Farm succession and inheritance planning: what you should know - AgriWebb

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Farm succession and inheritance planning: what you should know

Farm succession and inheritance planning: what you should know

Your free checklist to succession planning

 

In the days gone by, a farm succession plan could be written on the back of a postage stamp: ‘in case of death or illness, my firstborn son gets the farm’. Today, farming families want to ensure a fairer division of assets. Older generations also want to hand over the farming business while they have the time – and money – to enjoy their retirement.

It can make for complex calculations. How do you reward the input of a child who worked on the farm while their siblings went to uni? If you carve up your land, will you be left with little more than a handful of hobby farms? How can you compensate a child who’d like to stay on the property when it’s just not feasible?

They aren’t easy questions to answer. Only one thing is certain: the sooner you decide to tackle the issues around farm succession, the better chance you have of making yours a smooth one.

A clear plan lets everyone in the family business know what your expectations are and allows family members to make their own personal plans. It reduces anxiety about the future and helps everyone get on board with your vision.

Steps to start your farm succession journey

Regardless of your farming operation, there are five main steps that will help make your farm succession a success.

1. Gather your farming details and records

You can’t work out where you’re headed if you don’t know where you are. Put together a “digital dossier” on your current operation. Include a map of the property and an outline of its history; make note of people’s roles and businesses that are involved with the operation, and collate financial statements. This process will run particularly smoothly if you’re already using farm management software like AgriWebb for farm reporting. At the same time, educate yourself about the succession process: read articles, watch webinars and take part in workshops to give you confidence in your knowledge.

2. Work out your priorities

Before formal conversations with other stakeholders, work out what you want from a succession plan. How important is it that the farm stays in the family? Would you want an ongoing role in the farm’s development? How do you want to look after your children, and repay them for any contribution to the business? Talk to friends and family who’ve been through succession and use their experiences to inform your ideas.

3. Talk to the family

This step is one where many farmers drag their feet. A study on current practices in farm succession planning published in the Financial Planning Research Journal found that one reason of the main reasons succession fails was because discussion did not go beyond informal comments made in passing, where discussions were had without the whole family being included. 

It’s important to have a formal meeting with your family. Depending on relationships, a professional facilitator may be useful and/or necessary. Give everyone fair warning so after you do meet it’s more likely people come away with an understanding of each other’s hopes for the future.

4. Investigate options and develop a plan

Once you’re set on the general direction of succession planning – if one person will take over, whether the farm will be divided or run in partnership, etc. – you may need to speak to a financial adviser about the best way to hand over the family business.

You’ll also want to consider provisions for people leaving the property, and have a long-term financial plan for your retirement.

5. Follow through on your decision.

Once the course of action is decided, ensure everyone concerned is told about the process ahead. Clear time frames help when it comes to following through on the succession plan. As the plan unfolds, you should continue to review it every couple of years, as there may be significant changes to your family’s circumstances.

Download AgriWebb’s succession planning checklist, to help you make your farm succession run smoothly.

Your free checklist to succession planning​

AgriWebb
AgriWebb

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