A Legacy Restored – The Braken Family Case Part Two


Last month I talked about how a legacy of great people and profitable ranching had been almost destroyed by a well-meaning but poorly written will. That the Braken family had been reduced from a one of the greatest farming families into broken plots of land that divided both the farm and the family. Upset and confused about what to do next, many members of the Braken family contacted me at Farming Families. Everyone wanted the same thing: for us to find a way to solve this mess which honored Dave’s intentions: benefiting all seven beneficiaries without fighting. This is how we did it.

When multiple members of the Braken family came to me at Farming Families, it became really clear that we had a whole lot of work in front of us. Our first step was discussing with the family members to figure out what the largest priorities were: achieving financial comfort, protecting lifestyle, and planning an exit strategy. It was decided the best way to avoid conflicts of interest was to establish one point of contact, so we worked only with Dave’s oldest grandchild Ryan (now in his mid 30’s) and his immediate family.

We began with “Discovery Day.” Discovery day is a process that we use in every new engagement. During discovery day Ryan and we went over every aspect of the ranch. We discussed how he had to work at the power plant in order to keep the ranch afloat and how he wanted to change his current situation in the future. At the moment, Ryan and his wife Mila were both in their thirties, and they had a two year old daughter. Ryan had a job to help subsidize the ranch, but Mila was staying home with their child. They owned very little of their equipment, and they had $400 000 of debt from legal costs. They had a land base of 900 acres of hay and pasture, but 500 acres was co-owned by his sister Michelle. The land value was very high, and the entire parcel was valued at $6 000 000 with a V-day value of $200 000.

Ryan’s family dreamed of establishing a viable ranching operation. They wanted to create a new legacy for their daughter and any other children who might follow. Together Ryan and I decided that they would have to relocate to a cheaper land area, and we wrote a ten year transition plan that went a little like this:

Before the Sale: Before selling, Ryan and I had a lot to discuss. Do we sell 100% owned corporation or 50% owned corporation? Do we sell shares or land? Where would the family relocate to? How would the sale proceeds be allocated?

During Sale: We decided to only represent Ryan in the sale process. We selected a beautiful area for the family to relocate to and began negotiations. Ryan sold 300 acres for $3 500 000. Finally, we adjusted the closing dates to January, and we were granted replacement property benefits.

After Sale: After the sale we were able to apportion the purchase price of the new land, pay off all legal debt, and purchase used equipment. Ryan purchased 2000 acres of land and 100 cows.

So what does this all mean? It means that after we finished working with the Braken family, Ryan had a tax savings of $400 000, he had a capital dividend account worth $600 000, and the family was debt free. This news was phenomenal to them. The family was amazed by the results, and it lifted a huge financial burden and stress from all the people involved. Ryan had a clear title of 2600 acres and a 100+ cow/calf head count, and, to his huge relief, he was able to quit his off-farm job. After everything was wrapped up, my business, Farming Families, made arrangements to professionally manage his surplus money and crop land. Everyone was finally happy again: mission accomplished.

It took just over 18 months for everything to slowly sort itself out. By the end, the entire family transitioned into the new ranching area. Everyone was pleased with our focused approach and immediate improvements. At the end of the project, I had helped a family protect their lifestyle, achieve financial comfort, and restore their legacy. To this day, we continue to be one of our client’s most trusted advisor.

Ryan and the whole Braken family are not unique in their challenges.  Farming Families is focused on helping family farms make the right decision. We want farmers to understand that there is a company that is here for them, especially when they struggle with the enormity of succession planning and the complexity of real estate challenges. May you be comforted in knowing that you are in the company of professionals with strengths in farm taxation and farm land transfers. Contact me, Fred Mertz, at Farming Families today.

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