For so many farmers, the conversation about succession can be a difficult one to have. There are so many different eventualities to prepare for, and many are afraid that by talking about it they are tempting fate. Farm succession expert Heather Wildman, says that the “six Ds” farmers need to prepare themselves for are:
Death.Disability.Disaster/Disease.Divorce.Disagreements.Debt.“It is so important to communicate with your family, somebody must bring up the topic. The sooner families start these conversations the easier it can be and the more natural it becomes. But some families will never be able to have the succession conversation without an independent facilitator in attendance and that’s OK,” says Wildman.
There are a number of life events that can trigger the succession conversation. A family member might get married or start a new family. Someone may wish to retire or school-leavers may join the business. Someone could become ill or there could be high levels of conflict or a breakdown in communications.
Before you start, you need to know what you want out of your succession plan and what your numbers are. There are a number of things to ask yourself:
Do you know what your spouse or children want?How well do you know your business agreements? Whose name is on things like the bank accounts, land or herd number, tenancies, single farm payment?How exposed are you if something happens?There are a number of guiding principles to succession. The first is that there is no one-size-fits-all solution; each farming business solution is different and unique. It is important to obtain quality professional legal and accounting advice. Open communication is key and you have to be able to understand and respect the differences in generational values within the family.
“So many accountants just talk about ‘managing’ tax during this process. This is essential and important and by being open and planning in advance, the tax can be managed, but by keeping things in the dark, the rest of the family may end up in counselling and therapy,” Wildman says.
“Agriculture and rural businesses are unique, if the accountant is not talking your language and does not fully understand and have experience of your industry then leave or ask if there is another partner who does.”
Check list
Some of the technical information you need to collect and have ready for your meetings with your professional, legal and advisory teams includes:
Legal will(s). Power(s) of attorney. Property deeds. Tenancy and contract farming agreements.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 (eg lawyer, accountant, nutritionist/feed company, equipment supplier, etc). Any other business related material or information.“Powers of attorney are just as important as having a will. It could be the case that you’re skiing and there’s an avalanche that stops you from getting home,” says Wildman, adding that it is amazing that often only one person is privy to bank account information.
Things to plan for when preparing for the six Ds include; current and future family expenses, education of children, building or buying a house or houses, retirement lifestyle needs and care home costs.
“There is no right or wrong answer in developing your future plan; the aim is simply to provide the best possible outcome for your family and your farm business,” Wildman said.
Read more
Succession: ‘I’m losing two to three dairy clients a year’
Providing for retirement in succession planning
'I want to take a step back but I don't have a successor'
For so many farmers, the conversation about succession can be a difficult one to have. There are so many different eventualities to prepare for, and many are afraid that by talking about it they are tempting fate. Farm succession expert Heather Wildman, says that the “six Ds” farmers need to prepare themselves for are:
Death.Disability.Disaster/Disease.Divorce.Disagreements.Debt.“It is so important to communicate with your family, somebody must bring up the topic. The sooner families start these conversations the easier it can be and the more natural it becomes. But some families will never be able to have the succession conversation without an independent facilitator in attendance and that’s OK,” says Wildman.
There are a number of life events that can trigger the succession conversation. A family member might get married or start a new family. Someone may wish to retire or school-leavers may join the business. Someone could become ill or there could be high levels of conflict or a breakdown in communications.
Before you start, you need to know what you want out of your succession plan and what your numbers are. There are a number of things to ask yourself:
Do you know what your spouse or children want?How well do you know your business agreements? Whose name is on things like the bank accounts, land or herd number, tenancies, single farm payment?How exposed are you if something happens?There are a number of guiding principles to succession. The first is that there is no one-size-fits-all solution; each farming business solution is different and unique. It is important to obtain quality professional legal and accounting advice. Open communication is key and you have to be able to understand and respect the differences in generational values within the family.
“So many accountants just talk about ‘managing’ tax during this process. This is essential and important and by being open and planning in advance, the tax can be managed, but by keeping things in the dark, the rest of the family may end up in counselling and therapy,” Wildman says.
“Agriculture and rural businesses are unique, if the accountant is not talking your language and does not fully understand and have experience of your industry then leave or ask if there is another partner who does.”
Check list
Some of the technical information you need to collect and have ready for your meetings with your professional, legal and advisory teams includes:
Legal will(s). Power(s) of attorney. Property deeds. Tenancy and contract farming agreements.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 (eg lawyer, accountant, nutritionist/feed company, equipment supplier, etc). Any other business related material or information.“Powers of attorney are just as important as having a will. It could be the case that you’re skiing and there’s an avalanche that stops you from getting home,” says Wildman, adding that it is amazing that often only one person is privy to bank account information.
Things to plan for when preparing for the six Ds include; current and future family expenses, education of children, building or buying a house or houses, retirement lifestyle needs and care home costs.
“There is no right or wrong answer in developing your future plan; the aim is simply to provide the best possible outcome for your family and your farm business,” Wildman said.
Read more
Succession: ‘I’m losing two to three dairy clients a year’
Providing for retirement in succession planning
'I want to take a step back but I don't have a successor'
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