Planning for the unexpected

We probably all sadly know of situations where farmers have died too young.

If there is no plan in place to guard against this, family members are often left with complicated legal issues and difficulties running the farm, alongside their grief.

Here are some tips on avoiding this:

Write a handover manual

Spending half-a-day writing down key contacts and protocols could be one of the most valuable things you pass on.

Ask what would happen if you got hit by a bus tomorrow – could the business continue the next day?

Include:

• Contact details of key suppliers, customers, your accountant, consultants, bank manager.
• What you do on the farm and when, daily, but also throughout the seasons.
• A map of the farm with key features, such as drains and water points.
• Contact details of people who could help in the event of an emergency, for example, relief farmworkers.

Pass on skills

Continually pass on skills – build a team and culture where everyone knows how to do each other’s jobs.

If you always do a job, ask someone else to come with you so you can show them.

The test is whether you could take a holiday with a week’s notice.

Keep an updated business plan Always have an updated business plan and share that vision with your family and staff so they would not lose the strategy and direction.

Consider life insurance

Life insurance is designed to create financial protection for when a person dies, often designed to match borrowings a business has, or provide a sum of money to replace the earning potential of that individual.

Get key legal documents

Put in place power of attorney so family members can continue to run the business, make decisions and access bank accounts if you became suddenly too ill to do that.

Ensure business agreements have the correct dissolution clause in the event of a person’s death, so allow the agreements to continue, otherwise bank accounts could be frozen and the business wound up.

Set up a will

Without this, cash can sit in an account for six months or so while families work to get probate, impacting cashflow and ability to pay suppliers and staff.

Release family from a duty to farm: Talk to your family.

Would they want to continue farming without you? There are too many people farming through real hardship out of a sense of duty to keep it all going, rather than because they want to.

Have an honest conversation and tell your family they are not obliged to farm.

If they do not want to continue farming or owning the asset, put in place a sale plan.

If they would want to continue staying on the farm, but not farming, look into joint ventures or employing someone to run the business.