Passing over the reins

Back in the late 1800s, English law dictated that upon the death of a land owner his title would transfer to the eldest son. Succession was thus fairly straight forward and easily resolved. In a way it was Government regulated! Today many farming families consider succession planning a complex issue, and it is for this reason that it is usually ignored until it’s too late.

Case study

Fred and Mary own “Yarramon”, a livestock farming enterprise. Their children want to discuss and resolve the family’s succession so they can forge new lives with their respective families. Fred, in particular, refuses to discuss the family’s succession plan and has advised his children he will deal with it in his own time.

Are you prepared to let go of control?

One of the first steps in planning for succession is for the current owners of farming enterprises, usually the parents, to assess their attitude to letting go of control. A parent’s attitude towards control has a major influence over a family’s succession plan. Consider this:

Control

  • Positive, open approach towards family succession.
  • Delegation of duties and successor input into decision making.
  • Committed successors

Likely Succession Outcome

  • Generational succession: farm kept within the family.


Control

  • Limited sharing of information.
  • Authoritative management style and resistance to change.
  • Uncertainty concerning successor capabilities.

Likely Succession Outcome

  • Sale of Farm


An important way of overcoming various barriers to letting go of control and other related matters associated with succession planning is for farming enterprises to become better informed about succession and retirement planning options and procedures to assist them in beginning and progressing through their succession journey.

How to start your succession journey

Accountants, Banks and Financial Planners can now access new online Materials, Tools and Programs to make it easy for farming families to commence their succession journey. The suggested journey progresses through the following steps:

  • Complete a Growth and Succession Planning survey for farming enterprises as the first step in developing your farm succession plan.
  • Complete a Value Gap analysis to determine how much wealth you need away from the farm to live comfortably at retirement and to start the process of working out how to close any gap identified.
  • Prepare a Business Life Plan so you understand the goals and aspirations of all family members which is essential to a smooth transition of the control of the farm.
  • Secure a greater commitment from generational successors by agreeing and documenting farm management responsibilities.
  • Invest in training for generational successors to improve their business acumen.
  • Protect your wealth by staging the transference of ownership of your different asset classes over a period of time.

Succession - Do you have an end game?

There is a lot to consider if you want a smooth transition into business ownership or want to step back from the business and start transitioning. Read more.

Will your assets go where you want them to?

Talking about succession well ahead of retirement is probably the best thing you can do to avoid family conflicts and to make sure your family wealth ultimately ends up where you want it to. Read more.

Is your Will your farm succession plan?

According to recent research, less than 50% of farming enterprises have started to discuss succession, let alone prepared an effective plan. Read more.