Farming families generally acknowledge that having a documented succession plan is a good idea.
Usually, the goals of the succession plan are agreed relatively quickly, but there is often a bit of ‘argy-bargy’ between family members in determining the exact timeframe for implementation.
Hopefully, in those situations a compromise can be reached, in which all parties may not necessarily be completely happy, but all have a way forward that they can live with.
It’s at this point that families often take a deep breath, congratulate themselves on reaching an agreement and with the succession plan in place, consider the job done… or is it?
Have you thought about your current legal documents?
As an adviser, I believe it’s important for families to celebrate reaching agreements on a succession plan.
However, the plan is only as good as the legal documents that support it in the first place.
This means that Wills and enduring power of appointments need to be in place and consistent with the overall intentions of the succession plan.
Consideration of binding death benefit nominations for superannuation funds and reviewing trust deeds for the line of succession for trustee/appointor roles are all important elements in making sure the agreed goals of the succession plan can be implemented.
Have you considered that some opportunities may arise out of succession planning?
One example might be a review of the current farm bookkeeping process which can often lead to the adoption of new software packages, such as the ever-growing use of Xero.
Encouraging the next generation to take the lead in implementing new accounting software can be a good way of transitioning responsibility for the farm bookkeeping and budgeting process prior to the implementation of the succession plan.
On the flip side, relieving the older generation of the financial responsibility frees them up to take on new hobbies or activities in preparation for retirement.
What does your personal insurance look like?
The succession planning process can also identify issues causing anxiety to family members that can be addressed prior to the implementation of a succession plan.
Often for families with young children, there is an understandable fear of something going wrong, such as an accident causing death or disability to one of the parents. Involving a financial planner to review personal insurance needs and having the farm fund the premiums can often provide peace of mind.
How can RSM help?
Having your accountant or trusted adviser help facilitate the next steps in the process is often critical to successfully implementing your succession plan in the agreed time frame.
Mum and Dad enjoying a comfortable retirement and the next generation having a thriving farming enterprise is a great legacy that the entire family can be very proud of for many years to come.
If you have any questions regarding succession planning, please get in touch with your local RSM adviser today.