest challenges are barriers that you see farm families facing when it comes to the transition planning?

00;08;21;06 - 00;08;41;11
Paul Goeringer
The biggest barrier I've seen over my time doing this is just the wanting to sit down and have that conversation. When they come into our workshops, a lot of what we talk to them about is, my session is at the end of the day, we've gone through health insurance to start with this because a lot of them don't understand basic things like how Medicare works.

00;08;41;12 - 00;09;08;27
Paul Goeringer
And then we have, I am lucky enough here to work with someone who is our family communication specialist, and he has a background as a family therapist. So he comes in and teaches a communications part to them to help get them started in the process, and is willing to sit down with them and start having those difficult conversations that they may not want to have, and be that neutral party in the room that can kind of keep the family on task throughout that.

00;09;08;27 - 00;09;27;24
Paul Goeringer
And then I come in and talk to them. I go, well, I hate to tell all of you this, but you're going to die at some point. So we have to start having this conversation early. In human history, only four people have gotten out of the world alive, at least according to the Bible, I think it was 3 or 4, and not probably going to be one of those lucky people that get out of here alive.

00;09;27;29 - 00;09;57;26
Paul Goeringer
So we really have to start thinking about what happens when the inevitable happens and getting it planned early, and especially when we had the Medicare talk. It's getting them to think about, oh, I might have to use some of my assets to pay for my long term health care. So if I start thinking about how to do this early, I can better protect the farm, better set up a safety net for the next person coming up, and better be able to keep my family legacy going down the road to help them kind of do it and start that process.

00;09;57;28 - 00;10;06;10
Ahlishia Shipley
Yeah, it sounds like there's some level of therapy that sometimes folks who work with families in this process have to do as well.

00;10;06;14 - 00;10;17;04
Paul Goeringer
I'm an unlicensed therapist throughout this whole process, where a number of them call me and want to vent, and I just let them vent, good conversation. Like, here's how you're going to have to make this work.

00;10;17;06 - 00;10;43;25
Ahlishia Shipley
Got it. Those relationships are important. We talk about that a lot on the show. So, you know, I read through one of the resources that you've created about estate planning. And one of the things I appreciated is that you really helped to break down the issues, kind of like into, like practical tools and steps that, you know, a producer or family can understand and help me understand because I, you know, while I'm not 55, I am one of those people that does not have an estate plan.

00;10;43;25 - 00;11;04;14
Ahlishia Shipley
So this is actually a good encouragement for me for this interview. So for producers who may be listening and are beginning this process, what are some of those key estate planning tools that they should understand? And along with that. How do those tools help protect the family and the farm business?

00;11;04;14 - 00;11;19;18
Paul Goeringer
The biggest one they're all going to hear about, and that they're all going to have to have at some point is a will, which is just the document that's going to lay out how assets are going to be, transition to whoever is going to get them and whoever you decide it's going to get them. Well, I just tell them that's the one document

00;11;19;18 - 00;11;37;01
Paul Goeringer
they're all going to have. The rest of this, as I point out to them, I go, you're not going to McDonald's, you're not going to murder King. You're not going to win these. You're not going to any fast food restaurant. You're not ordering off the menu. You're about to go to the nicest restaurant you've ever been to your life, and the chef's going to cook for you.

00;11;37;06 - 00;12;03;08
Paul Goeringer
And we're going to figure out what's actually going to work for you in your situation. So I tell them all the time, I'm like, whatever your neighbors have, don't worry about that. Listen to what the attorney tells you, because they're going to tell you what you need to fix. What you want to do. So is in this. So we may end up with a trust as a part of this, as a way to sort of better protect assets and manage how it's going to move from one generation to the next.

