Many farm families, perhaps most, count on handing on the family farm on to one of the children. It is no good leaving it to the will. Succession planning ensures that what is wanted by the farmers actually happens. Wills can easily be contested and often are. Planning for succession may start when the children are in their teens or be left until they are in their 50’s. The earlier the better, but flexibility is important for the plan to succeed.
Plan before handing on the family farm.
A one size fits all approach does not work well. Nor does a farm succession plan that involves borrowing money from the bank to do it. There are better ways than that. Adding debt, just increases the risk of the farm eventually being lost to the bank. Main factors to consider before any other details are the goals of the parents and children. That sets the plan's direction. In most cases there will be more complex issues than expected, including relationships, finances, taxes, mortgages, competition amongst children and differing views of mum and dad.
Round table discussions
First steps that we always take are a private discussion with each family member, a sound understanding of the farm, its operations and finances. Then we organise family discussions in which people are encouraged to put their thoughts on the table, not as a final statement, but to open discussions. We really try at GBAC to get this right, because handled badly it could alienate some family members .
Diplomacy
Succession planning needs gentle diplomacy. Often one or two family members have expectations that others don’t share. In the end we want to make everyone happy. That is one reason why if succession planning starts in their teens or twenties, everyone has a clear understanding of what is happening and most wishes can be accommodated over time.
Personal experience
Running my own Merino property out west first was a good lead in to me succeeding my 2nd cousin by purchasing from him the beef cattle property in the Araluen Valley out of Braidwood, originally settled by my great grandfather and where my grandmother grew up. I am also more of a people person than figures man so having a good chat around the table works well for me and most clients. In the end succession planning pays of handsomely because goals can be achieved if options are thought over carefully. Once decisions are made on what will happen, work can start on making it happen.
