Agricultural Succession Planning

44% of farmers do not have a formal succession plan in place. Of those 44%, 24% had no plan at all, and 20% had a vague idea but nothing formal. Succession plans can reduce both personal and business risks. Although thinking of what will happen to your farm and business once you pass away is not an easy topic to think about, it is very important that there are formal plans in place.  

 

Many farming businesses do not see the need for a written partnership agreement. However, having a clear agreement provides clarity and certainty between partners, protects investment in the business and generally ensures that the business is run in the most tax efficient way. Drawing up a partnership agreement need not be a complicated or expensive exercise and brings with it peace of mind and future security.

 

Not having an agreed, formal succession plan can cause family divisions on a personal level and can also have negative impacts on a business level.  A recent well publicised case of Wild V Wild, a dispute between two brothers as to whether or not farmland was partnership property, highlights the need for farming businesses to accurately record their succession wishes especially in regards to specifying the ownership of farm assets in professionally drafted Wills and farm partnerships.

 

70% of farmers with succession plans preferred successors were sons and 24% of farmers with succession plans haven’t actually spoken to those they’d involve in the succession plan. A succession plan should be discussed with everyone involved before any formal documentation is finalised to make sure that everyone is happy with their role and the forward plan of the farming business. 25% of family members taking over farms have no current involvement in the farm, so experience of how to run a farming business is limited and could potentially affect the business.

 

A good succession plan will ensure the security of the farm and will provide a route for the direction of the business. This means that the future of the farm and the farming business is more secure and it more likely to be successful.

 Steps for good succession planning