Firstly, succession shouldn’t be rushed and doesn’t have to lead to a breakdown in communication in the family. Nobody wants this scenario, and with careful planning, you can empower everyone in the family.
Where to start
When looking at succession, the priority is usually securing the farm's future. But it is critical not to forget about the need for a sustainable income for both the retiring generation and the incoming one.
Often farms can have three generations living and working in and around the farm. In ifac, we have always advised, where possible, to find out the wishes of family members and stakeholders and take their thoughts into account. Communication is key to a better, successful succession plan. The aim is not to divide assets equally but to divide them fairly amongst your chosen successors.
10 Steps to a Successful Succession Plan
1. Clarify your goals
2. Collect and Analysis Information
3. Assess your Farms Viability
4. Explore your family options
5. Work with your team of professional advisors
6. Make Decisions
7. Develop and implement your plan
8. Review your plan at least once a year
9. Review and update your will
10. Ensure everyone is happy with the plan
Starting the succession process early is important in communicating with your family and seeking professional advice. The earlier you start succession planning, the better the outcome for yourself, your family and your farm.
Key Advice
Communication is a vital part of a successful succession plan
·Start the process early by seeking advice and formulating a plan
Give yourself time to implement the succession plan
Update your Will
Let's talk about Viability
With viability being a concern for farmers year-on-year, it is the number one challenge in succession planning. When you’re looking at succession plans, it’s important to find ways to generate enough income for both the retiring and the next generation. Succession planning is the perfect opportunity to pause and assess where you’re at, to consider what’s working and what’s not.
A good approach to teasing this out is to discuss these key questions together:
Can the farm pay a fair wage as the successor’s level of responsibility increases?
Can the farm sustain another household?
Can structural or operational changes be made to improve profitability?
To kick-start your succession journey, get in touch with our team of experts.
