Have you made your future plans clear

Have you talked to your family about succession? Fewer than half of farmers have a plan in place to pass the farm on. And I think I’m right in saying that every person reading this article will know a story of a farming family in turmoil over the lack of a succession plan. Now is the time to slip this article in front of the person who should be kicking off the process.

What is succession?

It’s the scary word that just means that there is a will in place that clearly states what your intentions are for the farm business. To appeal to a visual, if you were kicked by a bull yesterday and are now out of action, what would you want to be happening today?

In a perfect world, you (I’m referring to the head of the family/farm here) would sit down with your family, talk to them about future plans, what you would like to happen, they would give input and add their thoughts and you would pull together a plan that would then be taken to a lawyer and made legally binding, so that everyone is on the same page. It can be that simple.

But, we don’t live in a perfect world and there are many families that just don’t have that kind of dynamic and need a little help to get to that stage. This is when you have options to look at.

Laura Boswell, agricultural lawyer with Wright, Johnston and Mackenzie LLP (WJM), in Glasgow, deals with such processes regularly, and her advice is this: “You don’t have to have a clear idea of what you want in order to take the first step. People put it off because they don’t know what they want to do. The first step is realising that you just need to put something in place. Everybody needs a will, but it is even more important for farmers as itsit’s your family and your business all rolled into one.”

Laura says that their her firm understands that this is much more than: “These are my assets, and this is how I want them passed on.”

It can be a complicated business, and that’s why you need expert advice. It’s a process, it takes time to get to the right conclusion.

What are you worried about?

Laura from WJM, makes a very good point. “Often the head of the family makes assumptions of what the family want, or what their aspirations are, and when they get them involved in the discussions, they find that decisions aren’t as difficult as you they thought because they don’t have the demands that the head of the family had assumed.”

She continues: “What is important is to get those that are involved to be part of the process, which means that if the outcome is not their ideal outcome, they can be more accepting of it, as they know what the process has been and why it has to be resolved in this way.”

The process

For goodness sake talk to each other. This is all your futures at stake. If you die without a valid will in place, the law decides what happens to your assets and you can bet it won’t be what you had in mind. This can lead to disputes and threaten the viability of the farm, particularly if the farming child(ren) need to borrow money to buy out their non-farming siblings(s). Don’t let that happen.

If you approach your lawyer they can get the process moving, they can also involve your farm accountant in the process. Or And they can appoint other advisors if tax advice is needed or financial planning is necessary.

If more complex issues arise, you can look at putting a holding will in place, which sets out what you think at this stage what you would want to happen, but allows you to review it and update it as you go on.

Triggers

Triggers to having thoughts of putting a plan in action are often set off by the death of a friend or another family member and you see the issues that have arisen. You know the story, the ‘auld boy’ passes away leaving no instructions. Three kids, only one works the farm, and suddenly everyone wants their cut.

It’s a recipe for disaster, often ending in the sale of the farm. These are the issues that pull a will and succession plan into the foreground of your thoughts. It can also be triggered by a build-up of fall outs, it is so much better to avoid all of this by just taking the first step.

Dealing with an estate that has a will and plan in place is a much cheaper way to settle the estate. To put notNot to put too fine a point on it, if there is no will, lawyers are going to be involved for a much longer time trying to sort it out, and that will be a drain on finances, potentially for a long time in complicated cases.

Who is responsible?

The head of the family/farm owner must be on board. Gentle persuasion is the best way. It’s a difficult subject that is being addressed after all, mortality is never a pleasant topic, and having an end of life plan in place will make everyone less afraid of what happens in the future. On a lighter note, not all farmers want to die with their wellies on, some want a plan in place to retire and enjoy some more time to explore beyond the road end.

Laura suggests that communication is key, but if a third party is needed then that can be arranged. The law firm she works for, WJM, have a family business division, which is unique in this sector, and she has seen the process in action. Speaking to the family individually, and confidentially can bring great results. A third party doesn’t have the emotional connection involvement and can see the facts for what they are. They can then draw all the information together and help put the plan in action.

She adds: “It’s surprising how often people fear the worst, when actually it turns out to be a huge relief when they find that the worst-case scenario they have been fearing just doesn’t materialise, and that their family also want what is best for the farm.”