Succession will happen whether we want it to or not, we will all have our ‘last fence post’ there is an end, and most will hope to reflect that they have had a good life farming handing their legacy onto the next generation in a better state than they had inherited it.

Life, can be tricky it can be difficult but to have a life and career where you feel pride, passion, purpose and enjoyment each day, knowing that you love what you are doing and that doing it helps you to meet and achieve your lifetime goals and ambitions has to be most people’s aims, but sadly, this is not always the case. Start today by addressing these questions:

• Is farming what you want to do or would you prefer to be doing something else?

• What do you most enjoy about your work and what do you least enjoy?

• What legacy do you want to leave?

• What lifestyle do you want to have?

• When will succession happen in your family?

• Who will succeed to the farm, or will it need to be sold?

• Can all of the family be treated fairly?

• What money will you have or do you need?

• What are your expectations for retirement: financial, housing, to completely be removed from the day to day work or to stay on part time?

• How will you avoid feeling crippled with debt?

• How will you communicate regarding your succession?

• How will the management of the farm be transferred?

• How will the ownership of the farm be transferred?

• Are you willing to plan and control the process or just see what happens?

It’s time to stop looking down towards your wellies and instead to look up and forward and plan the life you want and deserve. Getting succession right – setting the last fencepost effectively and harmoniously – this is the ultimate challenge of the farmer’s life. Identify where you are, where you want to be and what is holding you back, make a plan, get professional advice, communicate with your family and make it happen.

My ambition is to enable people to approach their own dreams, hopes and aspirations in a calm, structured way, before family fall out, allowing everyone in the family the opportunity to speak up and to share their hopes and expectations. For each business to tailor make their own plans in a way that works for them. Giving the retiring generation the reassurance that the business has been handed over in a professional manner so that they can retire with dignity and pride, in a home of their choice and be able to live independently of the business. Thus, releasing the incoming generation allowing them to invest in their business for their family, living and working the hours and the way that they choose to. Investing and preparing for their next generation.

The hope is to encourage people to have a plan in place and shared with their family by the age of 50. This allows time to plan for retirement, some may wish to never leave the business until the day they die, which is fine this is their right, but it is unfair if they do not share this with their family. Having a plan also allows the incoming generation time to prepare, to learn the skills or to possibly leave the business and work elsewhere until the time is right for them to come back home and take over the reins. Having these discussions early allows the opportunity to hear what the off farm children wish from the business. If they wish to come home to the farm is the farm big enough? Can it sustain another family? If not what opportunities are there? Manage expectations early. Have a plan, share the plan, then get the best professional advice to ensure that the plan can be and is delivered.

Be honest, is this a life that anyone else would want to continue, what kind of role model have you been? – Complaining about conditions and policy, long hours, joyless, hard - working, little to no time off and being tired and miserable – would anyone genuinely want this or wish this on someone else?

Common triggers for succession planning:

• New members joining the business

• Member retiring

• Illness

• An individual wanting to exit the business or family

• High levels of conflict and communication breakdown

• Financial pressures and differing financial expectations

Common reasons for avoiding succession:

1. Fear of conflict

Fear of arguments is probably the biggest reason why people avoid succession planning. Farming is a unique type of business in that you are working with your family members, so avoiding conflict with the people you live and work with is important.

2. Too difficult

Many families feel that the whole thing is just too hard. It takes a lot of effort, time and resources and there’s no quick fix.

3. Don’t know how

Many families do not know where to start and have often only heard of the horror stories where succession has gone bad. Start by asking your friends and your network, who did they use, who would they recommend, who would they recommend that you avoid? Speak to your accountant, bank manager and lawyer. Read articles, attend seminars, research websites and organisations.

4. Bad past experiences

If the head of the family farm has had a bad experience with succession planning with their own parents or family, it has probably left a bitter taste in their mouth and given them a good reason to stay clear of succession planning. If managed well, a succession plan can avoid this type of bitterness and can be liberating for all involved.

