Peter Shanahan is a graduate of the College of William and Mary, a Certified Financial Planner and Chartered Retirement Planning Counselor. Most recently, Peter earned the distinguished designation Master Planner Advanced Studies (MPAS). He’s is one of the founding partners of a wealth management practice with Hilliard Lyons in Hendersonville, North Carolina. He has been in practice for over 30 years, and has contributed to the training of hundreds of financial advisors. Peter owns a horse farm near Tryon, North Carolina, and has earned colors with two local hunts, having served as treasurer for one of them. He also currently serves as president of a local equestrian trail association. He has lectured extensively on a variety of financial topics, but his primary area of interest is the intersection between his two passions: financial planning and equestrian pursuits. Do you have questions you want Peter to answer? Send questions to email@example.com.
When I told one of my friends that I planned to write this column, he asked me: “Why does Sidelines need a financial column?”
Could I answer that question with another question? Is it just me, or do you find that columns on personal finance in other magazines often don’t really relate to the things that are most important to you? You see, as horse and farm owners, we tend to face some very important financial questions that the typical reader of a magazine like Golf Digest may never need to think about.
For instance, very rarely does a person giving a golf lesson have someone fall out of the cart while taking a jump. For a golf pro, that’s just not a concern. But if you’re giving riding lessons on your farm, it’s something you need to be thinking about. Seriously. Horse and farm owners have some financial concerns that most other people just don’t share.
The purpose of this column is to address some of those issues: the ones that are common to horse and horse farm owners, and that tend to be ignored in the wider press. For example:
- How and when you can start writing off the expenses of your horse habit
- How you can protect yourself from the financial and legal risks of horse and farm ownership
- Ideas to save on taxes when you sell your horse farm business
Oftentimes, these issues overlap.
My goal will be to give an integrated picture of the issues that modern horse and farm owners need to be thinking about. That picture includes investment, tax, legal and risk management issues. So, you can expect me to enlist the input of some of the top experts in these fields.
Sidelines readers are a very varied group. Some of you are professionals. You may own a farm and have boarders, perhaps give lessons and host clinics. Some of you train horses for sale. Others give lessons at farms that you don’t own. For still others, horses are your passion, but you have day jobs that pay for your horse hobby. You will all have different areas of interest and concern but often they will overlap.
Stories that Help
One of my favorite ways to make a point is though stories. If a story is told well, it can illustrate a point better than any other vehicle. Stories are vivid. Stories stick with us. And let’s face it: Stories can be fun. So you can expect to read a few war stories, some cautionary tales and even a few horror stories. Perhaps you’ll see situations you recognize in some of the stories. I certainly hope so. And sometimes you may find that the things that matter most weren’t even on your radar.
For instance, not long ago, a wealthy widow was being courted by three gentlemen, and she couldn’t decide between them. So, she settled on a test. She wrote each of them a check for $10,000. The first gentleman took the check and spent it lavishly on her. The second took the money and invested it for their future together. The third put the check in his pocket and never mentioned it again. Which gentleman did she choose to marry?
I’ll give you the answer in just a little bit. But first, let me point out that sometimes we spend too much energy and attention on the wrong things. Bloodlines are important, of course, but only once we know the horse is sound. Lease agreements are fine, but only if we know that the person signing as lessee actually has the authority to sign. Selling your horse farm for the largest sum the market will bear is a great thing, but it’s not the only thing: Finding tax savings that maximize your net after-tax proceeds is much more important. Posting your state’s equine liability statute at your barn is a good idea, particularly in states that require it as a condition of obtaining protection under their equine liability statute. But does your state require a certain size print? North Carolina does, and many signs I see are not in compliance. Many states’ equine liability statutes protect “equine professionals” or “equine activity sponsors.” Do you qualify?
Sometimes we need to look a little deeper and ask a few questions that a typical financial advice column will never address. Oftentimes we must also look broader. Your CPA knows one piece of the picture, your attorney has a different piece and your financial advisor sees yet another piece. More often than not, they’ve never spoken to each other about YOU. That’s too bad, because if each is looking at only one of those pieces at a time, they’re likely to come up with the wrong answer. That’s because they didn’t consider all of the important factors — just the one that they thought was important.
For example, seven or eight years ago, Sue went to the expense of having her lawyer draw up an equine trust to care for her horse, Clover, after she passed. Unfortunately, no one thought to update it when she sold Clover and bought Snowflake. Her financial advisor and CPA both knew that she had bought a new horse, but no one thought to tell her lawyer. Which, in hindsight, was just as well, since the person she named as trustee of the trust died three years ago.
So, which of the three gentlemen did the wealthy widow marry? She married the one who foxhunted first flight with her, of course!
Sometimes, it pays to ask enough questions to see the broader picture — particularly when you’re dealing with horse people.
And so that’s my goal for this column: to look at a broader picture, and to bring overlapping disciplines together to help Sidelines readers make better financial decisions. I hope you will read and learn from this column, and that you will enjoy each installment and look forward to the next. I also hope you’ll feel free to write to me to ask questions and suggest topics.