Latest / CattleUSA Daily / 151: LLCs Explained, What Ranchers Need to Know Now with Paige Harding

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151: LLCs Explained, What Ranchers Need to Know Now with Paige Harding · CattleUSA Daily

• 0:00
  Welcome back to another episode of the Cattle USA Daily Podcast.
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  Today we are welcoming back once again Paige Harding.
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  Paige is an attorney from Southwest Kansas and a dear
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  friend of mine. Paige has been on the podcast
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  for the past few weeks and we have really enjoyed having her
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  on talking about estate planning and what that looks like from a
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  legal aspect. Today we're switching it up a
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  little bit and we're talking LLC.
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  We do talk LLCS and estate planning a little bit in this
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  podcast, but more than anything, we talk LLCS.
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  What does it look like to set up an LLC?
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  What is an LLC? Why do we need one?
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  Page breaks all of that down for us today and makes it really
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  digestible on the complexities of LLCS and how we can use those
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  as ranchers, as farmers, and as someone planning an estate and
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  planning their succession plan. Without further ado, let's go
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  ahead and hop into this podcast with Page.
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  But before we do, you could take 5 seconds to like, subscribe,
• 0:59
  rate, review, do all of the things.
• 1:01
  We really appreciate it here at the team.
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  It allows us to continue to grow this podcast, grow our audience
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  and grow our impact. So let's go ahead and hop into
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  this podcast with Paige and I'm going to let you all go take
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  half a second to go do those things.
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  Welcome to the Cattle USA Daily Podcast, your go to source for
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  the latest livestock markets, industry insights and the
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  updates shaping agriculture today.
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  I'm your host Lauren Moylan, a passionate advocate for
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  agriculture, here to keep you informed and connected.
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  Now let's dive into today's episode.
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  Paige, welcome back to the podcast.
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  Another week, another episode where we are talking about
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  estate planning and what that looks like for rural families,
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  agricultural families and just kind of everyone else in
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  between. We have been talking about
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  estates for a few weeks now and what that looks like and what
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  people need to be doing things to break it down.
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  Things that they can go do today it to just kind of at least get
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  the wheels turning and at least start some conversations.
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  But today we are here talking about using LLC's and entities
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  in estate planning and what that looks like.
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  Breaking all of that down South. Paige, to start out the podcast,
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  can you break all of that down? What is an LLC if someone
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  doesn't already know? And why should ranchers or rural
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  families be utilizing these just in general, but then also in
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  their estate planning guides? Absolutely.
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  So an LLC, a limited liability company is a type of business
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  structure. It's a way to legally organize
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  your farm, ranch, or small business into a business that's
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  separate from you personally. So the limited liability part
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  means that if the business owner or the business ever faces
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  debts, lawsuits, or other legal problems, your personal assets
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  like your home, your personal bank account, or your pickup are
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  protected. Only the assets that are owned
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  by the LLC are at risk, so not everything that you personally
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  owned. So if you have a personal pickup
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  that is safe, if you have a pickup that is titled to the
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  LLC, that would be held in the LLC and protected with the
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  limited liability. So it's like putting a super
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  strong fence around your personal life to keep it safe
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  from all of the business risks. It's separating your personal
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  life and your business life. In ranching and farming.
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  Setting up an LLC often means transferring the ownership of
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  your land, your cattle herd, or your equipment into the
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  business. And so instead of you personally
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  owning 1000 acres, your LLC own owns the land and you own the
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  LLC. So starting an LLC is pretty
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  straightforward. You file simple paperwork with
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  the state and create an operating agreement, which lays
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  out the rules for how the LL. Once it's set up, the LLC can
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  open its own bank account, sign contracts, and do business
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  separate from you personally. Using an LLC doesn't replace the
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  need for a will or trust. It's just one tool to help you
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  organize and protect your assets.
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  It can make it easier to manage the operation during your
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  lifetime, and it can make transferring ownership to the
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  next generation much simpler and cleaner after you're gone.
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  But as I've said a couple times, if you've been listening on this
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  podcast, go and see an attorney yourself so that they can walk
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  you through some options and opportunities for you and your
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  unique situation. Yes, and that's the nice thing
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  about working with an attorney is you can get so detailed on
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  everything that you are doing from setting up an LLC to
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  setting up an estate plan, everything like that.
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  Trust me as someone who DIY D it when they first started out
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  their LLC, just go talk to an attorney like go, go spend a few
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  $100 now to save yourself the headache later.
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  Because when I first started my LLC, I was like, oh, I can draft
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  an operating agreement myself. And then now I'm editing my
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  operating agreement and I'm like, I wish I would have just
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  had a professional do this when we first started out because
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  this is a mess. This is a mess.