5. Not their job

Who has responsibility for the succession plan? Some may say it’s the job of the head of the farm. But what if they are unwilling to bring it up? Succession is the responsibility of all members of the family. It might take one person in the family to have the courage to say, ‘Hey, we really need to talk about what is going to happen after . . .’ Someone has to say it, why not you?

6. Fear of what’s next

For many farming is who they are and what they do, take this away and they fear the loss of purpose and identity. From being ‘The Boss’ to just ‘the old man’! Also, what will the neighbours and my peers think, will this alter my relationships and status? Will they think I am past it? What will I do with my time, will I be bored, and don’t retired farmers just give up and die?

Recommendations in succession planning:

• Keep the bigger picture in mind – the long-term future and happiness of you and your family. The future success of the farm may be part of this or perhaps selling the farm will be the best option.

• Think of succession planning as a process rather than an event – it takes time and effort.

• Start planning now – the earlier the planning begins, the greater the number of options.

• Maintain a positive attitude – it can make a huge difference as attitudes are contagious.

• Complete a financial analysis of the past and present farm business along with some financial projections. If your farm is not making money now, what can be done to make it profitable? Is the farm business viable in the long run?

• Become educated about succession planning – take workshops, seminars, read articles and complete self-assessment questionnaires related to succession so that you are an active participant in the planning process.

• Use a family business meeting to open the lines of communication among family members. An objective, third-party facilitator can help ensure that the initial meetings run smoothly and everyone has an opportunity to voice their interests and concerns.

• Determine the most important things (values and their priorities) to each individual family member as a starting point. The business meeting mentioned above can be helpful with this.

• Figure out each individual personal, family and business goals, which should be based upon their values and priorities.

• Ensure good communication among family members about plans, strategies and issues.

• Address the tricky issue of fair (equitable) vs. equal division of the farm early in the process – especially if there are off-farm family members involved.

• Prepare a power of attorney and legal will early. A will can provide guidance on how the estate should be settled, power of attorney details both your intentions should you require medical intervention and your business and financial instructions.

• Generate and discuss various options. You can narrow these down over time but in the begin ning, have a big brainstorming session about all possible options.

• Assemble your team of professional advisors (e.g. lawyer, accountant, financial planner, banker etc) and work with them on your succession plan.

• Take responsibility for development and implementation of the plan with help of your team of advisors. This is your families plan, not the advisers. Family members have to buy into the plan for it to be successful.

• Consider tax implications but don’t focus solely on them as the most important thing. For example, rather than saying, ‘we don’t want to pay any taxes,’ make your goal, ‘transfer the farm business efficiently while considering tax consequences and preserving as much family capital as possible.’  

• Document your plan. By writing it down, all family members see exactly what’s in the plan and how it is going to be rolled out.

So, where are you at?

• Do you know what you want?

• Are you ready to make the change?

• Have you a time frame in mind?

• Do you have an exit plan?

• Do you know what your spouse wants?

• Do you know what your children want?

• Have you discussed this with your family?

• Is there a plan in place?

• Is there a written will?

• Have you done your numbers?

How are you feeling, are you:

Excited about

• Opportunities on the farm

• Getting to do other things off –farm

• Being free of the 24:7 workcommitment

Engaged regarding

• Planning your lives for the future

• The life you and your partner will succeed to?

Anxious about

• How succession will be resolved

• Having enough money for the future

• How your partner will adapt to the changes

Worried that

• There will be disputes in the family

• Your partner will not know how to keep busy after the farm

• Your farm won’t sell for enough money

• Your successor will not do a good job?

Afraid of

• The future, the unknown

• Leaving the only life, you know

• Family fall out

Conflicted about

• Going or staying, now or later

• Which child should succeed?

