Farm succession can take on a different meaning for different people and managing expectations around succession is often tricky.
Transferring farming land and assets from generation to generation can often be a challenging process.
Not only is there a variety of tax and legal implications to consider, but you also need to consider the various family members involved and the individual impacts for each of them.
It involves both the direct farming family members, but also the off-farm family members, which is why embarking on the family farm succession process can be a difficult journey for the many people involved.
From those exiting the farm, those continuing to farm, and maybe also those family members who are not involved in the farming operations, all generations must be considered.
Family members not involved in the farming operations are often the off-farm children, who are not close to the day-to-day operations of the farming business.
By not being actively involved, they may not have a good understanding of the business structures involved and the complexities of dealing with the laws and regulations.
In addition, parents often struggle between trying to be equitable between all family members and being fair to all family members.
As a result, expectations can become unrealistic and place unnecessary stress and pressure on those involved to make financial decisions that are not often in the best interests of the farming business.
This is why communication continues to be one of the critical pillars of any succession plan.
Courage is needed by everyone to voice what succession means to them and how they see the planning taking place.
It is important that this communication be as open and honest as possible so that everyone has a clear understanding of the needs of all involved.
Having all family members involved from the start can assist in managing the expectations of all from early on in the process.
As can often happen, plans change from time to time as different events unfold.
With these changing plans, expectations can also change.
Continuing the open and honest communication between all involved helps to keep the expectations of all managed within realistic options.
An accurate record of notes for reference assists everyone to remember why key decisions in the succession planning process were made, when they were made, and the implications for all involved.
Nominating someone to keep a clear record of notes, accessible to all and readily circulated to all family members involved, can help keep expectations manageable.
This person can often be your accountant, who not only knows but already understands the family business and group family dynamics.
There is no argument that succession planning is challenging and managing the expectations of all family members is one key aspect of the whole challenge itself.
It is important to remember that if things get difficult, clear and open communication from all is helpful and will help keep your plans moving forward.
How can RSM help? Consider commencing your discussion sooner rather than later and contact your local RSM accountant to engage in the succession planning process today.