Succession planning for farming families
- AuthorIsobel Willoughby
Back in 2017, Farmers Weekly carried out research which suggested that around 60% of farming families did not have a written succession plan in place. Based on our experiences with farming clients throughout Ryedale and beyond, this percentage is unlikely to have fallen much in the three intervening years.
Of the clients we speak to, many cite the concern that succession discussions will create family conflict. There is no getting around the fact that those concerns are often well-founded. However, despite the nature of these often-thorny (and, at the very least, uncomfortable) discussions, we always advise our clients that proper succession planning is an absolute must, for the sake of protecting families, their assets, and the future viability of their farming businesses.
We are even more mindful of the importance of succession planning in this post-COVID world, given the worrying risks it poses to everyone’s health, let alone to their businesses.
Firstly, then, let us clarify what we mean by “succession planning”. Succession planning is not the same as retirement planning. A good succession plan will consider the long-term plan for the farming business, including determining the vision of the business, and devising a strategy for how that vision can be achieved. Of course, part of that long-term plan may include discussions about retirement of the older generation, but we would strongly encourage farming families to begin making these succession plans long before any such retirements are anticipated.
With this in mind, if discussions about succession are to be productive and meaningful, it is vital that they include both the current and the future generations of the farming family. We often hear our older generation farming clients, express concerns about the younger generation’s lack of expertise, or desire to take the business in a different direction. In contrast, younger generations often complain that they are not being allowed a say in a business which they are expected to take over, or that they are not being given the benefit of their parents’ experience. If this resonates with you, reader, then believe us that you are not alone!
This is where we, as your trusted legal advisers, can play a significant part in helping you work together. Conversations relating to the family and the future of the farming business can be extremely sensitive, but we are used to helping families remove the emotion from the discussion, and look at points of dispute in a reasonable and pragmatic way. Very often, the negotiating skills which we employ day-to-day will be put to good use in helping family members to engage with one another, and find amicable solutions.
As well as making long-term plans for family members in connection with the business, we also advise our clients to consider how farm assets are owned (and, working with your accountants, how such ownership can be structured to be most tax efficient); whether family members have up-to-date Wills; whether there are up-to-date Partnership or Shareholders Agreements; whether pre-nuptial agreements might be advisable in the future; and (again, working with your accountants) how pensions can be used in conjunction with succession planning.
In short, if you want to ensure the continuance of your farming business, it is vital that you discuss and formalise your succession plan now.
If you wish to discuss your succession planning, or any other matter relating to your farming business, please feel free to call any of the solicitors in our specialist Agricultural Law department at Crombie Wilkinson Solicitors LLP.