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'It's never too soon' - succession planning vital to preserving your farming legacy

Farmers may feel uncomfortable starting the conversation, but succession planning is vital to preserve your farming legacy.

 

Heather Wildman at Saviour Associates spoke to Farmers Guardian about how to start tackling the thorny issue...

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'It's never too soon' - succession planning vital to preserving your farming legacy

IT is time to stop looking down at your wellies and start planning the future of the family farm.

 

Most farmers want to reflect on a good life in farming and hand on their legacy to the next generation in a better state than they inherited it.

 

However, many farmers are avoiding the issue of succession planning.

 

But for farmers avoiding the issue, Ms Wildman is warning succession will inevitably happen, whether they are ready for it or not.


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She says: “The sooner you start looking at and discussing your own succession the more options you will have ahead, it is never too soon, but it can be too late.”

 

Farmers need to start by considering when succession should happen – on retirement or death, who will succeed them or if the farm should be sold and how to treat their heirs fairly.

 

They also need to be aware of their expectations for retirement, consider how to avoid crippling the successor with farm debt and how the management and ownership will transfer across.

 

“Getting succession right – setting the last fencepost effectively and harmoniously – this is the ultimate challenge of the farmer’s life," addED Ms Wildman.

TOP TIPS

  • Be proactive: Take responsibility for your choices and the consequences
  • Begin with the end in mind: Know what you want for your family, career and your retirement and discuss it with family, friends and professionals
  • Understand what others want: Make sure you genuinely listen to all family members. It can create an atmosphere of caring and problem solving and encourage them to listen to you
  • Fair does not always mean equal: There needs to be an understanding fairness is often more important than equality
  • Create a professional support team: This could include an accountant, lawyer, facilitator or succession planning consultant
  • Act only on sound advice: Discussion with family and friends is important, but only take advice from people with the experience, knowledge and expertise to give it and never be afraid to ask for a second opinion or change your adviser
  • Keep the bigger picture in mind: The long-term future and happiness of you and your family
    Prepare a power of attorney and legal will early
    Complete a financial analysis of the business, past and present with projections for the future. For farms not making money, discuss how it can be made profitable and whether the business is viable in the long-term
  • Remember: Succession is a process, not an event

Arranging and running a family meeting

Arranging and running a family meeting

Meeting guidelines

  • Set a convenient time and date
  • Involve all active family members
  • Consider an off-farm neutral venue
  • Do not make it about us vs them
  • Set an agenda and stick to it
  • Set ground rules and hear each other out
  • Seek common ground and mutual benefits
  • Always consider time, tone and language

 

Outline specific objectives for the meeting

  • Consider options including selling the farm, partnerships, diversification, buy outs, life insurance and subdivision.
  • Set an agenda in advance- reluctance from some family members is often due to lack of clarity about the process.

 

External people

 

Heather Wildman advises these meetings work best with two external people, a facilitator with expertise to get people to talk opening and someone with business expertise.

 

Choose a facilitator everyone is comfortable with. Consider:

 

  • What you have heard about them
  • Any alliance they may have, real or perceived
  • If they are a professional
  • If they have professional indemnity
  • What training and experience they have
  • Book an accountant who understands the business as it is important to balance the needs of the family and the needs of the business.
  • Keep a written record of the meeting and arrange someone to do this before the meeting.
  • Have a discussion before a dispute arises on how you will deal with disputes, as it is too late to decide how to handle them in the middle of an argument.

 

Options include every family member voting on the issue or calling in a third party mediator.

 

Remember there is no magic bullet, not everyone can get what they want and no one solution will exist for every farm with circumstances always continuing to change.

 

“The best approach is to start early and adopt a flexible strategy that can accommodate changes as they arise in your family and wider circumstances,” Ms Wildman says.

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