00;12;03;08 - 00;12;40;10
Paul Goeringer
It will act exactly like a will, but not have to go through the probate process that a will would. And there are better restrictions that we can put within that trust to protect the farmland, to keep it within the family and limit the ability to sell that farmland down the road as needed. We may look at a business entity like an LLC or a corporation, to put the farmland or the farm business into as a way to better manage it and help transition it, especially for dealing with folks not on the farm and on the farm as a way to kind of keep everybody in a business together to where there's a way that the

00;12;40;10 - 00;13;04;29
Paul Goeringer
off farm heirs can kind of benefit from the farm business over time. And then we talk to them a lot about how you're going to have to have these three other documents. You're going to have to have a durable power of attorney so somebody can figure out how to pay bills for you if something happens, even if the bad outcome is you get dementia or all timers, somebody can pay bills for you while you're in the long term health care and keep stuff going for you over time.

00;13;05;00 - 00;13;23;02
Paul Goeringer
Health care proxy so somebody can make medical decisions for you. And then, as I point out to all of them, and nobody in the room has never not raised their hands of this question, when I ask, how many of you are control enthusiasts who want full control and they almost all raise their hand and I go, then you want a living will?

00;13;23;03 - 00;13;39;24
Paul Goeringer
Because a living will will dictate when I want certain end of life care taking up, taking care of me or I don't want end of life care. And then I ask them the question, how many of you want to make these decisions for your parents and everybody? No one will raise their hand. And I go, you don't want to make these decisions.

00;13;39;24 - 00;13;55;14
Paul Goeringer
Your kids don't want to make these decisions because a they're going to second guess every decision and assume every decision they make is at least to the parents. So this way you dictated it, and we all know what you want, and you made the decision when you can't make it anymore. And trying to get them to start thinking about them.

00;13;55;14 - 00;14;17;02
Paul Goeringer
Also tell them it's the most depressing document they'll ever read in their life, but they still have to do it. So those are a lot of the basic tools we end up talking to them about as they go through the process, and just trying to get them to think about who's going to have power in each one of those, and which child or family member do they think should have that power, thinking about how to handle those situations.

00;14;17;03 - 00;14;39;04
Ahlishia Shipley
Thank you for, you know, lining these out, these different tools, the kind of like are the key things and all these things. They seem to work to make things easier for the people around you. So speaking of the people around you, we've touched on this, you know, a little bit in terms of the conversations and approaching the conversations and that they are difficult.

00;14;39;04 - 00;14;55;20
Ahlishia Shipley
So could you speak a little bit more to kind of like the realities of these conversations that families have to face? And even if you could offer some tips on how a family can set themselves up to have a better, more productive conversation.

00;14;55;23 - 00;15;21;21
Paul Goeringer
Yeah. The biggest thing is probably within all of this, the way to set yourself up for success is accept the fact that you're not going to be able to do this alone. You are going to need help in this process. One of the biggest groups that can help most farm families going through this at the start is there's a group known as International Farm Transition Network, which is a professional association with practitioners.

00;15;21;21 - 00;15;48;28
Paul Goeringer
They can be attorneys, they could be financial managers, they could be extension faculty or lenders and ag mediators who have gone through specialized training to sort of help understand how to start that communication process and help the families do this. If I remember the website correctly, it's farm transition, and they will have a list of pharmacy session coordinators in the states and their contact information for how to reach out to them.

00;15;48;28 - 00;16;10;29
Paul Goeringer
And some are free and others will cost a little bit of money to do there with the extension, and is probably free to go through them, and probably free if they're an aid mediator to go through and start that process. Your lender may have some ability to do this as well, but it's just sitting down, having somebody else in the room who can help guide the conversation for how this is going to work.

00;16;11;00 - 00;16;34;12
Paul Goeringer
Because as we point out, everybody, every family comes in. You know, the siblings have pastel grudges that may come to bear at that point. Nobody wants to deal with the inevitable that mom and dad are going to pass away. So we all have to have somebody in that room that can kind of help keep us on track and help us think about how do we start this process, and how does everybody get to have a voice in that room to talk in?

