In the days gone by, a farm succession plan could be written on the back of a postage stamp: âin case of death or illness, my firstborn son gets the farmâ. 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 â and money â 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 whoâd like to stay on the property when itâs just not feasible?
They arenât 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 canât work out where youâre headed if you donât know where you are. Put together a âdigital dossierâ on your current operation. Include a map of the property and an outline of its history; make note of peopleâs roles and businesses that are involved with the operation, and collate financial statements. This process will run particularly smoothly if youâre 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 farmâs development? How do you want to look after your children, and repay them for any contribution to the business? Talk to friends and family whoâve 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.
Itâs 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 itâs more likely people come away with an understanding of each otherâs hopes for the future.
4. Investigate Options and Develop a Plan
Once youâre set on the general direction of succession planning â if one person will take over, whether the farm will be divided or run in partnership, etc. â you may need to speak to a financial adviser about the best way to hand over the family business.
Youâll also want to consider provisions for people leaving the property, and have a long-term financial plan for your retirement.
5. Follow Through
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 familyâs circumstances.
Download AgriWebbâs succession planning checklist, to help you make your farm succession run smoothly.