Transcript

Torgerson (narrating): When Reframing Rural and Winnett ACES set out to create this season, we wanted to make something different from the succession resources that are out there today. We wanted Season Four, “Succession Stories,” to be compelling for all audiences who care about rural places, those who are in agriculture, and those who aren't.

Our goal was for the season to be story-driven. We aimed for the succession takeaways to be sandwiched in between personal stories about how families navigate the leveling questions of life and legacy that we must all face someday. But the season wouldn't be complete if we didn't include an episode created specifically for the farm and ranch families who are trying to convince their loved ones they need to make a succession plan, or for those who are already convinced but don't know where to start.

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Welcome to Reframing Rural I'm Megan Torgerson. Today, a bonus episode for farm and ranch families that provides a roadmap for how to get started with succession planning. Today's episode has two chapters. Chapter one is a recording from a succession expert panel event co-hosted by Winnett ACES and Reframing Rural at the Petroleum County Community Center on October 29th, 2025. Chapter two is an interview with American Farmland Trusts Farm Legacy Director Jerry Cosgrove. 

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In part one, we'll hear from three experts in the field of succession. Michael Stolp, head of Learning Research and Insights at AgWest Farm Credit. Dr. Marsha Goetting, professor and extension family economics specialist with Montana State University Extension, and Lewistown, Montana-based certified public accountant Stacie Arntzen. Winnett, Montana rancher Diane Ahlgren also chimes in during the panel contributing her experience as someone who's gone through the succession process. 

In part two, we'll speak to Jerry Cosgrove about how conservation easements can be used as a tool in estate planning and how farmers and ranchers can approach succession when they don't have a family member to take over.

We'll also learn about the work American Farmland Trust does in the arena, and how policy makers can better support succession. American Farmland Trust is a supporter of this season. Their mission is to save the land that sustains us by protecting farmland, promoting sound farming practices, and keeping farmers on the land.

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First, we'll take you back to the October evening in Winnett where ranchers from around the Musselshell Plains traveled to learn how to secure the future of their ranches through succession planning. Here's Winnett ACES executive director Laura Nowlin kicking off the event.

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Laura Nowlin: Thanks everybody for coming. We're gonna go ahead and get started. I'm Laura Nowlin, I'm the executive director at Winnett ACES, and we're super excited for this event and to have you here all tonight, kind of at the end of the day. 

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Winnett ACES mission is to keep family, farmers and ranchers on the land. And so one of the most important things we felt like we could do is hopefully provide some resources for succession planning and helping that be possible for everyone in our community and thank you to those who have come from a long ways away. And so I get to introduce Megan Torgerson here with Reframing Rural.

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Megan and I met, we decided it was 2022, and Megan was working on an episode about Winnett ACES for the Reframing Rural podcast. And she's a farm girl from Eastern Montana. So really connected with a lot of the things that are, a lot of the values that we have here in our community and at Winnett ACES.

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And so then we met again like two years later at a Red Ants Pants grantee gathering and thought we should do a whole series about stories, about succession planning. And, now it's been a few years since then and you all get to be part of hearing that whole series kickoff.

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And then I also get to introduce Diane Ahlgren. Who most of you already know, but Diane's here from Winnett and one of the founding members of Winnett ACES and is passionate about succession planning and has done that herself with Skip and their place. And, just works really hard for all of the rest of us to be able to do the same thing.

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So thanks to Diane for agreeing to be part of the event tonight. And then Megan is gonna introduce our panelists. I'll hand it over. Thank you everybody for coming.

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Torgerson: Well, thank you so much for the introduction, Laura, and for the idea for the season. As Laura mentioned, I'm the founder of the documentary podcast, Reframing Rural, which has the mission to celebrate culture, preserve history, and cultivate curiosity and conversation across geographic class and cultural divides.

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I also wanted to thank my parents who are sitting right back there. My dad's in the green, my mom's in the black. My parents allowed me to record our succession planning conversations, which we used through MSU Extensions workbook. So thank you, Marsha, for putting together that workbook. And I recorded our conversations for a Season Three episode about succession, which also kind of launched into this whole new season.

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I grew up on a dryland wheat farm and cow calf operation south of Dagmar, Montana. And as I shared in the Season Three episode about my family's succession journey, our farm – at once, the work of parents, grandparents, and great-grandparents and the dream of so many who came before – is itself like an old immortal relative. It's seen herds and homesteaders come and go and cutting edge equipment rust and turn old. It has and it will endure beyond the time of its current steward or their successors. 

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The same can be said about the family farms and ranches that are featured in our new season, “Succession Stories.” As you all know, factors including aging farmer demographics, rising land values, trade wars, climate change and farm stress contribute to the serious need to make a succession plan.

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Approximately 40% of the nation's farmland is owned by people over 65, which means that up to 370 million acres of farmland could change hands in the next 20 years. That's more than a third of all farm and ranch land in the lower 48 states. Agricultural outlets often report the statistic that only 30% of family businesses transfer to the next generation, a number that drops to 12% when looking ahead to the third generation. 

