Succession planning can be daunting for many farming businesses and families. Our specialist agricultural team understand this and are here to support you and your business through the process.
What is succession planning and why is it important?
Succession planning does NOT mean retirement. It is a strategy put in place to protect your assets, your business and your family as well as future-proofing your farm.
A lack of succession planning can lead to problems down the line – legal issues, tax implications and family fall outs – all of which can be prevented by seeking professional advice to create a robust succession plan.
Step 1: Start the conversation
This is often the hardest part of the succession planning process, but it is necessary.
The key is to have an open and honest discussion with everyone involved and interested in the farm, not just those actively concerned with the management of it.
Farming is not a ‘typical’ business style set up, there tends to be more emotion involved with these discussions and you may prefer to call in one of your professional advisors to lead the discussion – that way you can blame them for asking the difficult questions!
Step 2: Call in the professionals
Your professional advisors – your Solicitor, Accountant and, Land Agent – play a vital role in your succession plan. Seeking professional advice is important as there are often elements of a succession plan that do not work practically and will need further thought; your advisors will be able to recommend as to the outcome and practicalities of your succession plan and what work needs to be undertaken to facilitate this.
Your advisors will consider:
- How assets are currently held and how they should be held in the future, for example:
- Property – the farmhouse, any other cottages or properties and the land;
- Machinery, livestock and any energy infrastructure i.e., windmills;
- Entitlements and scheme payments.
- How is the farming business currently operating – under a Partnership Agreement, a Sole Trader or Limited Company? What will work best for the future plans.
- Are everyone’s Wills up to date and do the Wills reflect what is being proposed and what impact do final wishes have on the succession plan.
- What tax implications need to be considered: Capital Gains Tax, Inheritance Tax and what reliefs are available to you: Agricultural Property Relief, Business Property Relief.
- Whether any additional protection should be afforded to particular assets and how best to facilitate that protection i.e., Trust Arrangements, Prenuptial Agreements.
Step 3: Putting the plan in place
Starting the succession planning process does not mean it needs to be implemented straight away. There are practical timeframes and challenges to consider when determining when the right time is for the Plan to be put in place – for some, this is immediately and for others, it can be months or years. The sooner the process starts, the smoother the implementation will be.
In an industry that relies heavily on elements that cannot be controlled: the weather, market prices, fertility of livestock, use succession planning to take control of your farm’s future. Contact Bendles’ agricultural specialists today.