Farm Guide VIC : 2008 - 2009
108 Succession Planning This change is coming about for two main reasons: 1. Attitudes of farmers are moving towards providing a more even-handed inheritance for all their children and 2. The increase of legal challenges to estate’s by aggrieved potential beneficiaries where it is perceived equitable distribution has not taken place. It is also important to note that historically, many have seen their “plan” in terms of ‘post life’ estate planning only – where the strategy only takes effect when they have passed away. For such a “plan” the only instrument that was used was the traditional will. Today however, a Succession Plan, whilst it incorporates estate planning, is a much broader approach. It should obviously include making sure that your assets are distributed in a timely manner, to the right individuals and with minimum tax cost as possible – but it should not have to wait until one has passed away. A thorough Succession Plan is about taking control of your financial destiny – while you are working, when you retire and ultimately after you have gone. It is all about providing farming families with choice and certainty as circumstances change. Succession can be very different for each farming family, for example: 1. Transition from farming life to retirement. This can be a very difficult period for those who have been on the land for most of their lives as they may have to come to grips with changes to their personal situation. Selling the farm may be the only option where due to age, lifestyle choice, health or financial restraints some families may not be able or afford or want to continue farming. Our experience is that many “retired farmers” may still wish to have some ongoing activity on the land and don’t know that they may be able to achieve both. 2. Retaining the farm and transitioning it to the next generation. Transitioning the farm to the next generation over a period of time can present difficulties and stresses that can come from multiple families living off the one farm income. Careful consideration should be given to these transitions to also enable the continued growth of the farm business by the next generation. 3. Providing Security / Certainty to the next generation. Certainty needs to be provided to the children that retain and work the farm as well as those who choose not to take up a farming career. In the event of an inheritance claim the farm should not be forced to be sold in order to pay out the non farm-working siblings. Plan for Lifestyle as well as Financial Goals A good Succession Plan should not only take into account the financial aspects that will affect your lives, but just as importantly, the social and environmental changes that will occur as your circumstances change. Key Points 1. Engage a trusted Principal Wealth Adviser. 2. Involve all stakeholders to achieve a “win/win” outcome. 3. Build and Document a Succession Plan. 4. Establish an ongoing contact program with Principal Wealth Adviser. 5. Maintain the Succession Plan to address changing circumstances. The social impact to farming families is an area that is nearly always overlooked -and without careful consideration, all the best laid financial plans can be undone when “life” didn’t turn out quite as expected. A comprehensive Succession Plan will help to address those issues and provide options to help achieve outcomes that may on the surface have not been considered available. Because everyone’s circumstances are unique and their goals different, there is no “one-size-fit all” Succession Plan. Bringing It All Together Farming people need someone whose prime responsibility is to help them take control and coordinate their financial security. That person is referred to as a Principal Wealth Adviser. The Principal Wealth Adviser seeks to understand your needs by working in a consultative approach with you. Their primary role is to coordinate all other professionals that have a relationship with the farming family and to ensure that all financial advice provided is aligned to your goals and objectives. Ensuring Alignment of Professional Advice 1. Principal Wealth Adviser: Co-ordinates advice of all professionals to meet you goals and provides specific strategic and investment advice where needed. 2. Lawyer: Legal structures and protection mechanisms. 3. Accountant: Structuring & tax planning. 4. Insurance Broker: Insurance. 5. Other Professionals: Personal Banker, Stock Agent, Real Estate Agent & Property Valuer.
2009 - 2010