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  So like Paige said, go consult an attorney because trust me,
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  your life will just be so much easier if you do talking LLC
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  page. How can like LLC's and estate
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  planning tide? What's the benefit of having an
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  LLC as part of an estate plan? So one major benefit is keeping
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  the operation intact. So for example, instead of
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  splitting up individual pieces of land to each air or
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  individual, you know this set of cattle goes to this air, this
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  set of cattle goes to this air, you pass down ownership of
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  shares in the LLC. So this way the ranch can stay
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  whole even if the ownership is divided.
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  Another big benefit is flexibility.
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  You can set up rules in the LLC's operating agreement like
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  how decisions are made, how ownership interest can be sold
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  and who can be part of the business period.
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  So sometimes people Pooh Pooh these LLC documents like an
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  operating agreement. But if done correctly and if you
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  put a lot of bought into how the business should be run, these
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  documents can be the driving force of your business.
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  It gives structure and it can avoid a lot of future arguments.
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  So keeping the operation intact and flexibility are two of the
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  biggest reasons why I will promote using an LLC and estate
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  planning and something to talk to your individual attorney
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  about. They will probably give you an
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  LLC as an option. Yes.
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  But you talked about earlier when we're kind of introducing
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  this that an LLC does not replace a trust or a will.
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  Can you break that down and explain how it's part of an
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  estate plan? But it's not.
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  It doesn't replace any of those things.
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  Correct. Great question.
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  No, an LLC does not replace a trust or a will.
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  It is just one additional tool in the toolbox of estate
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  planning. So you still need a plan for
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  what happens to your LLC membership interest when you
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  pass away and that's where your trust or will comes in.
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  So they all work together, they all work in tandem together.
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  You have to have both for this to work smoothly and
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  efficiently. So.
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  What is the process kind of look like for setting up an LLC?
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  See, especially when we're talking estate planning's
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  purposes, is it complicated? Is like what?
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  What does that look like? Yeah.
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  So it's actually pretty straightforward.
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  Like I discussed earlier, we file simple formation documents
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  with the state. We create an operating agreement
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  that fits your goals and then you get an employer
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  identification number from the IRS and that is the information
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  that you will use to set up a bank account, insurance fund,
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  things like that. So after after you do all of
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  that, after your LLC is created, you can move certain assets into
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  the LLC. So it's a little bit of
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  paperwork upfront, but it's worth it for the control and
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  protection that you gain from having an LLC.
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  So I had a rancher say to me sometime, Paige, I don't have
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  time for a mountain of paperwork.
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  And I told him that's why we keep it simple.
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  We get everything done in a couple of meetings and now his
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  operation is protected without him spending ending weeks buried
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  in forms that he's trying to tackle all by himself.
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  It's important to remember that if you fail to do all of the
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  things correctly upfront, mistakes may come to haunt you
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  later down the road. And typically they are way worse
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  down the road after they've been festering and and you've seen a
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  problem. So meet with someone to help you
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  set up an LLC and to help you appropriately transfer all of
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  your assets to the LLC that need to be there.
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  Yes, it is so important to just do it right in the 1st place
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  because again, coming from someone who DIY did in the
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  beginning because I was a 20 year old starting a business and
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  realized that I needed an LLC to set up a business bank account
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  and to accept payments and just googled how to set up an LLC in
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  the state of Kansas and just kind of pieced the puzzle
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  together. Now as a like business owner
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  multiple years later and I go back and I look at that and I'm
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  like, OK, so this puzzle that I put together is actually missing
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  like half of the puzzle pieces. And now I have to go back and I
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  have to fix all of it. And it's just, and working with
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  the government to fix things is never fun.
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  So just do it right in the 1st place and save yourself the
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  headache on so many fronts because I would not be spending
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  multiple hours of my week now as a business owner trying to fix
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  my mistakes if I had just done it right in the 1st place.
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  So learn from me, learn from my mistakes.
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  And LLC is it's great. I love having an LLC, but it's
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  it's great when it's done right. So like Paige said, go do all of
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  those things. Talk to someone who knows what
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  the heck they're talking about because I sure as heck don't and
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  still didn't many years ago. And you would think I'd learn
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  something by now. Still really haven't, don't
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  really know. So go, go talk to your attorney
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  and do all of those things. But Paige is someone who's
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  listening to this and they're kind of maybe thinking like an
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  LLC might, might be a good idea, might be a good idea for me,
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  might be a good idea for our operation.
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  What are their first steps and kind of next steps that they
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  should be looking at? Yes.
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  So as Lauren just discussed, start by getting professional
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  advice and typically you need to go see an accountant and go see
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  an attorney. So aside from just estate
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  planning, you know your operation might need to be in an
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  LLC right now. There are two big things that
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  you need to think of. The first is liability and the
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  second is taxes. So first let's talk about
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  liability. Do you have a trucking company
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  or do you operate a couple of semis?
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  Are you constantly hauling cattle down the road?
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  You might need an LLC to protect you personally from the
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  liability. You know, truck accidents are
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  are hot button huge, you know, so think about that and think
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  about if you have, you know, someone that you have come work
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  with you, a hired hand that you have come work with you on
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  occasion. If they were to get hurt on your
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  property, you know what would happen there?