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In Montana, the number of farms and ranches went down more than 10% in the five year span between 2017 and 2022. Some may have been absorbed by expanding operations while others were paved over for parking lots and condos. As is the case with the agricultural land surrounding Bozeman, where I live today, in hopes of preventing that from happening, we are encouraging people to make a succession plan by sharing heartfelt and optimistic family stories that make you feel the opposite of these statistics. These families look for what can be applied from the past as they grow, change, and innovate, and look towards the future.

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So without further ado, let's launch into this evening's succession expert panel discussion. So tonight we have with us Dr. Marsha Goetting. Marsha is a professor and extension family economic specialist at Montana State University. During 2024, she presented 65 legacy planning programs with over 5,800 Montanans attending. Dr. Geting is a member of the Montana Alzheimer's Coalition. She has been appointed to the Montana Supreme Court Commission on continuing legal education, and she received her PhD from Iowa State University and her master's and bachelor's degrees from Kansas State University. Thank you for coming, Marsha.

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Stacie Arntzen grew up in northeast Nebraska where she was an active part of her family's farm and ranch operation. She attended college at the University of South Dakota before transferring to Montana State University in Bozeman, graduating in May, 2002. Stacie became a certified public accountant with the state of Montana in 2005, and she joined Dale Huffine and Mickey McMillan as a partner in 2009. Stacie specializes in agriculture taxation, providing tax preparation, tax planning, and transition consulting services. Estate planning and administration are also among her areas of focus, and she values working with and educating her clients while building and maintaining lasting relationships with them.

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And Michael Stolp is joining us from Spokane, Washington. He journeyed the furthest to be with us this evening. Michael is the head of learning, research and insights at Ag Wests Farm Credit, where he leads initiatives in employee learning and development, customer learning, family business resources and research on marketplace industry and customer and employee experiences. As a family business facilitator, Michael assists businesses in enhancing communication and teamwork, improving management and strategic planning, developing successors and transitioning assets. Michael holds a bachelor's degree in agricultural business from Washington State University and a master's degree in agricultural economics from Purdue University. Michael's expertise in family business is rooted in his family's third generation farm and ranch, and Sprague Sprague Washington. With over 20 years of experience in family business facilitation, he combines practical lessons with a deep understanding of farm, ranch, and agribusiness perspectives across the West coast. So thank you for joining us, Michael.

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My first question for the panel is: what do you do to help in the succession planning process?

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And maybe Michael, we'll start with you and then just go down the line. 

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Stolp: Great. Well, it's a pleasure to be here. My hometown was a lot like Winnett. I had seven kids in my high school class and I gotta say go Rangers. You're doing great. I played eight man football. Uh, yeah, there you go. You can give it a clap.

Uh, well, you know, as we look at succession planning, I'll share that you're right. For, for me it comes from real passion for the family farm I grew up in. And if any one of you says, what's it about? I'd tell you one word. It's about alignment. And you're gonna say, well, what are we trying to align? And I'll say three things.

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Your business first, your people second, and lastly your assets. And in fact, when we think about it, we focus on business, smart family friendly decisions. I know you're gonna sit there and say, well wait Michael, I thought it was all about taxes and I love the work Stacie that you do. But the thing that we'll share is if you focus on taxes first, it's like the tail wagging the dog. So we help with aligning business, people, and assets in a way that's business smart first, family friendly second.

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Arntzen: So as Michael mentioned, my role in this is usually after you come meet with me, we'll talk about the tax consequences of the plan. So that's my role.

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Goetting: Well, my role with Montana State University is that I have a hundred percent extension appointment. So that means what I do is I teach, but I teach off campus. So I travel the state doing educational programs in different communities.

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I also then the author, uh, with other people on our MontGuides. We have over 50 different MontGuides in the estate planning area. So if there's something you have a question about, I hope MSU Extension would have a MontGuide on that. And specifically for those farm and ranch folks here, we've got a great asset to have you get together, have the conversation, and talk about what the values are, because I know that's a hard conversation.

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And if you have anybody in the family that is facing Alzheimer's. We also have one other publication on that. So our role is education. That's what MSU Extension does.

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Torgerson: And Marsha back to you. I'm wondering if you could just outline what are the components of a succession plan? So we'll kind of start with some technical questions this evening and then dive deeper. 

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Goetting: You know, when we're looking at components, one of the first things I do and I look at the audience and I say, how many are not white haired? But those people I want to talk to first because they need to have an estate plan with a will and they need the guardianship and conservatorship for their children. If you drive out on the highway and you're killed, what's gonna happen to those children? So I think a will's a major, major factor.

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I also think then one of the things you need to look at for living right now is a financial power of attorney. Same thing happens. You know, my sister was in a motorcycle accident with her husband and he had brain damage and there was all kinds of things. And lo and behold, she didn't have a financial power of attorney to be able to do the things that she needed to do while he was healing. We also now know that we need a healthcare power of attorney.

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Then I'm thinking there's probably something I'm forgetting. Oh, yeah. How about that separate listing? What listing that is what you wanna put with your will because it's where you put all the things that have emotional value to you. For example, I have my grandma Ray's opal ring. 117 years old. And I wanna make sure that I leave that to someone, but I don't have a title to it.

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So what I do is a separate list that's included with the will and I indicate that I want that to go to my niece. Now people will ask about a trust. Yes, there's reasons to have a trust, but I don't like those attorneys that say everybody needs a trust. No, you need to have some specific reasons.

