Edition #47

January 27, 2025

Good morning and welcome to the Braintrust Ag newsletter. Where we break up the winter doldrums with some easy-reading info to build & transition a better ag operation.

If someone forwarded you this email, subscribe here. We send regular resources for farmers and ranchers to grow and transition their operations.

In a Glance…

• 🔚 Big Idea → Wrapping up the Pro Manager Series

• 🎁 Gifting

• 📅 Community Happenings

• ✂️ The “Big D”

THE BIG IDEA - Pro Manager Series

The Final Chapter

Professional Management - The Key to Generational Success

This edition brings a close to our Pro Manager series. For the past 10 months, we’ve been detailing various aspects of professional management for ag operations + providing downloadable tools you can use directly on your operation. Here are links to all the previous blog posts for newer readers:

• Intro: Why Pro Management Preserves The Family Farm

• Farm Business Overview

• Take An Inventory

• Family/Farm Business Meetings

• Standard Operating Procedures

• Hiring & Managing Employees

• Hiring H-2A Visa Workers

• Managing Family Dynamics

• Six Principles of Financial Responsibility

• The Balance Sheet

• The Income Statement

• Enterprise → Whole Farm Budgeting

• 18 Farm Financial Ratios

• Agricultural Taxes

• Contingency Planning

The Final Chapter: Professional Management—The Key to Generational Success

Farming and ranching have always been about more than just producing crops or raising livestock. They’re about sustaining a way of life, building a legacy, and ensuring that future generations can thrive. The lessons we’ve explored in this series all point to one central truth: the farms and ranches that last are the ones managed like professional businesses. Let’s tie it all together.

The Foundations of Professional Management

Professional management isn’t just a buzzword—it’s a way of running your operation that ensures consistency, accountability, and long-term viability. Here are the cornerstones:

Document Everything

• Documenting your farm’s history and structure provides clarity for decision-making and continuity. It helps everyone understand where the operation has been and where it’s going.

• Standard operating procedures (SOPs) ensure tasks are done correctly and consistently, whether it’s feeding livestock or maintaining equipment. This is your playbook for smooth operations.

Take Inventory and Know Your Numbers

• A thorough inventory is the foundation of good management. Knowing what you own, what you owe, and how assets are titled is critical for strategic planning and succession.

• Financial statements—balance sheets, income statements, and enterprise budgets—aren’t just for bankers. They’re essential tools for tracking progress throughout the year, identifying inefficiencies, and making informed adjustments to stay on course.

Hold Regular Meetings

• Family and business meetings establish open communication. Use structured agendas to ensure everyone is on the same page and working toward shared goals.

• Clear roles, responsibilities, and decision-making processes reduce confusion and foster trust.

Plan for the Uncertain

• Contingency plans and risk management strategies prepare you for the unexpected, whether it’s a drought, market crash, or health emergency.

• Succession plans provide clarity on how the operation will transition to the next generation. Without one, even the most successful farms can falter.

Focus on Financial Health

• Budgeting isn’t optional; it’s your roadmap for navigating future growth and seizing opportunities. Strategic planning through budgets helps ensure resources are allocated toward investments that drive long-term profitability.

• Understanding and monitoring financial ratios provides insights into your operation’s resilience and growth potential. These metrics help you align today’s decisions with tomorrow’s goals.

Key Takeaways for Professional Farm Managers

• Adopt a Business Mindset. Running a farm is running a business. That means making data-driven decisions, understanding cash flow, and being proactive rather than reactive.

• Invest in People. Your team is one of your greatest assets. Hire well, compensate fairly, and provide clear expectations. Whether family or hired hands, everyone needs to feel valued.

• Communicate Clearly. Misunderstandings can sink even the best plans. Regular, structured communication builds unity and keeps everyone aligned.

• Be Ready to Adapt. The ag industry is constantly changing. Whether it’s technology, markets, or climate, the best managers embrace change and see it as an opportunity.

The Secret to Longevity

Generational farms and ranches don’t endure by accident. They thrive because someone made the decision to treat the operation like a business. They implemented systems, embraced transparency, and held themselves accountable to high standards. Here’s why this matters:

1. Consistency Builds Trust. Employees, lenders, and family members trust operations that are predictable and professional.

2. It’s Easier to Solve Problems. Professional managers don’t let issues fester. They address them head-on using tools like conflict resolution guides and structured meetings.

3. The Next Generation is Watching. Your kids and grandkids notice how you run things. Professionalism sets the standard for them to follow.

The Path Forward

If you’ve made it this far, you’re already on the path to better management. But knowing isn’t enough; action is what counts. Start by evaluating where you stand today. Use tools like the Pro Manager Appraisal to identify gaps. Then, tackle one area at a time. Document your SOPs. Hold your first family business meeting. Review your balance sheet.

