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.

Succession Planning at EPIC Grain ExpoLast week we spent the week on the Eyre Peninsula, presenting to farmers on the topic of Succession Planning at the EPIC Grain Industry Expo.

EPIC Grain Industry Expo

We began in Ceduna on the Monday and moved to a new district each day, stopping off in Warramboo, Kimba and finishing up in Cummins.  The expo featured 11 different speakers covering various different topics that farmers would find valuable for their businesses.  Over the course of four days, we presented to over 200 growers from the Eyre Peninsula and Mid-north regions.

Eyre Peninsula Integrated Commodities (EPIC) is an agricultural brokering service that farmers can use to easily sell their grain.  The main focus of the expo was to hear from a number of grain marketing companies that EPIC work with.  For many farmers it was a good opportunity to meet the representatives of who they have been selling their grain to.

Succession Planning – Key for farming families

Given our specialisation in advising farming families, we were invited to speak about succession planning and the importance it plays in ensuring that everyone gets the outcome they want without destroying close working relationships.  From our experience, succession planning is often talked about but rarely acted upon because nobody knows where to start.  Those who do want to act are too close to it and can be seen to have an alternative agenda or ‘gold digging’ for personal gain.  It is a team effort and everyone must be on board.  From our experience it has to be driven by someone external who is willing to listen to all parties involved and has no vested interest in the outcome.

We lept at the opportunity to be involved in this expo as we already work very closely with farming families across the Eyre Peninsula, Yorke Peninsula and Mid-North regions and felt we have something valuable to offer.  Please feel free to download a copy of our presentation here: Succession Planning for Farming Families.

The week finished with a great dinner at the Port Lincoln Hotel on Thursday night.  The following morning, Bob and I were invited to tour the Viterra port storage and handling facility.  This was an eye-opening experience for us to see the grain arrive on trucks and get tested before being loaded on to vessels.

Farm Succession PlanningNo doubt you would’ve heard the saying ‘if you fail to plan then you plan to fail.’ From our experience this is a true statement and applies to so many areas of our life.

This topic on succession planning is really about one generation exiting a business and the next generation taking over. Each family farming business eventually has to deal with this matter, either by choice or being forced to act after an unfortunate incident.

We’ve identified four main reasons for creating a succession plan:

In formulating a succession agreement, there are four main steps:

  1. Exit and retirement plan for the older generation leaving the business
  2. Transition plan for the next generation
  3. Decide / change ownership of assets
  4. Estate planning

It’s important that the process follows this order.

We met a person recently who provides rural skills training who said there is a scarcity of specialists who work in this field.  We know he is correct.  The reason, we think, is because it requires experience, empathy and common sense as much as technical ability. The process of succession involves transitioning different generations who often have different objectives and motivations.  This means there usually aren’t quick fixes or resolutions.

So what makes a good succession planner?

It’s advisable to use someone who is independent of the family, coordinates the process and calls on the services of the family accountant, lawyer, banker and even agronomist.  If they know and understand farming then that’s even better.

So when it comes to seeking expert succession planning advice, I’m pleased to say, we are one of those scarce specialists.  We’ve had over 25 years working with farming families in SA and have a particular focus on the Eyre Peninsula.

Estate PlanningIt’s quite common for people to spend a lot of time focused on building their wealth but  give little thought to what happens to it all after they die.  Many laugh it off, saying “I don’t have much” or “the kids can have my debts”.  I can assure you it is no laughing matter for the family at the time of death, as only then do they gradually learn what arrangements are in place (or not) and what this means for them.  Without the correct estate plans, this job is extremely costly and time consuming.

Estate plans include Wills, Powers of Attorney and Advanced Cared Directives (formerly Power of Guardianship).


A Will documents who inherits your assets and possessions once you have passed away and who is responsible for managing and distributing the estate on your behalf (the executor).  This excludes money and assets in superannuation or any other type of trust, which have their own rules.  In South Australia, marriage ordinarily revokes any previous will.  Those who die without a will have their affairs dealt with according to intestacy laws, which are slow and unlikely to match what you may have intended.

Power of Attorney

A Power of Attorney appoints a person or trustee of your choice to manage your financial or legal affairs while you are still alive.

Advanced Care Directive

An Advanced Care Directive outlines your lifestyle wishes if you are too unwell to make a choice.  For example, it nominates the person who decides to switch your life-support machine off.

