Plan for the future with 5 resolutions

The 20s have arrived and it is time to plan ahead for the next decade. The 30s will be here before we know it, particularly if you don’t lay the groundwork now.

1. Resolve to grasp the true profitability of your farming operation. Prepare a year-end financial statement each year by Jan. 31. This will help you and your bankers access your financial condition. Strive to list accurately the market value of all your assets and be sure to include all of your obligations, including all credit card balances and balances owed to suppliers ie. feed bill, vet bills, etc.

2. Resolve to have your taxes completed by the end of February. If you are due a refund, you are giving the federal and state government’s interest-free loans for every day you delay filing. If you owe taxes, you can delay paying until April 15, but how do you know if the return isn’t complete. Hint – if your tax preparer or CPA tries to delay you, find another provider. It is hard to get a grasp of your true financial condition until you have the tax return information in hand.

3. Resolve to monitor your estate plan on an annual basis. We often have attorneys prepare trusts and wills, but then forget about them. Things change! It is amazing how frequently I have seen ex-spouses or deceased individuals who are still listed as beneficiaries or trustees on estate plans. Preparing a succession plan for your farm is a critical part of your estate plan. What would happen to your farm if you were suddenly not a part of it? Would it continue on as you desire? Farmers often do not like to deal with issues like their own mortality. I have seen numerous examples of customers, friends and relatives dealing with unforeseen health issues or unexpected deaths leaving their heirs to deal with loose financial ends. Consult with your attorney or CPA about what is most beneficial for your farm assets. Should your assets be in a trust, LLC, or C-corporation?

4. Resolve to address the adequacy of your insurance policies. When reviewing your life insurance policies make sure your beneficiaries are accurate for the same reason as Resolution 3. Assess the adequacy of your property insurance. Do you still have your livestock, farm machinery, and buildings insured for enough? Do you have enough life insurance to provide for your family and creditors if something unforeseen should happen to you? Young farmers often fail to take advantage of affordable life insurance policies when they are young and healthy. Don’t forget to assess long-term care and disability policies. Many times a disability creates a much larger financial burden than a death.

5. Resolve to annually assess your capital needs and your long-term plan. Share these thoughts and desires with your banker and CPA. As a banker, I am frequently surprised by customers who approach me about building a new facility or purchasing new equipment without giving prior thought to it. Often this is driven by the desire to reduce taxes without giving adequate consideration to the resulting debt service obligation and the true benefit of the acquisition.

In conclusion, don’t hesitate to seek help in accomplishing these resolutions. Cultivate a relationship with your banker, CPA, attorney, insurance agent, and financial advisor. They are eager to help and it makes their job easier in helping you achieve financial success and meeting your goals.

Kim Light is president and senior credit officer with Heritage Bank of the Ozarks in Lebanon, Mo.


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