00;16;34;12 - 00;17;06;03
Paul Goeringer
The loudest voice is, you know, it's often told just to be quiet at times. So everybody can kind of have a say and kind of help guide the process to figuring out what it's going to be. It's going to be a lot of goal setting between all the parties involved, so we can kind of figure out how to get this process started, what folks are actually wanting in the process to kind of think about how do we set the tools up to work to get to a point where mom and dad can either retire or continue to control the business, but the kids are taking over slowly as this goes along?

00;17;06;03 - 00;17;29;17
Paul Goeringer
And one thing that we always tell people to is anyone at any point should want to start this conversation. If the parents don't want to have it, then the children should start trying to get the conversation started within this, because if they're the ones working on the farm, they want to make sure that they're being protected in a way that whatever they're doing is going to be better protected than what it currently would be with no plan.

00;17;29;18 - 00;18;01;17
Ahlishia Shipley
Yeah, I think it just goes back to making things less difficult, alleviating the challenges, even though there still will be some, but just trying to minimize those the best you can. So I mentioned at the top of the hour that you have also developed lots of educational resources. And I wanted to ask you to to talk about one today that you created called considering a State Landing at Any Age, which helps producers and families understand the process.

00;18;01;18 - 00;18;08;14
Ahlishia Shipley
Can you talk a little bit more about this resource? And it'll also be posted soon on the AG website.

00;18;08;15 - 00;18;30;19
Paul Goeringer
The resource is a part of a bigger online course that we set up with basically listeners that farms may be facing. Some are specifically Maryland focused, but the estate planning one is much more guided towards. Anybody can go through it. Now we do talk about some tax issues, which may only be Maryland specific, but the rest of it is pretty much national focus.

00;18;30;19 - 00;18;58;16
Paul Goeringer
But we did that in a way. And you got the presentation that we use in the in-person workshops that we've done on this, but for the online course, and I can put the link in the Farm champion's website to sign up for that course. You don't have to go through all the modules, the modules, once you do our intro part and give me some basic data about yourself, you can go to any of the modules you want to, but this module is set up just to try to get farm families to start thinking about how do I do succession planning?

00;18;58;16 - 00;19;18;10
Paul Goeringer
Because it's often when we've done workshops here, it's the one thing people tell us they want, but then they're less likely to come to a workshop. So we were trying to provide a way that you could watch. I believe if I remember correctly, the video is 15 to 20 minutes long. Going through succession planning. There is no PowerPoint involved.

00;19;18;10 - 00;19;33;23
Paul Goeringer
It is literally me standing out on our campus farm talking about succession planning and just trying to get you to start thinking about some of the tools that would go into it. And how do you start this process in thinking about what you need to be doing along the way?

00;19;33;26 - 00;20;04;19
Ahlishia Shipley
So you, Paul, are a forum champion, and one of the things that we like to highlight on this show is the impact that trusted guidance can have on producers. And so we want to elevate the former success stories that our farm champions have. And so could you share an example of a form family that you've worked with that has benefited from proactive estate or transition planning, and what changed for them as a result?

00;20;04;21 - 00;20;28;11
Paul Goeringer
One of the first one that comes to mind is I worked with one farm family who is trying to figure out how to transition the farm, not to any of the children, but to a grandson. And thinking about through that process, how do I do this in a way that helps my children and benefits them, but also protects the grandson who's currently working on the farm and taking it over to make sure he's being well taken care of.

00;20;28;11 - 00;20;48;27
Paul Goeringer
And a lot of the conversations have led to at least them proactively implementing tools needed in that process, or at least thinking about how to implement some of the tools we've talked about. They may have not implemented everything, but they've at least worked through the process to think about that. And I've had a lot of conversations with that family over the years.

00;20;48;29 - 00;21;21;10
Ahlishia Shipley
Wonderful. And thank you for that, because I think that hearing real examples can help producers see that while the process and feel difficult, it can make a meaningful difference for their family and the operation. All right. So I want to dive into just a couple of things that folks can do right now. So for listeners who may be hearing this conversation and thinking, I know I need to start this process, but I've been putting it off, I want to really have you offer something practical and encouraging.