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We've got a testamentary trust MontGuide. We've got a living trust mock guide, and we also have one that's called a QTIP, qualified terminal interest proper. And if you don't know what that is, who does, it's something new that you can make sure you provide for your spouse, but the spouse can't sell. The spouse can't give it away. It goes directly to the kids upon the death of the second spouse. So that's my soapbox for the evening. 

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Torgerson: And could you define what a trust is any of you, just so that we have that definition out in the air too.

Arntzen: Uh, a trust is a legal arrangement where the trustee manages assets for beneficiaries under terms set by the grantor.

Torgerson: Perfect. That sounds like a lot of things you need to do, a family needs to get started on. It sounds like they need to get started on it early because it's a long process. And I'm curious, when should families start succession planning Should they start conversations and building out some of these essential documents needed?

Stolp: That's a great question and everyone will ask me. What's the first step in succession planning? The first step is procrastination, meaning everyone puts it off. And then if you'd ask, well, when should we get the ball rolling? Uh, before you think you need it. Why is that? The longer you wait, the fewer choices you have, and I've never met a farmer or rancher that didn't want more choices. So kudos to all of you who are taking time outta your very busy schedules tonight to come here to learn more about it. And my hope for all of you is that you get the ball rolling. 

Torgerson: Thank you. So I first learned about Michael, through one of the families featured in this season, Gene Curry, who used Michael as a succession facilitator. And communication is something that came up again and again in my conversations with Gene about how Michael stepped in and helped foster a culture of communication within the family.

And so I'm curious if you could just speak to the role of communication in this process of starting now or starting tomorrow on your succession planning. 

Stolp: Yeah, it's a great question, and if you, anyone of you were to say, well, why, why do people procrastinate? It really comes down to communication and the fear of conflict.

And if you think about it, when we come together as families to look at where we want to take our business for the next generation and how we get there with people, those ideas are better when they're informed by more than one person. And in fact one of my favorite quotes is if there are two people in the room and they each have the same opinion, one of them is unnecessary.

And so as you think about what is right for your family business, I always think about getting the right players around the table and then putting the intellectual building blocks or puzzle pieces in the center of the table and then ask, how do we arrange them in a way that makes sense for us? Well, if we don't have conversations or can't have conversations with each other, that process is impossible and the outcomes are ultimately suboptimized because they don't benefit from everyone's head and heart.

And so communication is far more than a touchy feely thing we all talk about. It's an imperative that makes better business sense and ultimately it's better for the relationships as well.

Torgerson: Um, some of the families that I interviewed this season, they had conversations first with their on-farm children and then brought the off-farm children into the conversation. I'm curious, just if anyone could add anything to the phases of who all should be involved in the, invited into the room. At what point should you invite professionals into the room to have these conversations?

Stolp: Yeah, I'll start on that one. So I've done this for 21 years, a long time now, and everything I share with you isn't because I've read in the book, it's because family businesses have taught me this works. And generally when families start to have the conversation, every family is different out of the gate.

Yet generally speaking, the best practice is to engage the vested players in the business, including spouses who may not work directly in the business as you start. Now, what about off-farm family members? It's really the family's prerogative. What I generally always do though, is then build the bridge to the off-farm family members in a family business planning session debrief, because those off-farm family members are affected by the decisions you make as you look at what's equal or fair.

And so, bottom line, include everyone who's vested in the business, whether they work or not in the business, and always ask how do you connect the dots for those people who are off farm? 'Cause if not, they'll fill that void with their own narrative, which generally is a crappy first draft.

Arntzen: Well, I just wanted to piggyback on that. Don't assume what an off-farm heir might be thinking or feeling too. 

Torgerson: I know that transferring your farm or ranch to the next generation, I think that's the name of the workbook. It has questions for off-farm siblings and on-farm siblings. And so I'm curious too, Marsha, if there's anything that you can add to the role of having conversations with both. 

Goetting: I often have families that say, well, oh, it's so hard to get everybody together, and we're told, you know, we really shouldn't deal with some of these things during Thanksgiving or Christmas, but come on, when do the kids come home?

You probably have some kids that are outta state and if they are when they're home, and that's when we need to get together. Now, last week I was talking with an attorney and he said, now get this. He doesn't believe that you should have to pay him $300 an hour to educate you. And he says, what I do is give people your MSU Extension MontGuides, and that's what we've done.

Torgerson: While you're recommending to folks to not worry about taxes, I heard people coming in saying they wanted to hear about taxes, and I know that that's on the minds of many. Stacie, is there anything that you can add about taxes and, you know, avoiding capital gains and the concerns that people bring to your office?

Arntzen: So the estate tax isn't maybe the concern, but maybe the transitioning tax is what we're looking at. So when we sell to the kids, the capital gains, so a couple ways to structure so that you can minimize the taxes, is like an installment sale or a gift. The difference with the sale and a gift is gonna be your basis.

And if you wanna do that before you pass away, then you don't have the stepped up basis. So, with an installment sale, you only have to pay tax yearly on the amount of money that you get. So you can sell your land, but you don't have to pay the tax fully in that year.

