Gone are the days when farming families had to wait with bated breath to find out how Dad had divvied up the family farm in his Will. In modern farming families, the willingness to discuss the farm succession plan has grown exponentially over the past twenty years.
Start early, chat often
One of the main frustrations of the families that we have worked with over the years is that of younger generations to get a commitment from the landowning generation to start a structured succession planning process. Conversely, the landowning generation can become frustrated with the impatience (real or perceived) of the younger generations.
Ideally, the conversation starts when the youngest generation is coming back to the farm (around the late twenties/early thirties). This can be a slow process, and personal benchmarks and needs often change as time goes on. Opening the discussion early on, though, allows trust to build so that both sides of the equation feel able to raise issues as they arise.
In addition to your agronomist or financial advisor, we recommend getting a team of people with different skill sets together to help craft the succession plan. At a bare minimum, we suggest bringing your accountant and your lawyer in on any major discussion points, such as asset acquisition discussions and estate planning meetings. For other families, where the discussion is likely to touch on significant personal and familial pain points, a mediator or relationship counsellor might be a useful addition to the team.
It is important to remember that the family farm is a business like any other, whilst simultaneously like no other business on Earth. Any discussions, formal or preliminary, should be put into writing and signed by all relevant family members to demonstrate their acknowledgment of the current state of the succession plan. This provides everyone with a roadmap and can head off disagreements about what exactly was said by whom and when
Fair doesn’t mean equal
Our final tip applies as much to the landowning generation as it does to the off-farm family members. Although it seems fair to split the asset pool equally between all your children, it is rare that a farming family will be able to use this strategy. Fairness has to be considered in the context of the lifetime of the family, and consideration given to sacrifices made by those members staying on the farm. An effective succession plan, established over many years, will allow for fair gifts to be made in the final Will.
It has been our privilege to work with farming families across the Demeter Legal at all stages of the succession planning process. For more information on our succession planning packages and agribusiness services, please book your FREE consultation.