00;21;21;10 - 00;21;27;27
Ahlishia Shipley
So what are 1 or 2 practical, four steps that a producer and their family can take? Right now?

00;21;27;29 - 00;21;50;22
Paul Goeringer
I think the biggest practical step is just setting down and at least talking to their families. They don't actually have to fully start the process, but just sit down and say, hey, we need to do some goal setting as a family here. Mom and dad's goals. What are the children's goals? Depending on ages of everybody, we may have spouses involved in all of this.

00;21;50;23 - 00;22;12;15
Paul Goeringer
We may have grandkids involved in all of this. But just sitting down as a family doing this, I know we're coming up to holiday time of the year, many holidays coming up. That's not a good time to do any of this. We often have to remind folks at Christmas and Thanksgiving time that family holidays are never the time to do this, because we're there to celebrate together.

00;22;12;18 - 00;22;36;17
Paul Goeringer
It may be Memorial Day, 4th of July stuff coming up. We need to pick another time of year and just kind of get together and say, we want to have this conversation and start thinking about what is this process going to look like? They may not walk away with a plan, but they can at least start talking about what that process should look like and some of the values they're going to bring into this that they want to protect throughout the whole thing.

00;22;36;19 - 00;22;45;25
Ahlishia Shipley
All right. So notes of self have this conversation in a non festive boring month. Like what is a non festive boring month April.

00;22;46;02 - 00;22;48;25
Paul Goeringer
April. Oh no. You might have Easter in April.

00;22;48;27 - 00;22;51;15
Ahlishia Shipley
Oh yeah there's Easter.

00;22;51;18 - 00;22;52;06
Paul Goeringer
August.

00;22;52;07 - 00;22;55;21
Ahlishia Shipley
August. August. Yes. Yeah. Okay.

00;22;55;22 - 00;23;12;27
Paul Goeringer
And we have to have realized people. We may not be having this a mom and dad's house, because we often have to point out the votes to us in that mom and dad's house. Who's in charge? Mom and dad. The kids were kids in that house, so we need to set it in like a control spot where everybody feels comfortable having the conversation.

00;23;12;27 - 00;23;25;09
Paul Goeringer
Because there may be things where kids walk into the room. When I go to my parent's house, I revert to some of my childhood ways of acting. I'm like, wait, I don't do that. Why am I doing that here? I'm like, oh yeah, I'm at Mom and Dad's house.

00;23;25;11 - 00;23;51;08
Ahlishia Shipley
I see that is actually really good advice. All of that. So thank you for sharing that. You know, I've really, really enjoyed this conversation. But you know, before we close, we always like to end with a resilience reflection, which is a brief moment where we ask our guest to step back from the details of the topic and their work, and really reflect on the bigger picture of helping form families.

00;23;51;08 - 00;24;08;01
Ahlishia Shipley
And so, as we have talked throughout our time together, a state planning and tradition planning is, you know, very difficult and it could be very difficult and is deeply personal. And so what keeps you committed to helping form families navigate this process?

00;24;08;06 - 00;24;28;20
Paul Goeringer
As a former farm kid who's not working on the farm, it really is that like, I want those that wanted to do this, do it because I recognize how much family members I have loved doing it. I love working with farmers, and I want whoever is going to come in to be successful and keep the farm going and get to continue to do what they love.

00;24;28;27 - 00;24;54;23
Ahlishia Shipley
I love that, thank you and thank you for the work that you do to help farm families protect their operations and their legacy. And so listeners to explore tools and resources that support form businesses. Please remember to visit agftap.org and learn how to connect with a FARM Champion in your area. And don't forget to follow and subscribe to the FARM Champion podcast.

00;24;54;24 - 00;24;56;03
Ahlishia Shipley
We'll see you next time.