You can spread that out. So you can manage tax brackets a little bit better that way. And then, say you wanna make it work for your child, so you sell 'em for less than fair market value, then you have a partial gift there, and that's where that comes in. 

Goetting: MSU Extension does have a MontGuide that talks about the carryover basis and the step up in basis that occurs.

Uh, some of what she's talking about, and I gotta admit, that was something I didn't really understand till recently. And I go, wow, you as a parent can just keep it until you die. And he gives me a $15 million ranch and I go hip, hip, hooray. But if I sell it, I'm gonna have to pay a capital gain if I kept it for a couple years. But if I sell it at the price that he died and it was at that price, I don't have a capital gain. I don't have an inheritance tax, and I don't have a federal estate tax. Woo-hoo. Not bad at all. 

Torgerson: Well, a question that I have for you, Michael, is, how do families know whether they can start succession planning on their own or whether they need to bring in someone like a facilitator to help with the process?

Stolp: A great, great question. The short answer is every family should and can do this alone and not require a family business facilitator. They're saying that's weird. The family business facilitator just said he's unnecessary. However, there are cases where facilitation makes sense and the cases include things that you would imagine.

In some cases, it comes down to communication where people simply struggle to get in the same room and talk without a lot of fireworks. Other cases are where there is incredible confusion around folks' roles and responsibilities in the business, meaning they're not clear on what seats they have on the bus.

In other cases, there is significant strategic misalignment, meaning different partners have different perspectives around whether the business should grow. Downsize, take on risk, those types of things. And in some cases, businesses just are so complex that having a facilitator come in can allow the family and the business to focus on the questions and their insight, and then have someone like me or otherwise run through a process where out at the end comes an aligned plan.

I'll be clear though. A family business facilitator is not a counselor, not a psychologist. What we are are people who understand the right questions and bring best practices from other operations to the benefit of the people we work with. Ultimately, the family is the expert around their business. We're experts around the process and can share best practices. 

Torgerson: Is there a success story or a failure story that you could bring to mind that brings to life kind of the need for a facilitator? 

Stolp: Yeah. Yeah. I'll tell you what, and you, you all are gonna think this is crazy. You sure? You're gonna say that every family I work with is a success story because those are the families that have chosen to come and engage a family business facilitator to build a plan.

Um, I'll tell you though, some of the success stories is a customer I'll work with in the next few weeks. The son and daughter came to work with the dad in business before succession occurred, and they were very intentional around, here's the business, here's the roles, here's the opportunity, what do you want?

As Stacie said, they talked to the next gen and the success story there. In that case the son came back, the daughter said it wasn't for her. In another family, the story was they went to a meeting like this. Came to Thanksgiving, Marsha. And at that one they had, we had a succession, a planning session, and the dad looked around the table and it was one of the most courageous things I ever heard.

He looked at his oldest son and he said, if you put you and me on this farm together, it is like putting two alpha wolves together in a cage. We're gonna tear each other up. And in that case, the daughter came back. And that's a success story too. What are some of the stories that might not be so successful?

I can think of two of them. One was a 76-year-old producer who brought his family together and in the middle of the session he started crying and the family had never seen him cry before. And they said, what? Why are you crying, dad? And he looked around the table and he said, it occurs to me, I waited too long. As that family looked, his dream was to build out the business and grow it. Yet, what do you think his successor in their fifties were looking at as they considered their vision. Retirement? Retirement. 

This final thing on this, in terms of things that didn't go as anticipated, is for any of you who's, as you engage this process, step back and ask yourself what one of our customers did in a session. Own your truth. Own your truth. Because when families come together and talk about what's important to them, their business and where they want to go, what doesn't work. If they leave that process, they don't own their truth, and then they leave and say, there's no way in heck I'm gonna support that plan.

Torgerson: Thank you. I feel like those stories bring a lot to this conversation.

Well, we've been talking a lot about passing the farm or ranch down to the next generation, and one of the questions submitted by one of the attendees, one of you all in the audience, was if you could talk about succession when it's not family.

Have any of you had experience with succession planning when it's passed down to someone other than a family member? 

Stolp: Yes. In this case it was an operation where they didn't have a family member that wanted to come back. And what occurred is this farmer was proactive in his local community and he had seen someone, he would, he'd always been impressed with, and this individual did not have an opportunity with regard to his own family to come back to the farm or ranch. And so we'll call this guy Bob. Bob went out and he proactively recruited this young man to come back to his operation, non-family member. And then what Bob did is Bob groomed this young man who became the CFO for the operation.

So it was large enough that it could have, you know, a production side and a CFO. And the most fascinating thing in this case was Bob was a serial entrepreneur, so innovative, and yet Sam, we'll call him Sam, his CFO was very conservative and together they were one of the best teams ever worked with, non-family team.

And then Bob and his wife got ready for retirement and they looked at how did they transition the business to Sam and his family. And what was really interesting in that is we got the plan in place. We got, of course the financial parts figured out, and then what we did is we engaged Bob's off-farm kids because it was very important to Sam, the non-family successor, that Bob's kids understood what was intended.

And it was a wonderful success story. And now Bob is someone we look to as an example of how do you transition a business if you don't have a family member who wants to take over the business. And what I'll share with you is remember business smart, family friendly.

