The "cost" of estate and business planning

Three generations
03 Dec 2018

Often there are perceived hurdles in the way of producers when they are deciding whether to do an estate and business plan. For example, no one likes facing their own mortality; many do not know where to start; many think they have time to get a plan done later . . . just to name a few.

The costs associated with estate and business planning are also potential hurdles for producers. Responses like “I know I should do that, but it costs money” are common. Yes, it does cost money to plan, especially with an expert working in your best interest and taking the time to explore the big picture for your operation. But, that’s what you need. To get it right, it takes time and expertise. You get what you pay for. It is crucial to work with a specialist who has assisted thousands of farmers and seen all types of situations.

Another way you could look at it is by taking the cost and spreading it over the bushels produced on acres farmed. For example, assume you farm 1,000 acres of corn. Further assume you average 160 bushels per acre, giving you 160,000 bushels of corn. Next, assume you complete an estate and business plan and spend $5,000 doing so. The $5,000 cost to do a plan spread over 160,000 bushels of corn is a mere three cents per bushel. How does that compare to other costs you have per bushel?

Now compare this to the cost of not doing a plan. Assume that there is another farm of 1,000 acres of corn, averaging 160 bushels per acre. Further assume that the operator does not do an estate and business plan because they have been putting it off. Then the operator dies.

The operator “saved” the three cents per bushel in not taking the time and expense of completing an estate and business plan. But now what? What does their family do? What’s the future of the farm? What opportunities are missed because of the lack of planning? What are the tax implications? What’s the plan? The unknowns and stresses pile up.

Ultimately, we’re comparing three cents per bushel to do a plan to the stresses and unknowns resulting from doing nothing. It makes you rethink the “cost” of an estate and business plan, doesn’t it? The fact is the real cost is when you don’t do one.

Further, the above example gives a cost per bushel from a dollars and cents standpoint. What is it worth to you to assure your farm and your family can continue on if something suddenly happened to you? What’s that worth per bushel?

The time is now to get your planning done. AgCountry’s Succession and Retirement Planning Department is available to work with you on your planning needs. Talk with your AgCountry Loan Officer or your local branch for more information.

Andrew Zenk
Written By: Andy Zenk
Succession and Retirement Planning Consultant