CLIENT PROFILE

Robert E. Lee Ranch Company is a diversified cow/calf and small grain operation located in the foothills of the Snowy Mountains in central Montana. The ranch is owned and operated by Bob and Kathy Lee, who purchased their first piece of ground in 1969.

THE SITUATION

At 70 years old, Bob and his wife Kathy decided to formally transition the ranch operations and the family property to their three children. How best to proceed presented numerous challenges, as only the couple’s son and daughter-in-law worked in the day-to-day operations. Additionally, Montana’s high land values have risen steadily, presenting heavy tax risks. 

The Lees were familiar with Wipfli from the firm’s involvement in the Montana Stock Growers Association. Knowing Wipfli had the industry experience they were looking for, Bob and Kathy asked for guidance.

THE STRATEGY

In structuring the transition, Wipfli set out to establish a healthy balance between fairness and continued ranch profitability. It’s a balance that starts by first understanding each family’s unique dynamics. By collaborating with the Lees, the firm explored the best ways to transition the business to the son and his wife as on-ranch heirs, while also providing for the two daughters as off-ranch heirs. 

Also challenging was properly addressing the relatively high value of the ranch real estate.  An outright sale would be disadvantageous, resulting in costly tax liabilities. Mindful of the more favorable federal estate tax laws, Wipfli structured a hybrid plan to transfer land control and ownership both as a gift now and as an inheritance later. 

WHAT WERE THE RESULTS?

The Lees now have the peace of mind that comes with a well-developed transition plan. Their succession plan preserves both family harmony and the family legacy. It positions the ranch for continued viability into the next generation with the least amount of financial burden. It supports the livelihood of those family members still working to sustain the company’s operations, while fairly providing for remaining family members. And it saves potentially millions of tax dollars compared to the alternative of selling the business and dividing the assets.