This was business smart because Sam is really the portfolio manager who creates a nice financial return for the off-farm kids who are landlords, grow rate. It's also family smart because the brother and sister who are off farm understand that's what mom and dad wanted and they celebrate and appreciate Sam.

Torgerson: Hmm. Thanks for that inspiring story. Diane has a question.

Diane Ahlgren: Well, I guess I would just have a quick comment. We are working on a transition with a non-family member and it's a great option and I think I would encourage folks to consider it if you don't have family that's interested. I think it's an option, so don't be afraid of it. And there's kids out there that want that opportunity and that's how we started.

So it's a passion for me to pass that on. So I would encourage it. And thanks everybody for coming. This to me is a success story right here, seeing all you folks, so thank you. 

Torgerson: How have you involved this off-farm kid in your planning conversations too? Like just, have you invited him into any meetings with any professionals or has it been a conversation with the two of you?

Ahlgren: It's pretty much just been a conversation between us. We've, we've tried to get everything we can think of in writing. I firmly believe in that handshakes are good, but, but people forget or assume or understand it at a, you know, differently. So I encourage getting it written out. Um, if things move forward, we will need to include a team to work through it. But at this point, they're leasing. 

Stolp: Diane, ditto. If it isn't written down, it didn't happen and I could not agree more because when you write it down, what you create is a document that's falsifiable. Meaning people can look at it and say, is that what we mean? If not, there's a lot of misunderstanding that can fill the void.

Torgerson: Could you speak to what kind of questions you should bring to your accountant? What kind of questions you should bring to your attorney? And as an accountant, Stacie, what do you like for your clients to have in order, put together, before they first start meeting with you?

Arntzen: A general idea of the end goal, because if I kind of know what goal we're working toward, I can help them work through how to get there easier. And a listing of all your assets, which we should have on a depreciation schedule anyway, but having a listing, an idea of your non-business assets also as they would play a role in there.

And then, in general, you know, having your will and your financial powers and things that Mark has talked about, and then your beneficiaries and all your IRAs and other things at the bank. 

Torgerson: And when I've met with my accountant sometimes he's like, this is tiptoeing into tax law things. So I technically can't give you advice on that. Are there questions that you say I defer to your attorney for this? This isn't exactly a question that I can, I can answer. 

Arntzen: Probably, more in like drafting documents. Definitely the attorneys need to do all of that. And it does sometimes get into, can I do this or can I do that?

And then that does become a legal question. For the most part. We focus on, you know, the tax implications of if I sell this or if I gift this, or how can I structure this entity to transition faster. 

Torgerson: Um, and when we were preparing for this panel, one of the other things we discussed, Stacie, was just the different types of business structures that farmers or ranchers should have and why they might choose one over the other during a transition process.

And through the families that I've interviewed this season, they talked about that, separating land out from their operating business and, and things like that. I'm wondering if you could speak more to the business structure too. 

Arntzen: Sure. So quickly, there's a sole proprietorship, which is just you as an individual, and then a partnership, which can be limited.

You can have a general partner and a limited partner, and then you can get into an S corporation, which is shareholders, and then a full C corporation, which again is shareholders, but it's its own standalone entity that pays its own tax. Whereas the S corporation and the partnership will be a flow through entity.

So you'll pay the tax on your individual return, and you may choose one of those entities depending on what your end goal is and how you wanna use that in your plan. Because with the shares, especially in the limited liability companies or partnerships, you can have what they call minority discounting.

So if you're gonna give just one or two shares, you know, you're giving a minor interest so you can discount that so you can gift more per year if you're using those shares to gift that way. 

Torgerson: I know that, in the past, people were instructed to create corporations and that's becoming kind of a thing of the past because of tax implications, if I'm understanding correctly. I'm curious if you've dealt with any clients who've had to dissolve a corporation or navigate changing that into a different type of business entity. 

Arntzen: Yes. That the C corporations were definitely more prominent in the eighties and before, and we don't see them as much. And part of that reason, there's a couple things.

One, we saw them used for tax planning because the tax rates were a little bit lower, that changed. And now the rates are higher, but also there's the double taxation in the C corporation. So getting out of a C corporation is a lot harder. And C corporations are good if you're just gonna, they're long term, you don't want the land to sell or you want, you know, it to go on for a long time, that's when they're a little bit used more.

Torgerson: And for some of the families that I interviewed this season, some of them have their land within a trust and some of them own the land as individuals. I'm curious if you could speak to, any of you, what the benefit would be to have a trust or to continue to own it as an individual.

Goetting: Well that qualified terminal interest property trust QTIP. Let's just remember QTIP. You know the thing you put in your ear and clean it? Well, that's the, this kind of trust, and it was used primarily as a tax avoidance type thing. We can avoid taxes. That's fine. It's evasion that gets us in trouble.

And so it was designed that the first part would be taxable over here when the first person dies and then it goes over here. And you work it around what the exemption is. So it'd be 15 and 15 or what? And it would be less than that if you have less. But the idea then is we use up the unified credit over here, the death of the first spouse, and then it goes, we have some over here that she has or he has, and then there would be no tax benefit.

