Legacy planning helps protect farm's future

By Vicky Boyd

Stanislaus County farmer Darrell Cordova and his wife, Norma, had already laid the groundwork to pass on their Denair-area tree nut operation to the next generation by having an attorney draft an estate plan. 

When Darrell attended a Farm Bureau meeting and heard a Nationwide presentation about Land As Your Legacy, he thought about taking advantage of the no-cost service. After all, the Cordovas’ estate plan was last updated in 2012, and he said things had changed since then.

“It was getting down to where we’d better have this checked over to make sure everything is still accurate and up to date,” Darrell said.

Norma agreed. “I think it’s always a good idea to have a second set of eyes, especially since Nationwide designed the program for that particular reason,” she said.

They met with Nationwide’s James Cabral to discuss their estate plan.

“Darrell and Norma just wanted a seal of approval,” Cabral said. “Are they doing everything right?”

As a financial educator based in Modesto, Cabral works with farm families and farming partnerships on succession and estate planning. One of the Land As Your Legacy’s main goals is to keep the farm in the family.

As one generation decides to step aside or passes away, the next generation increasingly decides not to continue farming. Nowadays, Cabral said, big companies frequently buy the farm.

“One of the primary concerns is that Nationwide wants to keep the farm in the family,” he said. “There’s a big security concern that it’s better for the U.S. to keep the farm in the family.”

Covering about 60% of family farms in California puts Nationwide in a prime position to help family-owned operations with generational transitions, Cabral said.

The Land As Your Legacy goals resonated soundly with the Cordovas, who represent the third generation to farm the property that Norma’s grandfather purchased in the early 1940s. The family planted its first almonds in 2005 and has since expanded into walnuts and, more recently, pistachios.

How Cabral and other Nationwide representatives approach succession and estate planning depends on the operation’s structure. Is it guided by a single key person or is it a partnership? Having more than one decision-maker adds several different options. 

“How does one family member buy the other family member out?” Cabral asked. “Is it selling part of the farm or buying life insurance and using the proceeds to buy the other out?”

In the Cordovas’ situation, the farming operation and several other entities fall under a limited liability corporation, with Darrell as the primary decision-maker. They have two sons—one a tree nut producer in the Denair area and the other a water engineer in Sacramento.

During the meeting, the Cordovas provided Cabral with documents that detailed the LLC and a copy of their estate plan. After Nationwide’s team of experts reviewed the information and developed recommendations in an easy-to-understand format, Cabral met again with the Cordovas to go over the information compiled in a binder.

“Nationwide isn’t there to tell what someone did wrong,” Cabral said. “They’re a resource to do a lot of the heavy lifting, so you can give it to your professionals to help them with the planning.”

Depending on the individual operation’s structure, the Land As Your Legacy plan may include information on estate taxes, irrevocable life insurance trusts, installment sales, buyout options, key personal indemnification, and farm and family checklists.

“They went through our estate plan very carefully and very thoroughly and came back out with a report on their findings,” Norma said. 

The Cordovas have since returned to their attorney to make a few clarifications to their estate plan, based on the Nationwide review.

Cabral commended the Cordovas for having open conversations within the family and planning ahead.

“It’s better to have the conversation when everybody is alive rather than guess what mom and dad wanted,” Cabral said. 

He said many farm operators mean well and tell themselves they’ll start planning when things slow down a bit. But things never do.

“We know the biggest problem is procrastination,” Cabral said.

Vicky Boyd is a reporter in Modesto. She can be reached at agalert@cfbf.com.