Advice

Is your will your farm succession plan?

By Helen Warnock
December 21 2021 - 10:30pm
Succession is a complex and emotive issue. It is too often considered easier to ignore than to address. Photo: Shutterstock

For many privately owned farming enterprises, the preparation of their wills becomes their only attempt to address family succession.

According to recent research, less than 50 per cent of farming enterprises have started to discuss succession, let alone prepare an effective succession plan.

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We all know succession is a complex and emotive issue. It is too often considered easier to ignore than to address.

Yet it is becoming increasingly more of a critical issue for farming families with the record numbers of baby boomers retiring, the growth in farm asset values and the rise in the number of relationship breakdowns.

The easiest option (the will) becomes the default option.

The consequences can be heart breaking for families with the farm being sold or the start of family disharmony due to misunderstandings.

There are many barriers to effective farm succession planning and some of the major stumbling blocks include the following.

Parents often find it too difficult to let go of control.

There is a changed focus of the parents to ensure the assets are protected from marital claims made against the children rather than considering the continuation of the family business.

Helen Warnock.

For many privately owned farming enterprises, the preparation of their wills becomes their only attempt to address family succession.

According to recent research, less than 50 per cent of farming enterprises have started to discuss succession, let alone prepare an effective succession plan.

We all know succession is a complex and emotive issue. It is too often considered easier to ignore than to address.

Yet it is becoming increasingly more of a critical issue for farming families with the record numbers of baby boomers retiring, the growth in farm asset values and the rise in the number of relationship breakdowns.

The easiest option (the will) becomes the default option.

The consequences can be heart breaking for families with the farm being sold or the start of family disharmony due to misunderstandings.

There are many barriers to effective farm succession planning and some of the major stumbling blocks include the following.

Parents often find it too difficult to let go of control.

There is a changed focus of the parents to ensure the assets are protected from marital claims made against the children rather than considering the continuation of the family business.

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There is a lack of planning and implementation of their children's management and business skills in this fast changing world of farming.

The children are not introduced to the family advisers.

There are often valuation disputes as it is difficult to achieve an equal share for everyone.

Often there are difficulties in organising new bank funding which does not involve guarantees by the parents.

When it comes to farm succession planning, there is no one-stop-solution to suit all rural families.

It is essential that you get the right advice to help avoid any negative consequences among the family.

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This could involve meetings with your accountant, financial planner, solicitor and banker and may take several years to come to the best plan.

  • Helen Warnock is a partner in a Central Queensland chartered accountant firm. This article offers general information only. You should consult your personal advisor to seek advice relevant to your personal circumstances before taking action.

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