Rural Succession PLanning q&A
How does a Succession Plan ensure longevity of a family’s farm?
Strategic Planning is very important. A succession plan will enable the family to be engaged and understand the direction of the farming business, including the machinery replacement schedule, relevant retirement ages, job and role descriptions and also the transition of the control of the family farm business.
What needs to be taken into consideration for a Farm Succession Plan?
Every family member needs to voice their opinion as it will become apparent to advisors that different family members are driven by different motivating factors. For example, the daughter in law may want to ensure her children’s education needs are met and there are sufficient funds for house renovations. Whereas, the mum and dad may want to transition into retirement and want an off farm house purchased by the business and all accounts paid for by the business. The son may be interested in the business structure and when control of the company will ultimately pass to him.
Do’s and Dont’s of Succession Planning
There are certain do’s and dont’s that we would recommend to all our clients when looking at Family Succession Plan. These include –
- Have the family discussion upfront and early. However, remember it is never too late to start the discussion.
- Keep an open mind and an open dialogue and respect each other’s opinions.
- Always have an accountant and lawyer involved in the discussions as they understand the financials of the business and a lawyer can review the legal structure of the business and draft any necessary legal documents to implement the family strategic plan.
- Have a family meeting once a month to discuss the business and circulate an agenda so each family member is aware of the issues to be discussed.
- Don’t leave the succession planning to fall to the terms of your will, because as we know we live in a litigious society and family provision claims against the estate of the deceased are prevalent.