A surprisingly high amount of people do not have any documented estate planning arrangements.  Reasons why may include; cost, time, effort or simply not being aware of its importance.

Most general legal practises offer estate planning services, although our experience is that they are often not thorough.  A surprisingly high number of clients who have seen a lawyer in the past to arrange their will, do not have a Power of Attorney or Advanced Care Directive.  We find this odd given the insignificant additional cost involved.  Typically, this is because lawyers act on instruction only.  The trouble is – you don’t know what you don’t know.  How can you instruct someone to provide you with specific estate planning solutions if you don’t know what they are?  Experienced practitioners who operate in this space will know what questions to ask, which is why we usually recommend seeing someone who specialises in this area, rather than who is merely convenient in town.

While we cannot create these documents for our clients, we have a good enough understanding to alert and guide them through the process.

Self Managed SuperannuationThere’s a simple saying I often use: “You don’t know what you don’t know”.  In a roundabout way what this phrase is saying is that making important decisions without getting all the facts can have very long lasting consequences.  There are lots of examples where this rings true.  I can think of my own situation where, on occasions, I would’ve saved time, effort and money had I opted to getting sound advice and support.

Financial Planning is a very different service to anything I know. Why?  Because life goes on whether people engage with them or not.  Seeing an adviser is purely optional.  Unlike other professionals such as accountants, there’s a legal requirement to get your tax done each year.  When we’re unwell we see a doctor or take our car to a mechanic for repairs.  There’s an obvious need and reason to take action.  It gets back to ‘you don’t know what you don’t know.’

I believe that many people are heading for a financial disaster of some sort but don’t know it.  The disaster might not mean they’re wiped out but with sound advice and support they could’ve saved time, money and effort.  Without labouring on this point, I’ll give a couple of examples.

Purchasing farm land in the most cost-effective way

One of the areas we specialise in is helping farming families purchase farm land in the most cost effective way.  The most common method is to borrow from a bank and make repayments.  A far more cost effective way is to use the tax advantages of superannuation.  There are significant savings, often in the hundreds of thousands of dollars.

Succession planning

In our last article Daniel wrote about succession planning which is a fancy term for having a plan to transfer a business to the next generation.  This is one of those things that most farmers know should be addressed but sometimes leave far too long.  Business succession plans provide confidence, peace of mind, security and direction for all family members.  It’s the best way to prevent legal issues and break up of families.

Direction and purpose

The most common reason for people engaging with us is because they want to establish a plan that gives them direction and purpose.  It’s a broad statement but what they’re really saying is that they are so focused on what happens day to day to do it themselves.  Establishing a meaningful plan is both motivating and rewarding.

The starting point with all the work we do is to have a good understanding of a person’s situation and discover those things that are most important to them.  This is the basis to providing sound financial advice.

Succession Planning for FarmersFarming family members that work together may get along quite well, but often the important issues of ‘who gets what’ down the track can be grey and are never discussed in any detail.

In many cases the parents have something in mind, while their successors might be assuming something different.  It all comes down to communication and planning.

It is important that this process is started early on your own terms, while you have time and health on your side.

4 Crucial Steps in Farm Succession Planning

1. Think about your own future first before helping your kids

One common mistake we see is parents trying to set their children up without taking into account their own needs first.  Important questions you need to ask yourself are:

2. Talk to your family members

Formalise the subject by allocating a time to meet or discuss your farm succession plan.  It’s no good trying to broach this topic while you are shearing or at Christmas lunch.  Time needs to be set aside properly.  If family members are living long distances apart, perhaps begin by sending everyone an e-mail, simply to say that you want to start the discussion.  That way everyone is receiving it at the same time and is given the opportunity to respond accordingly.  It’s important to know what each person is thinking and feeling.  This is also a good time to start building or repairing any of these relationships.

3. Seek independent advice

Family members and stakeholders are often too close to achieve a good result.  We find it works best when someone impartial outside of the family and experienced in dealing with rural matters is involved.  Their job should be to help open up the lines of communication and identify strategies to deliver the best results for everyone’s objectives.

Things that should be addressed are:

4. Create a plan and review it regularly

Once all parties are on board, ensure you have a clear course of action and who is responsible.  Set out your ideal timeframe and expectations of those around you. Seasons and circumstances will continually change so it is vital that the plan is reviewed regularly.

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