5 E SSENTIAL S TEPS FOR A S UCCESSFUL R ANCH P LAN Matthew A. Bryan, Sr. December, 2017
5 ESSENTIAL STEPS FOR A SUCCESSFUL RANCH PLAN Matthew A. Bryan, Sr. If your own children, grandchildren or spouse Introduction have neither the ability, nor the desire to carry on I believe in building strong families that also the work, then why not look to an employee, build multi- generational wealth. “Strong families” another family, or some young person who dreams and “wealth” are key concepts warranting their own of becoming a rancher, but isn’t blessed to have separate discussion . “Strong” means more than grown up on a ranch? Bless them. Your plan can “wealthy” and “wealthy” means more than cash, still make sure that your family derives benefit. But mutual funds, land or cows. I think that ideal can be broaden the scope of your thinking on may become attained, or at least approached, more often than it the successor to your ranch. is, with proper planning. My ideas in this paper are premised on this basic belief. Most often the successor is a family member or multiple family members, but it need not be. The I have several reasons for my belief in building Japanese business that builds temples named strong families that build multi-generational Kongo Gumi was a family business for 1,400 years wealth, none of which are relevant to why you want before becoming a subsidiary of Takamatsu to pass on your ranch. Perhaps you haven’t thought Construction Group. But, they did it by adopting through the why , you just know that it seems to you into the family those they believed would be well- like just ranching for as long as your health permits equipped to run the business, thereby maintaining it, eventually dying, and then letting whomever the its “family” business status. That’s one way to keep legislature has decided for you off your ranch and it all in the family. Perhaps an extreme way. But it go buy nice new trucks, and maybe subsidize the does challenge us to expand our ideas of running an good people in Washington D.C. and Helena seems enterprise for succeeding generations. How serious like a bad idea. are you about perpetuating your ranch? Assuming, then, you want your life’s work is The overwhelming tendency of most people is bigger than just you, and too important to leave in to want to divide things up equally among the the hands of politicians, I offer the following steps children. For the sake of the overall benefit to the for your consideration. family, I suggest that you not follow the herd on this, unless all your children are equally interested, invested, skilled and passionate about growing and Step One: Clone Yourself. protecting the ranch across multiple generations. I think the best idea is to prepare them all to The most important part of planning for participate in some way or another based on their continuity of a ranch is the development of those relative talents and strengths, but have just one, or who will come next. You know your herds, but do at most two, who are the primary successors going you know your people? If you haven’t done this, forward. you can start now. D on’t give up just because your children are grown and are not prepared, or The ranch stands a greater chance of continuing interested in becoming prepared, to take over the and growing for the benefit of generations of reins. extended family, if it is left mostly to the decision- making stewardship of one person after you. You need a quarterback at the helm. P a g e | 1 e z r a l a w o f f i c e . c o m
As an attorney, I do not have much more across the table shoots straight with you. Such a practical advice to offer on how to develop your person is invaluable. Ask someone who has trusted ranch’s successor. You have to impart your vision, something important to someone untrustworthy not just your ranching skills. This is the single most A faithful, trustworthy advisor does two main important thing you can do in the whole process. things. He speaks truth to you, and he is true to you. Candor and loyalty are the qualities, in addition to Step Two: Give Everything to Your Successor. the other measurable, that typify a trustworthy “Give” is another one of those loaded terms. advisor. “Transfer through prudent means” would be more “Professional,” has its root in the word accurate, though less catchy for a section title. “profess.” They are, or should be, people who Leaving out the subsequent steps could bring “ profess ” what they believe to be true in their given unpleasant unintended consequences. But, with these first two steps, you have, in a nutshell, the two field of expertise, regardless of any pecuniary gain they may or may not receive. That’s what makes most fundamental steps: 1) Select and prepare a successor, and when he is ready, 2) Give it to him. them professional and not a salesman. I am oversimplifying, of course, for the sake of I am not a will and trust salesman. While no emphasis. line of business is conducted without of exchanging You can transfer control, management, some of value, the professional must be a trusted advisor the assets, some of the revenue, and so on through first and foremost, even to the detriment of his outright gift, compensation for services, installment bottom line, if necessary. sale, transfers to trusts or other entities, or some I profess to a client what I believe to be the best combination of these. There are many options legal ordering of his affairs, based on the available available to prudently transfer your ranch assets and information, my experience, my previous and operations to the next man. The earlier you plan to continuing education. Then, the client pays me do this, the easier it is accomplish, and the more because I so professed. If you feel like an advisor tools in my tool chest we can work with. If you is selling you a bag of goods, keep looking. You are early in your ranching career, I applaud you for need advisors, and you need to trust them. you taking this on now. Many wait until later, when goals become harder to achieve. If you have Once you have your advisors, trust them. I waited, never fear; there is still much that can be probably speak for others when I tell you I spend a done to achieve the desired ends. lot of time and energy knowing the things I know about tax, business and ranch planning and estate Step Three: Get some advisors. planning (among other legal things). It’s almost If you are working on Step 1, you are already weird how much time I spend. I have two law beginning to learn to trust. It is probably more degrees, attend continuing education course crucial in Step 1, but here, in Step 3, it is almost as frequently, and still I spend 2-3 hours each day important. In both steps, the priority in identifying reading tax law, or related subjects. your key people is whether or not you trust them. I have often joked about how being a tax lawyer Do you trust their knowledge, wisdom and just shows that I have a mental disorder, albeit a integrity? Are they the kind of person you trust marketable one. I could not acquire the breadth and your spouse and children and grandchildren’s well - depth of the ranching knowledge you have by going being with? If not, keep looking. Consider the to a seminar or reading an article or three. I would paper credentials, but also heed your gut. be ill-advised to go buy a ranch right now and not It is not just about educational and professional get some (a lot) of advice about how to run it. resumes. Those need to be considered, but at a deep personal level, you need to know that the person P a g e | 1 e z r a l a w o f f i c e . c o m
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