Farming families risk creating problems and expense or reducing their options by leaving succession planning too late. Sometimes this can result in the farming property being sold or broken up. Sometimes it’s the family that breaks up.
Estate planning involving all family members and taking into account individual expectations can often prevent problems, such as breakdowns in family relationships and trust, emerging later on.
Instead of a planned handover of management, control and ownership of the farm over time, families often wait for a major life event before considering farm succession and passing on the enterprise to the next generation. These events can be the older generation wanting to retire, a son or daughter returning home to work on the farm, a new marriage or death in the family, or a housing issue. Ideal planning occurs when the family makes an informed decision before that happens in conjunction with all interested parties when decisions can be made by choice and not necessity.
Often both generations do not negotiate their wishes, their expectations, remuneration, holidays, housing issues, what they stand to inherit and what financial support is needed for off farm family members and parents in retirement.
It is very traumatic for the farm family that has not planned for succession when a situation dawns on them and they realise the farm needs to be sold.
Good succession planning should encompass early planning around a profitable business with off farm investment to provide for the older generation’s retirement and the needs of off farm siblings. It should begin by managing the expectation of farm family members.
Understanding families is the key to effective estate planning:
Having a clear understanding of your family at the outset of the planning process helps ensure that the plan suits the particular needs of your individual families.
The best source of information about families comes from you, who has the clearest knowledge of family strengths and weaknesses and can guide in the preparation of estate
plans that fit your circumstances.