Navigating the path to successful farm succession
Planning for the succession of a family farm can often be a multifaceted and emotional process. At the recent GrowingSA conference, Mellor Olsson Partner, Callen Bubner delved into the intricacies of farm succession planning. During this discussion, Mr Bubner addressed the question of what some of the key components were that helped when constructing a successful succession plan.
Some of the critical elements he highlighted include:
- Seeking professional advice: Farmers should seek advice from all of their trusted advisors, including their lawyers, accountants, financial planners etc. Whilst those advisors may not necessarily agree on all aspects of the succession plan, they can provide you with the information you need to make an informed decision moving forward;
- Effective communication: One of the key objectives in a successful succession plan is ensuring that the whole family group is relatively satisfied, and harmony is maintained. Often, the best way to achieve this is to ensure there is a level of communication amongst the family group so they are at least aware of what is proposed in the succession plan. Sometimes family dynamics may determine the level of communication, if any at all, but ultimately family members shouldn’t be shocked or surprised once the plan is implemented as this is often where arguments then arise;
- Recognising succession planning is a process: Farmers are becoming more aware that it can take many years to implement a successful succession plan. Consideration should be made to a potential farm succession plan early and considered regularly. Don’t set and forget. It can take a substantial amount of time to ensure the structures in which the farming enterprise is operating are conducive to a seamless transition from one generation to the next, and often it may take a restructure of that enterprise so that this can occur;
- Provision: It is important that the retiring generation have sufficient funds for their own retirement but also that there is some provision for any off-farm children. With increasing land values, it is often now impossible for equality to be achieved between on-farm and off-farm children. However, careful consideration should be made as to what provision will be made to any off-farm children to ensure that harmony in the family group is maintained. Farmers should be striving for fairness amongst the family group, not necessarily equality. If there isn’t currently any provision for off-farm children, then this may need to be planned for as part of the succession planning process.
Every family's circumstances are unique, and the specific key elements of a successful succession plan can vary accordingly. Mellor Olsson has many years of experience when it comes to developing and implementing effective farm succession plans.
For Livestock SA members, a 20-minute free consultation on any legal matter is available. To discuss farm succession planning or other concerns, reach out to Callen via email at email@example.com or phone at 08 8842 1833.