But the benefit would be you already decide in the trust that here you can have income from it, you can do this and this, but you can't sell it. You can't give it away. And so then when, let's say it's mom dies, then it goes to the kids because the concern is what I'm, you know, you're young and what if you die?

And she remarries and she puts that property in joint tenancy with the new spouse. Then she dies. Where does the property go? The new spouse. And we've disinherited the kids. So those of you that have joined with right of survivorship needed to do some thinking about that. Is it that, is that the way you want it?

Uh, same way. So, and that's why we have a MontGuide that's called property ownership. I ask the questions when I do a meeting, do you have sole ownership? Sole proprietorship, joint tenancy, tenancy in common. And when I mention tenancy in common, people look at me like I'm a crazy person. They've never heard of it.

But tenancy in common can be a very good way to title property, particularly when we're getting in a situation where he has two kids over here, she has two kids over here. And what did they do when they got married? They put everything in joint tenancy with right of survivorship. And this man is at my meeting and I'm talking about it, and he gets aggravated.

He comes up to me at coffee break and says, who told you about my situation? Well, I didn't know it. I, that was from another county that I did that. And can you imagine his conversation going home? Because he realizes now, oh my gosh, I've disinherited my kids by putting this property in joint tenancy. So he's going home to her and say, hi, honey. Uh, can we eliminate this joint tenancy? Well, she said, yes, but why did she say yes? And the reason being she had her property that she had put in joint tenancy with him and get this, they thought they could write a will. And make sure the property gets to these two, you know, his kids. So he would write a will saying, I'm wanted to go to my two kids.

And the attorney should have said, Uh uh, you can't do that because a will cannot undo a contract. So always keep that in mind. A will cannot undo a contract. 

Torgerson: Wow. Learn something new. Um, Marsha, could you speak to what happens when you do not have a will? 

Goetting: If you don't have a will? You're giving control to the state of Montana. So the state of Montana has a way that the property's going to be divided. First of all, it's always the spouse if you're married, and then if your spouse is not alive, then it goes to the children. Okay, but let's say some of you out there don't even have children and you die. Well, it goes up the tree, then it first goes to your parents if they're alive.

And then if they aren't, it goes to the brothers and sisters. So this is all kind of difficult. So what I did is a MontGuide, first of all, and it shows you what Montana law does. And then we, those of you that hate computers, you won't like this, but we did a program on the computer where you can answer questions.

Are you married? Yes. No. Do you have children? Yes. No. All these fancy questions. And then ta-da. At the very end, it tells you where your property is going to go. And sometimes that can be the very reason that a person needs to do estate planning. When you realize it's going to go to some people that, well, quite frankly, you just don't like them.

Well, okay. That's why we wanna write a will and do estate planning. 

Torgerson: Thank you. Well, a question for you, Michael. How often should plans be revised and under what circumstances? 

Stolp: You know, the simple answer is things change. Your plan should too, and generally speaking, when we build a plan, we encourage our customers to update them every year.

Now, you might say every year, why? Because keep in mind, you know, the approach we take is that it's a strategic succession plan that starts with your business plan. Then it looks at the people, and then finally looks at what's your philosophy with regard to how assets should be transferred. And as you come together, this is really a tool that you participate in as you lead your business and then as dynamic as the world is, yeah, you should update it every year.

And then you should also step back and say, well, if that's a plan for our business, how have our lives changed and how do our life changes affect what we want, uh, from our life and from our business. Because one of the wonderful things around a family owned business is you have the opportunity to contour both your business and your life goals in a way where you can create a really unique kind of alignment that isn't available outside of family business.

I'm a big fan of family businesses, not because they're easy, but because they can have profound benefits if people work at it and they're intentional.

Torgerson: Well, I have a couple audience questions, So one question we received is, what are some of the best ways to continue to provide care to previous generations without the farm or ranch going broke, trying to do so?

Arntzen: One of the first things that comes to mind is maybe a long-term lease or something that ties up the land in a contract. Then that lease payment of course is gonna go to the nursing home, but then they wouldn't, at least they wouldn't have to sell the land, might be one option.

Stolp: You know, that's a question that we sometimes get, and again, I'm not an attorney, accountant or financial planner. The thing though that I've learned is there are no silver bullets. And what I will share with you, what someone once told me, a great mentor who happened to be a CPA, and you know, he told me, he said the number one rule in succession planning is mom and dad need to be.

And so one of the first things that can occur for any one of, for all of you who are in the senior generation, don't give it away too fast. Number one. Number two, make sure that you have a personal balance sheet to the extent you're able, so as, as best you're able, it doesn't encumber the family business.

And then number three, to the extent it encumbers the family business, understand the difference between strategic and non-strategic assets and be clear in what they are. Because the non-strategic assets are the ones that you generally want to go to first and encumber or draw on to support family members in need.

The strategic assets should be the last, and you'd be surprised whether there's not alignment or clarity around that. How moments that can be objective, get emotional because people aren't aligned. One of your questions, Megan, is how does family business facilitation help? Ultimately, it's looking at things that can get emotional and looking at what's the problem, what are the facts, and then how do you assemble them in a way that makes sense?

Again, business smart, family friendly. 

