You have worked countless hours growing your farm, its success is due to blood, sweat and maybe tears, but have you considered what you will happen when you decide the time is right for you to enjoy the fruits of your labour?
It’s never too early to begin planning for the future, but with the day to day running of your farm taking centre stage it may be something that has been pushed to the back of your mind, something to consider soon.
We advise most of our clients to begin planning as much as 15 to 20 years before they plan to step down from the business/retire, but because of the often complex way in which farms are owned and operate we encourage the planning to begin even sooner.
At the start of the “Succession Journey” you need to:
Define personal, family and business objectives:-
Open up communication between the generations so that everyone will start to think about their involvement in the future of the farm business.
Consider the legacy you want to leave your children/family, the type of lifestyle you hope for when you retire, the amount of income you will need when you retire and where you want to live when you retire.
Consider how land and other assets could be maintained/distributed among future generations. Do the next generation want to be involved in the farm? If not focus will shift to preserving family wealth and the transition out of farming.
Consider how sustainable your farm will be.
Look at gap between your future vision and where you are today.
Determine the steps required to get you to where you want to be:-
Examine the current position of the farm, from which we can access the profitability of the farm and any steps that need to be taken before long term plans can be made.
Clarify who owns what; it is important to clarify who owns what part of the farm/land and whether it is being held in the most tax efficient way. If a Partnership Agreement already exists does it reflect the correct ownership position? Arrange for all land, property, assets, machinery, livestock, growing crops, cash, mortgage and other debts to be listed and valued. It is also necessary to be clear about any borrowing arrangements and who is responsible for discharging that borrowing.
Once all the necessary information has been obtained the family can begin to discuss the various options available and investigate the different “what if” scenarios. It is recommended that you enlist the help of team of advisers, which might include an accountant and a lawyer to provide you with advice relating to the various options as a plan is developed. One of our farming team would be happy to guide the family through reviewing the various options along with providing some helpful hints.
Once the preliminary decisions have been made a plan can be drafted to reflect your needs.
Once the plan has been agreed it is advisable to provide all family members with a copy. As the plan is implemented progress should be regularly monitored so that any issues that arise can be addressed and the plan modified accordingly.
One of our farming team would be happy to guide you and your family through reviewing the various options along with providing some helpful hints.