Remember, professional management is a journey, not a destination. The farms and ranches that embrace this philosophy aren’t just surviving—they’re thriving. They’re the operations that weather storms, adapt to change, and pass on something truly remarkable to the next generation.

A Call to Action

If you take one thing away from this series, let it be this: professional management is the best insurance policy for your farm’s future. It’s what turns a good operation into a great one. So, make the commitment today. Because the most successful farms aren’t just run—they’re managed.

GIFTING

Don’t Sleep on Annual Gifting for Farm Succession Planning

Here’s the deal: annual gifting is a straightforward way to pass assets to the next generation without having to file with the IRS.

Example: Husband and Wife are farmers with four kids. In 2025, they can gift up to $152,000 total—$19,000 per spouse to each kid—without filing a gift tax return.

What qualifies? Almost anything of value:

• Cash

• Crops

• Livestock

• Equipment

• Interests in entities (LLCs, partnerships, etc.)

But let’s talk about the trade-off. If you’re gifting tangible property (like equipment or interest in your LLC) instead of cash, the recipient takes over your basis in the property. In other words, they don’t get the benefit of a stepped-up basis. This could mean higher capital gains taxes down the road if they sell the property. It’s something to weigh carefully, especially in the context of long-term family plans.

While this strategy isn’t about improving your own balance sheet, it’s a way to give the next generation a leg up. Gifts like livestock or crops could help them expand their operation and might even serve as compensation for their work on the farm. The gist is, it’s about putting them in a stronger position for the future.

Brain Trust Ag Community Updates

If you’re not a member, join our agriculture community.

Sign up & receive a 7-day free trial.

What’s Happening?

1) New Regular Peer Groups

If you missed the announcement, CLICK HERE for all the details on our newest virtual peer group offerings:

→ The Market Edge - Grain Merchandising & Marketing Group

The 2nd & 4th Wednesday of each month

→ Leaving A Legacy - Succession Strategies Group

The 1st Friday of each month

→ Young In Ag - Next Generation Group

The 4th Friday of each month

These three new groups join our weekly Sunrise Sessions (each Wed morning) and our periodic SOIL Gatherings.

2) We’re at 394 members

Encourage your relatives, friends, and enemies to invest in their future by becoming a member and pushing us past the 400 mark!

The “Big D”

🎵 Going through the “Big D” and don’t mean Dallas… 🎵

For those who don’t know, Mark Chestnutt was referring to a big concern of many farm families: DIVORCE

Specifically, the owner generation concerned about leaving the family farm to successors and not wanting to see it get split in half upon a divorce. Here’s two ways to protect the farm:

1/ Prenuptial Agreement

A prenup is a contract among a couple, signed before marriage, that controls what property goes where if they get divorced. (Postnuptial Agreements do the same thing, but just after they’re already married)

Now, before we dive into what the prenup should cover, it’s important to point out that different walks of faith have varying views on prenups. A common faith-based school of thought is that we’re entering into a marriage & pledging our devotion for one another and not planning to divorce. In other words, a premarital contact is opposed to what a loving marriage should entail… husband & wife bound for life. The counter-point to that is we’re just assigning property, almost like a business arrangement, and it has nothing to do with our loving intentions.

Regardless your views of prenups, they’re tools that exist, so awareness of them shouldn’t cause any harm.

That caveat said, these 3 categories ought to be addressed in a prenup:

A. Assets owned individually before marriage

B. Assets earned during marriage

C. Inheritances received during marriage

For each category, the prenup should define whose property is whose upon a divorce. For example, Jack & Jill are getting married. Their prenup says each of their individual property they’re bringing into the marriage remain theirs. Any property acquired during their marriage (including growth on the initial property) is theirs to share. Any inheritances they receive during their marriage belong to Jack or Jill individually.

If Jill inherits 1,000 acres of farmland during their marriage, and unfortunately they get divorced, she keeps the farmland to herself. You can see how this could put the owner generation of that land at ease, if their goal is to keep the farmland in the family.

Now, for the prenup to be valid, there’s some requirements:

• Jack & Jill both need to consent to the prenup

• They both need to fully disclose their assets and let the other review

• They each need to have separate attorney representation

• It needs to be formalized in a signed, binding agreement

But what if they don’t want to get a prenup? What’s the owner generation to do then?

2/ That’s where a trust comes in.

Instead of Jill inheriting the farmland outright, the owner generation can designate that it goes into a trust for the benefit of Jill only. When properly drafted, this trust will not only protect the land if there’s a divorce, but it can protect the land if Jill were to file bankruptcy or get some big financial judgment against her.

Also, this inheritance can be kept out of Jill’s estate for death tax purposes.

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So, there are multiple tools available for the owner generation to rest assured that their life’s work & legacy won’t get split should an unfortunate divorce happen.

Definitely talk to your attorney if this peaks your interest.

Meme of the Week

That’s a wrap, folks.

Until next time, thank you to everyone involved in ag.