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  Do you have that that takes us down a whole entire other road.
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  Do you have hunters that come onto your property?
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  Could there be some liability there?
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  So First things first, think about all of the potential
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  liability that you could have with your farming or ranching
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  operation. Second thing, this is where you
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  need to go see your accountant to see if an LLC could benefit
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  you tax wise. You know no one loves to give
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  money to the government. If you do, I mean wow, but no
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  one likes to give money to the government.
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  Go see your accountant and see if an LLC could benefit you tax
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  wise. And you know for those reasons
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  alone you might want or need an LLC for your farming or ranching
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  operation. Period.
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  Not even to help you with the state planning.
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  You might just need one period. So think about that.
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  A lot of farms and ranches can benefit from an LLC, so defer to
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  your CPA for tax purposes. Then go see your attorney for
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  how to help you get this all set up.
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  It's about looking at your own personal operation, your family
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  situation, and your long term goals.
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  Those are the things that you need to think about and assess
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  before you go to see these professionals.
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  Then the accountants and attorneys can work together to
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  define a right structure for your specific situation and your
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  specific needs. So using some of the tools we've
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  discussed today, an LLC can also help you with estate planning.
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  But remember, an LLC does not replace estate planning.
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  You still need to have a trust or a will to help keep all of
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  that working together and working well together to make
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  sure that your assets are distributed according to your
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  wishes at the end of your life. Yes, Paige, thank you so much
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  for all of that amazing information and talking about
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  estate planning. You have an amazing tool that
• 13:21
  you created, a free tool that you created recently that is
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  available for anyone and everyone to just kind of start
• 13:30
  themselves along the process in estate planning and start
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  chipping away at it. Can you take a couple minutes to
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  discuss that amazing new product that you've got out there that
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  is free and available to everyone and just what it can
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  mean for people listening? Yes, so I created the estate
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  planning essential information guide and this is not a legal
• 13:52
  document. This is simply a practical tool
• 13:55
  to help you get all of your affairs in order.
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  So it's a a few pages long, pretty in depth.
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  It goes from goes through everything from your legal name,
• 14:05
  if you're an organ donor to where you're safe is located.
• 14:09
  What's the combination for your safe?
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  It will also go into your property description.
• 14:14
  Where are your vehicle titles located?
• 14:17
  What is your Netflix password? What is your e-mail account
• 14:20
  password? So it helps to keep all of that
• 14:22
  super important information located in one spot and I
• 14:26
  promise you that your loved ones will thank you later.
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  It is a long time consuming process to wrap up someone's
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  estate and it does not help when emotions are high and you're
• 14:39
  right in the middle of the grieving process.
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  So make it a little bit easier on your family down the road and
• 14:44
  have all of with that important information at their fingertips
• 14:48
  so they don't have to go looking for it.
• 14:50
  It will help. Trust me, this will help you and
• 14:53
  your loved ones will be thanking you later.
• 14:55
  So click the link below, get that downloadable guide and
• 14:59
  start filling it out with your family today.
• 15:01
  You don't have to get it all done today.
• 15:03
  Take it one one day at a time, 1 section at a time, and keep all
• 15:08
  of this information in readily accessible air, like your office
• 15:14
  drawer or the pantry. And then keep another copy of
• 15:18
  this in a safe location like, and you're safe.
• 15:22
  And Lauren had the great idea to, you know, upload it to your
• 15:26
  phone so that you can keep it readily available on your phone
• 15:30
  and on your computer and share it with some of your loved ones.
• 15:33
  You know, some of this information might change, like
• 15:36
  your Netflix password. If you're anything like me, you
• 15:39
  have to click forget password every single time you log into
• 15:42
  Netflix. But some of this information
• 15:45
  will probably not change, like the location of your safe in
• 15:48
  your safe combination. So take the time to fill this
• 15:51
  out today because I promise you that your loved ones will thank
• 15:54
  you later. And I promise you that you'll
• 15:56
  probably just feel some relief personally about having all of
• 15:59
  your affairs in order and all of your important information in
• 16:02
  one safe location. Wonderful, yes, to all of our
• 16:06
  listeners out there, go check out those show notes.
• 16:08
  We've got that link down below for you and if you have any
• 16:11
  questions on anything that we talked about today, I also have
• 16:14
  pages information link down below where you can get a hold
• 16:17
  of Paige and her team and just ask questions and open up just
• 16:21
  kind of the door to be like, hey, I have a question about XYZ
• 16:25
  topic or here's the situation that I'm in.
• 16:28
  And Paige and her team can get you all the answers that you
• 16:31
  need or at least guide you to where the answers are.
• 16:35
  And it kind of help you along that path.
• 16:37
  So make sure you check out those show notes down below.
• 16:39
  And as always, we will see you all tomorrow on another episode
• 16:43
  of the Cattle USA Daily podcast. Have a good one y'all.