NEWS

Giving some consideration to succession planning is better done sooner rather than later. Over time the succession plan can change but having some direction in mind is useful. Having a succession plan that has been well thought out is preferable to having a succession plan brought to a head by some ‘trigger’ event such as an illness or death. There is no one size fits all as every family has different objectives.

Communication is #1

Communication is key when it comes to formulating a succession plan. The family wishes are important, and it is imperative that all family members involved are aware of and understand the issues. Parents should have conversations with their children, this can be facilitated by an Accountant, Lawyer, or some other trusted Advisor. If we can get the family to buy into the plan, there is more chance for success. Usually, it is best to deal with the first generation first before considering the grandchildren.

Considering Long-Term Financial Viability

The financial viability of the farm or business is important along with the capital income and capital needs of the family members. We do not want to burden the next generation with debt. The skillset of the family members is also important to take into consideration.

Succession planning doesn’t necessarily need to mean the asset is transferred to family. It could be that the asset is sold and a plan is made for the transfer of inter-generational wealth.

Counselling or Mediation Options

A lot of emotion is involved when it comes succession planning and this can create heated arguments. Utilising counselling or mediation services is recommended.

When it comes to what is fair, this doesn’t necessarily mean the children receive equal values. As often is the case when it comes to farms, for the family farm to continue, it is not possible to split the value evenly between siblings. The conversation needs to be about more than just dollar values.

How Can We Help?

Here at REAL we are happy to support you with succession planning. We are here to support ‘your’ plan and it is not our place to impose our views. We will ask you a lot of questions throughout the process to help support your thinking around your decision making. We need to look at the tax consequences and take into consideration any relationship property issues. A succession plan will not happen overnight and takes time. The succession plan should be well-documented and all parties sign an agreement. All parties should have the opportunity to seek independent advice. 

 

Disclaimer

This information is intended to provide general advice only.  We recommend you discuss your specific situation with your Accountant.