Farm succession planning: A small price to pay for a valuable asset

Cognitive dissonance is the uncomfortable feeling we get when we hold two conflicting thoughts at the same time.  An example is knowing you should do something but avoid it.  One way to make this feeling go away is to apply mental gymnastics in order to justify a making the bad decision.  We all do it, myself included.  A classic example is when someone starts a diet.  “I ate the donut because I’ve been really healthy this week”.  The more uncomfortable we feel with the thought, the more we say and do to try and make peace with it.

We see this time and time again with farmers and their succession planning – or lack thereof.  They know they should do something about it but avoid it.  We hear things like, “It’s expensive”, “I’m really busy”,  or even worse, “Dad said it’s all sorted”.  These are all great ways to keep kicking the can down the road.

A succession plan is not transferring a block of land into someone’s name.

A succession plan is not setting up a new trading entity for your son and daughter in law.

A succession plan is not discussing it with your accountant.

A succession plan is not saying your off farm-daughters get your shack and super.

A succession plan is not hoping for a good season to pay down more debt.

A succession plan is not getting a will.

A succession plan is not having a great family that would never not take you to court.

A succession plan is not all agreeing that something needs to be done.

A succession plan is not assuming that everyone in the family knows what you are thinking.

A succession plan is not simply saying “Whatever mum and dad want”.

Addressing the elephant in the room

If you find this confronting, it’s meant to be.  We’re all busy but believe me, the sheep and spraying can wait.  This is about addressing the elephant in the room.  The elephant that your off-farm children roll their eyes at.  The elephant that your son and daughter-in-law can’t discuss honestly around you.  No, these people aren’t greedy and wondering what’s in it for them.  They can see the storm brewing while you convince yourself that you’re busy and everything is fine.  I can speak with authority on this issue because we see it day in, day out.

Nothing will ever change if you’re not willing to give something up, including your time, money and commitment to the cause.

Succession Planning is much more than getting your wills done

People often confuse succession planning with getting wills done.  One appointment with the lawyer, $2,000 later.  Wrong!  While this is an important exercise, it’s one of the last jobs once all the big questions have been discussed and answered with all family members.  You cannot do this – father and son alone – without involving all immediate family members and finding out their honest opinion.  Just because they have never said anything – and you have never asked – doesn’t mean they don’t have their own assumptions and expectations.  Avoiding this step now is the easiest way to break up a family and wipe your estate clean in legal fees when you’re gone later.

Why Succession Planning should be outsourced

The process in developing a succession plan can be confronting and uncomfortable at times.  Therefore, it must be outsourced to a professional who is impartial and not afraid to ask the tough questions.  Once a plan has been agreed to, their role is to ensure it is followed through.  This means engaging with all the relevant stakeholders and other professionals, such as accountants, lawyers, bank managers and conveyancers.  We specialise in succession planning within the rural sector in South Australia.

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