Torgerson: Could you define strategic versus non-strategic assets too? 

Stolp: Yeah, I'd be glad to. In the place I grew up on, the strategic asset was the one that had the barn, the machine shop. It was the main place. The phone shed, the non-strategic asset, was the piece of ground that was always a pain to get to, that we had to drive 20 miles to.

And yeah, you know, we were glad we had it. But if we didn't, we'd say that would be non-strategic. A better answer would be a strategic asset is anything that as you look at your business, would be critical to the success of the business. And without it, your business would be at a disadvantage and no longer have, what we would say is a competitive advantage.

A non-strategic asset is one that if you lost it would affect the size of your business and your revenue engine, but at the same time, it wouldn't be a material issue. And down the road you could always get it back. Either a replicable piece of land or whatnot.

Torgerson: And another question from the audience. How do you avoid probate? 

Goetting: Okay, we wanna avoid probate first thing. If you have less than a hundred thousand dollars, you don't have to have probate. I doubt that applies to anybody in this room. Okay. Montana has that as a collection of personal property by affidavit, and so it doesn't go through the probate process.

One thing you can do is if you have payable on death designations, on your checkings savings and certificates of deposit, you can also have one beneficiary designation on your United States savings bonds. So the idea is you should have first the primary and then have a secondary because husband and wives often travel together and they name one another.

Well, okay, what if you both go at the same time? So think about naming a secondary or a tertiary. What if you've got some stocks, bonds, mutual funds, you can put what is called a transfer on death registration. And that's if you're dealing with a broker. You sign one sheet, you indicate who your beneficiaries are, and that applies to your whole section of stocks and bonds.

If you have a mutual fund and another mutual fund and another one, then you would need to have a transfer on death registration. For all three of those, the legislature made an exciting law and that is you can use a transfer on death deed. Now I did not think I would live to see the day our legislature would let us transfer $6 million worth of land or more by using a TODD, a transfer on death deed.

Also, all beneficiary designations, like on your life insurance, your individual retirement accounts. Those avoid probate.

So we have a MontGuide, of course, on non-probate transfers that you would be welcome to get from your accounting extension office, and Cody would be glad to give that to you.

Torgerson: Well, Lance has a microphone to bring around to anybody who has any questions. And then we have some closing questions after audience questions. Just feel free to raise your hand.

Bill Milton: So, at the end of the day, you know, for succession to successfully occur, and Michael, you talk about, you know, the business right off the bat, it's gotta be good business. And when you're bringing the next generation back, or in the case where maybe one of your examples of a person, non-family member, what a young person needs today versus what maybe parents needed or how they paid themselves, you know, while they ran the rent.

In my experience, it looks like the business has to actually be more successful than it is in order for that transition to occur because of the costs and expenses, of what people expect, you know? So in the work you guys have done, how often does that come up? I mean, I've even heard issues like health insurance, gee, I can't bring my son back 'cause the business can't afford health insurance.

And that looks like that's gonna become even an increasingly more difficult challenge for, uh, any business. So how often are those tangible issues of just the cost of having more people involved in the business or making that transition? How often do those come up that are really honestly addressed?

Like, yeah, this business has to create another quarter million dollars in order to pull this thing off and maybe we need to grow the business in words for succession to actually be successful long term. 

Stolp: Great question. 100% of the time, if it doesn't make economic sense, it doesn't make sense. And that sounds like it's cold hearted. It's not one of the things that we do in our process, and it could be any process, is when we have sons and daughters that come back to the operation in an ideal state, they fill out a personal goal worksheet that talks about what are their professional goals, what are their financial goals, what do they receive a sense of purpose, what do they want for health and wellness, including leisure, and then what can the business support?

And then to look at if there is a gap, what are our alternatives to close the gap, because you alluded to it, there are always alternatives. The thing though is the alternatives take hard work and sacrifice and trade-offs oftentimes on a smaller operation. They include one of the spouses working off farm, as you noted to provide health insurance.

The thing though, is the best scenarios when faced with gap, get creative and close that gap with ingenuity and hard work. No different than you probably did when you came back to the business. One of the biggest mistakes that any family can make though, is to bring a son or daughter back and assume or hope that it will all work out.

Because the thing that matters is make sure you understand expectations before you bring your son and daughter back. I could tell you lots of stories where that didn't happen and, and the hardship that it required both for the business as well as the family. You know why? Because it wasn't business smart.

Torgerson: Alright, well I have a few closing questions and then I'm sure you might have some questions for them that's off microphone. So what advice do you have for the senior generation and for the incoming generation? I know this is a big question, but some takeaways that folks can bring home with them tonight.

Arntzen: What I had was just to be open-minded and to listen to and hear what the other generation's saying.

I wrote, yes, you wanna minimize tax, but, but that probably, like, as Michael said, isn't the main goal in the end. But don't assume you know what they're thinking.

Goetting: The thing I would think about is suggesting that you make the commitment to plan between the two of you, between the kids, the commitment, and then the next step is start taking action where, you know, maybe the first thing you do is, well, we can do it real easy, let's put pods on things. And you kind of start making that list of things you've accomplished and you feel good about that.

