Homework answers / question archive / Question 1 0 / 1 pts What is the risk if a sole proprietor of an agricultural business dies unexpectedly?    Family members do not receive the full potential inheritance from the person who died

Question 1 0 / 1 pts What is the risk if a sole proprietor of an agricultural business dies unexpectedly?    Family members do not receive the full potential inheritance from the person who died

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Question 1

0 / 1 pts

What is the risk if a sole proprietor of an agricultural business dies unexpectedly?

  

Family members do not receive the full potential inheritance from the person who died.

  

Conflict between family members damages personal relationships and business viability.

  

All of the answers are correct.

  

The business and land are broken up and sold, so that the operation, family, and legacy are lost.

 

 

Question 2

1 / 1 pts

When choosing a business entity for a family farm operation that will pass from one generation to the next, which interests must the planning process take into consideration?

  

Personal income for the management and labor of the operation.

  

All of the answers are correct.

  

Cash-flow for the business entity.

  

Retirement income for the parent generation.

 

 

Question 3

1 / 1 pts

Which document creates an agent who can execute financial transactions for you if you become incapacitated such that you unable to manage your own affairs?

 

Springing financial power of attorney

  

Living Will

  

Healthcare power of attorney

  

Durable financial power of attorney

 

 

Question 4

1 / 1 pts

What is the risk of giving or selling farm business assets to your family members while you are still alive?

  

All of the answers are correct.

   

Loss of those assets due to the death, divorce, or debt of the family member who owns the farm business asset.

  

Family members disagreeing about which items they get and how to manage them.

  

Loss of items that can act as collateral for farm operating loans.

 

 

Question 5

1 / 1 pts

Which legal mechanism can you include in your LLC or Corporation to make sure that your business stays in the family?

  

None of the answers is correct, all businesses must be open to public purchase.

  

Buy-Sell Agreements/Stock Purchase Options

  

Dividend Agreements

  

Restrictive Covenants

 

 

Question 6

1 / 1 pts

Rancher Ricardo has 7 children, his spouse is deceased and he did not remarry. His youngest daughter, Reba, is dedicated to taking over the ranch. She has graduated from OSU, worked on a ranch in Montana for 4 years, and is now ready to come back home to transition into the family ranch management alongside Ricardo.

The other 6 siblings live off the ranch, with families and careers of their own. They all still feel strong ties to the ranch, even though none of them want to move back or manage it. They are fully aware that the ranch is worth a substantial sum of money and have told Ricardo that it wouldn't be fair for Reba to get the whole farm. Because Ricardo worked so hard to build up the value of the farm, he has few other assets besides the farm and there would be little left for the other 6 kids to inherit. On the other hand, Reba is dedicated to the farm and thinks it would be unfair, and impossible, for all of the siblings to own the farm together while she is living there and making the day-to-day decisions.

How could Ricardo organize the ranch business so that all of this children are treated fairly and the ranch can continue to operate with Reba as the manager?

  

Set up an operating LLC that owns all of the livestock, equipment, and other assets needed to run the farm (but not the land). Reba will work her way into ownership, and take full ownership when Ricardo dies. Also set up a landholding LLC that all of the kids will inherit equally when Ricardo dies. Create a long term renewable lease so that the operating LLC continues to use the land, and the landholding LLC gets rental payments to distribute to the kids.

  

Divide the land into 7 equal parcels with buy-sell agreements between the family, so that if any family member wants to sell, then the other family members can buy their parcel to keep it all together. Give Reba the parcel that has the house, barns, and other structures so that she can keep operating the ranch.

  

Create a will giving all of the farm land and assets to Reba, because she is the only one dedicated to the ranch. The rest of the kids can make their way on their own.

  

Create an LLC for the entire farm operation, including all land, equipment, livestock, etc. Ricardo's will gives membership interests in the LLC to all kids equally. Reba, as the manager hired by Ricardo, should be able to keep her job as the rest of her siblings should respect her father's decision to give her management duties, even though the siblings would all have a vote in hiring and firing the farm manager.

 

 

Question 7

1 / 1 pts

The Noble family owns a Christmas tree farm in Oregon. Clark and Carrie, the senior generation, are ready to retire and their daughter, Candy, wants to take over managing the farm. They have 2 other children, Cathy and Chris, who have careers off the farm. Cathy married a used car salesman, Dirk, who has a lot of debt. The parents don't like him and they are afraid that the marriage won't last.

Clark and Carrie need ongoing farm income to fund their retirement. They also want all of their children to benefit from the farm business they have built, but they want Candy to be the farm manager and they don't want Dirk to get his hand on any of the farm assets. What is the best farm business organization they can use to achieve their goals?

  

Spin off model with Clark holding all shares to distribute as he sees fit.

  

Spin off model so that Candy can own the farm business if she promises to help her parents and siblings when needed.

  

Super firm model with the parents holding all shares until their death.

  

Super firm model with Candy as manager and buy-sell agreements that keep the ownership interests in the family.

 

 

Question 8

1 / 1 pts

Elmer dies with a will, but his children are unhappy because he left all of his money to the Abandoned Chicken Refuge (ACR), a charity. The children go to court to challenge the will, claiming that it is invalid. What legal claims can they use to challenge the will?

  

All of the answers are correct.

  

Children are legally entitled to a parent's property, even with a will.

  

Enforcing the will is absurd.

 

Will formalities were not present, such as no signature or lack of witnesses.