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Covid-19 crisis sparks need for succession planning

Succession planning has been a process that has all too often been postponed on farms and estates in the past, but the coronavirus crisis is prompting the subject to be discussed in some families where it has been avoided for years or even decades.

The crisis will result in big changes to rural businesses and has reminded us all, even if only at a subconscious level, of our own mortality.

 

Throw into the mix the dramatic drop in income that many were already facing as a result of the phasing out of BPS support and there is a new preparedness to address the topic with a candour and urgency I have not witnessed before.


The earlier the conversation is started, the easier it is to have and the more effective the decisions that can be taken will be, too.


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Getting it right and doing it in a timely fashion allows the more senior generation to step back, while allowing the younger generation to take on more responsibility at the time that is right for them.

 

The net result is a more profitable and resilient farm or estate that is better placed to pass through the generations undamaged by taxes and is more enjoyable to be involved in.

 

A few simple ground rules make these conversations easier. Having an independent person in the room – be it a consultant, an accountant or even a trusted family friend – can help.

 

Everyone around the table, meanwhile, has to be honest and constructive. In these discussions, everyone should be heard and should feel comfortable saying what they think.


Many farm and estate owners beginning the process feel like a weight has been lifted off their shoulders. I have been involved in farming all my life and a consultant for nearly 20 years and can count the number of meetings on the fingers of one hand when I wished I had taken a tin hat to one of these meetings.

 

Motivations


What is crucial is that everyone understands their own aspirations. Being motivated by wanting to grow bumper crops of wheat or build a sporting estate of national renown are equally legitimate. Prioritising biodiversity or making sure that you generate the funds to maintain your family home.

 

Long-term

 

Everyone, however, must understand all the pros and cons of the different options and appreciate how that fits within the jigsaw puzzle that is successful succession.


Succession planning is not actually about retiring or even dying – it is about putting your business on the best possible long-term footing. It is about creating a foundation that will serve your children and grandchildren well, and giving everyone a clarity of direction, a peace of mind and a new focus.

 

It can reenergise a business.

 

Covid-19

 

The Covid-19 crisis, quickening the rate of change that was already happening, means succession planning is more necessary now than ever.

 

It also means that there has never been a better time to do it than now, especially given that the current tax regime is extremely beneficial, whereas the post-coronavirus tax landscape will inevitably be harder to navigate and result in bigger bills.

  • Mark Weaver is a farm business consultant at CLM.
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