And I kind of guess I disagree with Michael in a sense of saying you need to change it every year. I would say review it every year, but I just had a lady tell me yesterday, you know, we went to the attorney, that attorney had everything in the world she wanted us to bring to prove. And I said, well, there's a reason for doing that.

But she said, I was so overwhelmed that I never went back. And I think about my MontGuide getting started, and in there I have a list of things your attorney should know. And you might think, gee, that's a bunch of crap. But it's so important because if you don't know how your property's titled, you really can't do a will.

And the attorney should not take your word for it. He, he or she should ask to see the document because people have messed up their plans by giving wrong information to the attorney.

Stolp: And Megan, what I would ask the senior generation to do is step back and ask yourself, what do you want your legacy to be? And that sounds like a touchy feely question. It's not. Because what all this work has taught me is that your legacy isn't your buildings. It's not your land, it's not your cattle. It's the impact you have on your family and your community.

And I know that sounds cliche. I see that legacy in here though. Every funeral I go to in my hometown, and I'll tell you what, you can tell the differences by people who've been intentional and those who haven't. And then what I would do for the next generation is recognize that succession's a two way street.

Oftentimes I'll hear the next generation say, mom and dad simply won't have the conversation. The thing they haven't done though is look in the mirror and ask themself what have they demonstrated with regard to their ambition and their commitment to take on that responsibility so mom and dad can step back.

Torgerson: It's a dance. And what role do stories and family histories have in the succession planning process? So this question is inspired by the episode to come out with Gene Curry. He talked about the process he went on with Michael and that part of the family retreat. They actually went through the history of the ranch and that provided him this opportunity to reflect, 'cause he's so often working in the business that he doesn't have that moment to reflect.

Stolp: I'll start on this one. We think about strategic planning as a very simple thing. It's where have you been, where are you at today, and where do you want to go? And it starts with where you've been. And in a family business context, what we'll do is we'll have families build a history timeline that alluded to before.

And then at the end of that, I'll have everyone on a pad of paper say, as you listen to that history timeline, what are the lessons you've learned? Because lessons learned inform your culture, which bottom line is how we do things around here and people shouldn't have to guess from the senior generation.

What it does is it's a moment of appreciation that the junior generation can say, wow, thank you for the next generation. It's a chance to step back and look at paradigms and ask, well, why do we do things the way we do? 'cause we don't have to. The final thing it is, is guess what? If you're in the senior generation, you weren't much different than your kids when you were their age.

And that's a pretty interesting revelation. I've done this hundreds of times, I've never done it and had a family member say that was a waste of time because something always interesting comes out. Most recently what came out was when mom and grandma said, did you know when dad asked me to marry him? I said, no.

The first time they said, how long did it take? We were thinking they were gonna say like, 20 minutes. No, it's two weeks.

Torgerson: Can I turn that question over to you, Diane, as someone who has, you've allowed me to enter into your home and put a microphone in front of you to, um, have you on the podcast and share, you know, the stories that you've, that you shared with me.

Ahlgren: Thank you. Yeah, we did have some great conversations. It got long. We were supposed to be done in an hour and a half and it was four hours later. It was great. 

Torgerson: You fed me coffee.

Ahlgren: It was great. I think the historical part is huge and most everyone knows we didn't have kids, but I think starting early and making kids aware that what this land, what this ranch, what this means to us, starting that early I think could be beneficial. So I just was looking through some transitioning stuff, and a gal was saying, she says transparency helps avoid entitlement.

When someone thinks they're going to get a certain amount of the value of your assets, they're already calculating it and counting on it. After your death, if the plan is different, that's when entitlement rears its head. If you can start that whole process early, it would seem like that may be a little bit more avoided.

And so I think it's a huge part of it to have that historical value and, and have them hopefully appreciate your thoughts on your legacy. 

Torgerson: One of my favorite questions that I asked everybody this season is, what do you hope future generations know about your work? Stewarding this land? And I got Gene Curry to read me a poem in response to that question.

And I got, other, you know, pretty stoic ranchers to shed tears. And so I just love, I love the question of how story can be part of these legacy conversations. In conclusion, I'm just curious if you could share one takeaway each of you that you hope the audience brings home with them tonight.

Arntzen: Just communicate open and honest. Be truthful, and hear what the other party has to say. 'Cause they might surprise you.

Goetting: I think as an educator, I would say educate yourself first. So you've got that list of questions that you wanna ask one another as well as your estate planning team that you might have.

Stolp: And then finally, what I would ask everyone to think about is the epiphany in your succession planning process. And for me, what it's taught me is the following. Imagine you are sitting there, mom and dad driving down the driveway from the home place. And the next generation is there on the farm or ranch.

And you look in the rear view mirror and maybe mom looks at dad and says, my gosh, they're doing it as good, if not better than we ever did it. And in that moment, dad looks at mom and he feels vulnerable and he asks himself, is that because we didn't do it as great? And mom reads his mind and the next thing mom says is, great job coach.

Great job coach. Because at the end of the day, your legacy is that next generation that's on that farm and ranch when you drive down that road. And if you can't leave, you haven't done your job in developing the next generation. 

Torgerson: Well, thank you all so much for driving out. Thank you to the panelists for sharing all of your wisdom. We really appreciate your participation.