Farming succession planning is an essential part of running a family farm business. Effectively planning for the future allows you to protect your assets, safeguard your business, ensure continuity and provide for your family.Succession planning in the farming industry is also vital to the sector’s viability as a whole. In this post, we look at some of the key things you need to consider when succession planning for your farming estate.
Farming succession planning explained
Succession planning isn’t just about planning your retirement but ensuring a smooth transition for those who run the business once you have stepped down, and whoever comes after. You are planning your business legacy, leaving behind your vision and goals for the continued success of the business. Farming in the UK faces difficulty as a result of poor succession planning, an ageing workforce, and very few new entrants to the sector. Research conducted by Let’s Talk Succession showed that less than half of those interviewed had a succession plan in place.
Discussing the future with your family
The first step in succession planning is discussing your plans with the next generation. You should try to include everyone who might be affected in the discussions. It could be a good idea to bring in a specialist adviser at this stage, who can help to explain the best way to move forward and set out all of your options clearly.
What should be included in the succession plan?
There is lots to consider when it comes to what should be included in a comprehensive succession plan. Firstly, you will need to understand and set out the following:
- How the assets of the farm are owned
- How each member of the family wishes to benefit from the farm
- What parties are occupying the building and land on the farm and what the arrangements are
- What the long-term plans and goals are for the farm
- What each family member will do to run the farm in the short term and in the future
- A plan for mentoring or training the future generations, including how you will step back from running the operation
- Tax considerations
Who will own the farm?
An important part of succession planning is making sure that ownership of the farm passes in the way you would like it to. You should ensure that all family members involved in the ownership or running of the farm have valid wills in place to protect the family business.
Furthermore, you may wish to implement a partnership or shareholder agreement. You should be mindful of matters such as marriage or divorce, and you may wish to consider prenuptial agreements to protect the business. This will ensure the business’s ownership ends up in the right hands at the right time.
This is not legal advice; it is intended to provide information of general interest about current legal issues.