Handing your farm over to family members is a wonderful way to leave a legacy the whole family can enjoy. A good farm succession plan will not only give you peace of mind, but will also help you transition out of your farm when the time comes. We recommend involving all family members in the process to ensure everyone is on the same page, and in order to prevent potential misunderstandings in the future.
Everyone’s circumstances are different, which is why it is so important you have a close and trusted relationship with your chartered accountant. Our accountants get you because we know that getting the right professional advice can mean the difference between success and failure.
So join Pisani Group and other expert speakers for our first Farmers’ Succession Seminar on Saturday, October 11th, 2021. Discover the most effective ways to pass your farm onto the next generation as successfully as possible. There are limited seats, so be sure to book your spot before October 1st by calling Sonya on 0413 963 789.
So what exactly is Farm succession planning, and why is it important? Read on to find out.
What is farm succession planning?
According to Farmtable.com, succession planning is “the development of a plan that will allow a smooth transition of the business and any assets with minimal disruption to the business or, importantly, family relationships”
In simple terms, succession planning is the process of ‘retiring’ one farmer and passing it on to another farmer – usually a partner, sibling or adult child. This allows the farmers’ way of life to continue, and the new farmer can then build on what their parents had built up over their lifetime. While that may sound straightforward, it can be anything but.
Transferring ownership of the family farm to a new person can be confusing, stressful and filled with conflict. Why? Because it’s so much more than just transferring assets. But with a strong plan in place, you can smoothly transfer your farm without the hassle.
What are the key components of farm succession planning?
Farm succession planning is often referred to as a three-legged stool. That’s because there are three parts of the process – all equally indispensable and as essential as each other:
- Estate planning – the transfer of ownership of family and individual assets.
- Retirement planning – the transition of labour and management on the farm.
- Succession planning – the transfer of management and control of the family farm to another person.
From there, succession planning can then be broken down into three more categories, which can give the farm families more options for separate ownership structures:
- Family – the farm family’s goals, cash needs and wills.
- Ownership – choosing a suitable ownership structure.
- Business – how to successfully change the economic environment.
Starting the farm transition planning process
Define your goals
The first step in creating a successful farm succession plan is to define your goals. Every farm and family is different, so outlining your objectives ensures that you and future generations will benefit from your succession plan.
Think of your needs
You may need income from assets like phone towers, natural gas and rental properties to support your retirement. If so, don’t release these during your golden years.
What’s important to you?
Is keeping your home in the family important to you? Or perhaps you want to donate some assets to your favourite charities? Whatever it is, make it clear what your wishes are after you retire.
Who will be in your farm succession plan?
Now comes the logistics. Who exactly do you want to be involved in your succession plan? Whoever you choose will have some pretty big shoes to fill – after all, it will be their job to ensure that the farm thrives for future generations.
So who do you choose? Start by asking yourself these questions:
- How many heirs do I have?
- Will my heirs be able to work well together?
- How do I split my farm between family members who are farmers and those who aren’t?
- Will having too many heirs affect my farm succession plan?
By answering these questions, you will know who your heirs are, how many you have, and what roles they will play on your farm.
Farm succession planning tools and guides
The Farm Family and Their Family Farm (2016 edition)
Based on decades of experience and research, author Greg Weir has written The Farm Family and Their Family Farm – a thorough overview of the farm succession planning process.
Legacy Workbook
This book may be US-based, but that doesn’t mean you won’t find it helpful. Legacy Workbook by the Farm Journal Legacy Project was written to help you start the succession planning process.
Overwhelmed with it all? We’re here to help! Join Pisani Group and other expert speakers for our first Farmers’ Succession Seminar on Monday, October 11th, 2021
Pisani Group is proud to host a Farmers’ Succession Planning Seminar, where South Australian farmers can learn:
- The benefits of a successful succession plan
- How to transition assets to the next generation – such as machinery, feed, livestock and land
- The best methods of effectively involving your heirs in the farm transition process
- How to use insurance for your farm succession plan
Meet with our experienced, knowledgeable speakers such as lawyer Sarah Bartholomeusz, agribusiness general insurance expert Tracey Miller, financial advisor Katherine Hann, and our own Stephen Pisani – founder and owner of Pisani Group.
Virtus Soccer Club, 9 Park Street, Port Pirie. 5:30pm to 7:30pm. RSVP to Sonya on 0413 963 789 by the 1st of October, 2021.
There are so many aspects to succession planning and taxation that you need to consider as a farmer. It is crucial to be proactive and stay on top of it so you don’t have any nasty tax surprises. Let a dedicated Pisani accountant guide you. Contact us here to find out more.
