The rural life evokes strong emotions at any time. When considering retirement unrealistic expectations and competing interests can lead to unpleasantness and fear of change. The key is to take responsibility for your future and mange the process as best as possible for the good of all involved.
The family farm business is an icon of the Australian way of life. It was once the main source of national prosperity and remains the lifeblood of rural communities. For some city based professionals it remains a romantic drawcard. However the family farm can also be a source of stress and heartache, especially when deciding who will take over when those currently in occupation and ownership retire.
Diversity among the businesses and personalities involved means no one-size-fits-all approach to farm succession planning can properly be applied. However, there are certain underlying principles that can make the process easier.
1. Close and relevant relationships
People in relationships face at least three levels of expectations:
Those that we know we have and talk about
Those we know we have but haven’t discussed
Some we don’t even know we have – until they are not met
How these expectations are managed has a strong bearing on the success of relationships and associated issues like succession planning. Usually managing the expectations of all parties is to have all relevant people consider their expectations and then create an opportunity for open and honest discussion of the expectations.
2. Prepare for change
Everyone struggles with change at some level. Managing change is a core subject to a business course. In many respects farmers experience and mange change often. Succession issues go to the heart of family relationships and are in a different basket to the many challenges usually faced on the farm. One change often experienced on the farm is when a son or daughter becomes part of the business, or a son marries and a daughter-in-law and children come on board.
Sometimes it is threatening when new family members enter the field. Their new energy, knowledge and ideas may be just what your farm business needs. But a new family unit working and living on the farm is a new dynamic. It is essential to find out their real expectations and negotiate how they can be incorporated into your vision for the future of your farm business.
3. Communicate to get the result you want
The way often communicate can make it hard to address tough issues like succession:
talk tends to be understated and focus on daily routines and tasks
those who work and live within a family often make a lot of (frequently incorrect) assumptions
there may be underlying unknown or unstated jealousies or disappointments playing out
many don’t recognise that a lot of communication is in what’s not said – silence may not mean agreement, but just the opposite
natural courtesy may lead to avoidance of hard questions like “Dad, when are you going to retire and give us a clear run?” The younger generation may less and less patiently wait and hope things will sort themselves out.
Enduring family farming businesses avoid these traps. People communicate regularly (perhaps weekly) in a structured way, making it much easier to introduce and work through tricky topics like death and divorce. Since their impact on business succession is undeniable, it’s foolish only to broach these issues when there’s a crisis and feelings are running high. The highest goal in the family farm is to strengthen relationships given that natural bonds of love are relied on for the success of the venture today and through future generations.
4. Succession planning – never too early to start
Like any other form of planning, the earlier you start, the more options you will have. An early start will also give you time to call on the professional legal and accounting advice you need to achieve the best outcomes.
5. Be real about the money
Not surprisingly, the biggest difficulties with succession planning can arise when the available assets are not enough to fund all the family members.
As in other walks of life, the more money available, the more options there are. It is important that realistic expectations are provided for because these, if unmet, can later lead to bitterness and a major breakdown in family relationships. This underlines the need to start planning sooner rather than later, so you have time to negotiate a solution that is as equitable as possible for all family members. Always consider involving a trusted advisor in discussions. It may run counter to your preference for keeping such matters ‘all in the family’ but some experts have considerable skills in these matters and can assist to mediate solutions that give success to all interests.
6. Set a timeframe
A good and natural time to start succession planning may be when someone new enters the family, and change and the future are already on people’s minds. The best solution may be to stagger handing over control and ownership over time. This allows exiting family members time to plan for their futures and transfer knowledge to those taking over, while the latter can use this lead time to find – and plug – any gaps in their farm management knowledge and skills. The goal date and process should be documented. Most importantly it gives certainty to those involved.
You also need time to get your plan right – anything from one to 10 years, depending on the complexity of your farming business. And remember to review the plan regularly as time passes, or whenever circumstances change. If you don’t already have a succession plan for your farm underway, now’s the time to start so you can avoid a crisis driven handover that leaves nobody happy. Maybe the first step is to leave this article lying around!
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Retirement Village & Aged Care Advice
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Special Disability Trusts – What Are they and How Can they Assist you
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