• What your partner wants

Concerned about

• Your partners reaction

• What the future holds

• Your successors competence

• Yours children’s relationships

Once you have established where you are, and when you know what you want and you are clear about what’s important to you and your family, then it’s time to start thinking about communicating with the whole family.

Arranging and running family meetings

Put some meeting guidelines in place, such as:

• Involve all active family members

• Don’t personalise issues (us versus them)

• Stick to the agenda, don’t rehash old grievances

• Listen without judging, hear each other out

• Seek common ground and mutual benefits

Succession options available to discuss:

• Sell the farm

• Partnerships

• Buy out

• Off farm assets/Diversification

• Family Trusts

• Education/Training

• Life insurance

• Leaving the business

• Getting agreement

Reluctance from some family members is often due to their lack of clarity about the meeting process. Have an agenda which should be circulated in advance. Important issues signaled early, no nasty surprises.

Recording the meeting

It is crucial to have a written record of the meeting. It is best to have an agreement about who will do this before the meeting – an accountant/ family facilitator might be able to do it, or another impartial person who is not involved in the meeting process could be asked to attend in order to record the meeting.

Arrange a suitable venue for the meeting

It is important to hold the meeting in a neutral venue. This minimises distractions and maximises the opportunity for family members to contribute. The venue should have a large table to seat everyone.

Who should attend?

We encourage all members of the family, including in-laws to attend. Experience and feedback from families indicates that when family members are not included (ie off-farm children) they feel excluded, possibly upset and relationships can be damaged as a result. The inclusion of off-farm children is very useful as they often bring a different perspective to those involved in the day-to-day running of the business. Some families might choose not to include in-laws.

It is important to understand that when a family is given an opportunity to express their hopes and concerns they do so and that they are as open and honest as possible.

Managing disputes

There will be times when people just won’t agree on things. So, it can be really helpful to have a discussion – before a dispute arises – about how you are going to deal with disputes.

You may decide that each member of the family gets to vote on the issue or that a third-party mediator needs to be called in. Whatever you decide, it’s important that you have this discussion ahead of time. You don’t want to be arguing about how you’re going to manage a dispute while you’re already in the middle of one.

No magic bullet

Farms, like many family businesses, have a problem in that a great part of the family wealth is likely to be tied up in a single asset. No one solution exists in that all families are different and circumstances continue to change. The best approach is to start early and adopt a flexible strategy that can accommodate changes as they arise in your family and wider circumstances.

It also goes without saying that not everyone gets what they want in any business meeting – family business or not. A meeting does not always imply consensus. It is desirable but not always possible, but by being included and having opportunity to ask questions and to listen to all views this helps to go a long way to understanding the process and accepting the ultimate conclusion and decision reached.

Check list

Some of the technical information you need to collect and have ready for your meetings with your professional legal and advice teams includes:

• Legal will(s)

• Power(s) of attorney

• Property deeds

• Mortgages and loan information

• Past and any current tax records and information

• Past and current financial records

• Past and current financial statements

• Past and current production and performance records

• Bank account information

• Savings and off-farm investment information

• Retirement planning and savings

• A current list of debts and other liabilities

• A current list of suppliers and service providers (e.g. lawyer, accountant, nutritionist/feed company, equipment supplier, etc.)

• Any other business-related material or information

• Land Ownership
  – Title references
  – Acreages
  – Relative location of properties

• Mortgagees

• Diversification projects/ownership

If you’re looking at this list thinking that’s a lot of information to collect, you are right. But this is the information you should have, regardless of succession planning, as part of effectively managing your business.

Start now:

• What would you like to happen?

• What you do not want to happen?

• Where is the business now, get financial and physical performance information up to date, know the ownerships and legal situation?

• Set up a plan with realistic time scales and deadlines, who do you need to speak to?

• Work out how best to communicate your plan and who needs to know?

• Record and minute all meetings and agreements

Get the best professional advice and don’t be afraid to change your advisers. Make it happen and don’t give up when it gets too difficult.