A harmonious farm succession plan is possible with the right support.
This holiday season could be the right time for farming families to gather and discuss the first steps of building a succession plan. Succession planning is the process of transitioning management of the farm and its assets from the older to the incoming generation. Details are captured in a plan or agreement which seeks to satisfy the needs of all parties in the future.
“We’ve all heard some dramatic tales about succession planning within family units, but it doesn’t have to be that way,” says Craig Hough, CEO of the Rural Financial Counselling Service NSW.
“Achieving a positive succession process requires open mindedness, planning, objectivity and respectful communication,” he says.
Craig says that a succession plan requires significant time and effort to resolve various succession and financial arrangements: “What is the proposed business structure, personal changes and legal, insurance and other business contracts in the future? When will these things take place? What is the current value of the business? Are there any retirement payments required from the planned succession date and under what terms? What are the sale and buyout conditions if these are planned course of action? These and other questions are answered in a succession plan.”
The solution for many farming families is to engage a professional to help with appropriate communication and planning for succession.
“An independent person such as a Rural Financial Counsellor (RFC) can have those all-important initial discussions to educate you about succession planning so that you understand what is involved, how to navigate the process and which professionals to engage to help you with your succession plan. Whilst they can’t facilitate the succession planning process for you from start to end, they can help you to manage the process,” says Craig.
Rural Financial Counsellors can also be involved in reviewing the past performance of the enterprise, building financial skill sets in the family and road-testing options through cash flows and enterprise budgets.
“I recommend that families start the process early, make sure expectations are realistic, consider all parties fairly – including parents, farming children, non-farming children and in-laws, treat everyone respectfully and approach the process with appreciation rather than entitlement,” says Craig.
“Speak to your local Rural Financial Counsellor about how your family can start a harmonious succession plan in 2024. We are here to support farming families.”