Farm succession planning can be a thorny issue, but most mistakes are avoidable with openness, communication and good planning, says Laura Teasdale, associate and family facilitator at Kite Consulting.
The death of a family member is not the time to be talking about succession as people are more inclined to make snap decisions based on emotions.
This can lead to disputes and conflict, distress for any surviving parent and no-one getting the outcome they want.
Keeping things under wraps until death means children find out for the first time what they will and won’t get – potentially with nasty surprises. This could leave them in a financial situation which is different to what they were expecting or what they would have planned if they had known.
Develop a succession plan early through open discussions with all family members.
Problems occur if communication breaks down or does not happen to start with. For example, if the parents decide who is taking over the business and then stop including other family members in discussions.
The consequences of not involving all children/ siblings is that they feel excluded and what might start as a very small issue can quickly become an area of conflict.
Having partners of siblings/children in a meeting can often provide good balance, as they generally don’t have the same emotional ties to the farm. Different opinions and experiences can offer new perspectives and ideas.
Starting early will also ensure everyone in the family knows what to expect and can make plans accordingly.
This can significantly reduce your options. Make sure all family members understand this and agree to work through issues to achieve agreement.
It is much easier to plan financially for splitting a farm or having different enterprises on the unit when siblings are in their 20s and 30s rather than their 50s and 60s.
If you have children who want to farm, think about what skills and qualifications they might need and start discussions early.
Begin planning as soon as possible for retirement – this will avoid the older generation being a drain on farm resources, impacting its viability for successors.
Death, divorce and incapacitation should also be discussed.
Unless everyone is agreed on the plan it is likely to fail.
It should be the family’s plan – not the facilitator’s or accountant’s. Ensure everyone has had their say and find areas where there is agreement to build on.
Accept different things are important to each individual.
In many cases, it is not possible to divide the farm assets equitably if one or more of the children want to farm and others do not, and leave the unit viable.
Think about the value of things beyond money. Family homes and farms have strong emotional ties, so selling up in order to divide things equitably does not always result in benefits beyond money.
Acknowledge the roles different members of the family have had in the business – not all are paid.
Shape Your Farming Future is a series of informative and practical guides looking in-depth at issues pertinent to farmers when planning for the future.