Why starting early makes all the difference
The Myth of the ‘Succession Event’
Most farming families assume succession is something that happens at retirement or worse, at death. In practice, the succession plans that we have seen work are those that start early, evolve over time, and are treated as a process, not just a legal document.
At Moin Morris Schaefer, we have over 30 years’ experience in advising farming families on succession planning. We have seen first-hand what helps succession plans succeed and what quietly causes them to fail.
Where Succession Plans Really Succeed and Fail
Succession plans succeed when:
- Conversations start early and continue often rather than being treated as a ‘once and done’ responsibility
- Control and responsibility are transferred incrementally
- Everyone understands that fair is not always equal
They fail when:
- Decisions are deferred to avoid conflict
- Legal documents are prepared without genuine involvement or agreement
- Death or incapacity forces outcomes that were never intended
The Pressure Points: Control, Ownership and Timing
Control
Farming parents often struggle to step back from operational decision-making, even after the next generation is involved and doing a significant amount of the work. This can create a sense of frustration, resentment, and sometimes disengagement. This can also result in the next generation living in a state of ‘limbo’, making it difficult for not only those working on farm, but the rest of their family.
Ownership
Without a meaningful ownership stake and decision-making capacity, the next generation may never feel secure enough to invest emotionally or financially in the future of the business.
Timing
Many families avoid setting triggers or dates for transfer of ownership and control in farming assets, preferring to put things off until it ‘feels right’. Unfortunately in these circumstances, the trigger often becomes illness, accident, or death, limiting the options available to the parties.
Tax: A Tool, Not the Strategy
Tax issues are important discussions in succession planning, however a common mistake is allowing tax outcomes to drive decisions rather than inform them. Finding solutions that are tax effective and commercially sound should be the goal.
Family Dynamics
No one family is the same. There are a countless variables that can influence how a family may approach their succession plan. There are, however, a number of common complicating factors that require careful consideration when developing a succession plan that will work:
- On-farm vs off-farm children
- In-laws and second marriages
- Unequal contribution vs equal inheritance expectations
- Parents avoiding decisions to “keep the peace”
- Limited off-farm income and/or assets
- A desire to keep the property as a ‘whole’.
Common Mistakes Families and Advisers Make
- Leaving planning too late: planning for retirement should happen in the building phase, not the slowing down phase
- Treating succession as a one-off legal task: your succession plan may change over time as your and your children’s circumstances change
- Working in adviser silos: the best outcomes come from coordinated legal, tax and commercial advice
- Keeping people in the dark: honest family conversations are the core of successful succession planning
Frequently Asked Questions
- How do we treat the children fairly without selling the farm?
- What if we give too much away too early?
- What happens if the farming child wants to sell the farm after we transfer it?
- How will we fund our retirement?
- How will we pay for Aged Care if we need it?
- Can we change the plan later?
Our experienced advisors at Moin Morris Schaefer can provide answers to these questions, and more, and provide tailored responses and solutions for your family’s particular needs.
When succession planning is approached early, revisited regularly, and supported by coordinated legal, financial and tax advice, it creates clarity, continuity and confidence for all involved. Done well, it protects not just the farm and the business, but the family relationships that sustain them.
Get in touch with our team to find out how we can assist with your family’s succession planning.
