Generations & Family Partnerships – Ehmke: Age affects business goals
“At different points in our life, different things are important,” says Cole Ehmke, University of Wyoming Extension specialist.
Someone in their 20s with very few assets and no family will not have the same concerns as someone who has been on the ranch for many years and is now at retirement age.
Accumulating, preserving and distributing, notes Ehmke, are the stages in our lifetimes related to estate planning.
“Someone just out of college is interested in building up the size of their estate so that they are financially secure,” he explains.
This is the stage of accumulating, so that we can pay the bills and protect our families as we build up our estate.
“Preserving is when we are closer to using our assets, for example in retirement,” he continues.
As we get older, we get more serious about protecting our assets and making sure that they retain their value.
“Distributing is when we eventually pass on our assets to whomever our heirs may be,” Ehmke adds.
Estate planning can mean a lot of different things, depending on who is assessing the situation.
“Estate planning is the process of accumulating, preserving and distributing assets to achieve the financial goals of people during their lifetimes and to provide for heirs according to agreed upon conditions at the time of death,” states Ehmke.
The process, he explains, occurs over time, and it can take quite awhile.
“For someone at age 65, it is more than likely that they will reach 86.6 years old,” he says of men. “Women are expected to live a tad longer to 88.2 years old.”
These numbers are up two years from predicted life expectancy in 2000 for people currently at age 65.
“People who are 20 years old now could easily live to be 100,” he comments.
Working later in life is also easier than it has been in past generations, with advances in medicine and machine technology.
“Some of our operations are not as physically intense as they used to be,” comments Ehmke. “They are dangerous, but there is a lot of machinery.”
Farmers and ranchers can reasonably work into their 60s and 70s, remaining physically and mentally strong.
“This has some implications for bringing a son, daughter or next generation of management or ownership into the business or operation,” he notes.
To exemplify the situation, Ehmke introduced the Queen of England, who will be 89 years old in April.
“How old is Prince Charles?” he asked. “He has kids, and now they have kids. How long can he reasonably expect to be the King of England if his mother is still Queen and he is already 66?”
This concept applies to farmers and ranchers as well.
Ehmke notes, estate planners should ask, “How long do we intend to be involved in the business, and how long will we own the assets?”
He also explains that future generations should be included in the discussion so that the family can develop shared goals.
“We want to make sure that we are all headed in the same direction,” he says.
Ehmke suggests looking at the family business as a whole, considering who is operating it, who is managing it and who is working it.
“Do we have a retirement plan and what is our intention for what we will be doing?” he asks.
He encourages estate planners to share responsibilities and ownership early, speaking with heirs about their goals and intentions.
“We all have different goals during our lifetimes,” says Ehmke about providing for our families, our heirs and ourselves. “There are a lot of different stages in the process of estate planning.”
Cole Ehmke spoke on Feb. 12 at Fremont County Farm and Ranch Days in Riverton.
This article is the fourth and final part in a multi-part series on transitioning the ranch to the next generation.
Natasha Wheeler is editor of the Wyoming Livestock Roundup and can be contacted at firstname.lastname@example.org.