Top Tips for Succession Planning
14th February 2020
Succession planning is an important step for any farming family to take when looking to the future. However, there is often a sense of reluctance towards broaching the subject. There can be uncertainty around the process and many see it as a daunting task. However, this doesn’t need to be the case.
Members of farming families tend to have varying levels of involvement in the farm. Some family members may have put their heart and soul into the day to day running of the farm whereas others may not have been so hands on, or indeed involved at all. This can make it tricky to work out how to treat all of the family members fairly but in a way that isn’t going to affect the ongoing running of the business.
If you are the head of the farming family perhaps this worry has become something of a burden to you. You may put those thoughts aside and focus on the task in hand. However, it’s not likely to get any easier, and the burden won’t be lifted without taking action. You may already have noticed tensions rising within your family, which is inevitable where family members face uncertainty as to their future. Often they have their own family to plan for too.
You don’t need to work out the solution yourself before you speak to a solicitor. It can be really helpful to sit down with a solicitor and start going through the process. Even if you have more questions than answers, it’s good to make a start. A solicitor will be able to discuss your assets, your family situation, and then suggest options you may not have previously considered.
I’d always encourage farm owners to be open and speak about succession planning with the family, however I appreciate this isn’t always easy, and completely depends on the dynamic of your family. But misconceptions as to your family’s ambitions will not necessarily result in a satisfactory conclusion. Perhaps you are ruling out options that you think would upset your family, when those options have long been their expectation. Finding out their views, whatever they may be, will allow you to make an informed decision, and by including them in the process, they may be more accepting of the result, even if it’s not exactly what they were hoping for.
While every family has their own quirks and differences, the majority of farming families are going through similar experiences. There is no one right or wrong solution and everyone should have their own tailored plan to suit their own circumstances.
Succession planning should be a continual process. It’s not necessarily just about what you put in your will. It’s about what happens from now until then. For example, you may want to make changes to your business in a more gradual way, rather than just putting everything in your will and have a huge change on your death. It is often easier to have members of your family take on a greater role at an earlier stage while you slowly but surely step back. You should look at what you ultimately want to achieve – your end goal – then work towards this through in stages reviewing it as things progress. The more involvement and control your family have in the business whilst you are still there to oversee it, the easier it will be for them when you are no longer around.
By not having any kind of plan in place, inheritance laws may dictate an outcome that no one would have wanted. No matter how difficult you think it will be to find a solution, a solution of your choosing is better than one that is outwith your control.
A good solicitor will be able to talk to you openly about your situation while looking at all the options available in order to find a succession plan you’re truly happy with.
This article first appeared in The Scottish Farmer
The information contained in this newsletter is for general guidance only and represents our understanding of relevant law and practice as at February 2020. Wright, Johnston & Mackenzie LLP cannot be held responsible for any action taken or not taken in reliance upon the contents. Specific advice should be taken on any individual matter. Transmissions to or from our email system and calls to or from our offices may be monitored and/or recorded for regulatory purposes. Authorised and regulated by the Financial Conduct Authority. Registered office: 302 St Vincent Street, Glasgow, G2 5RZ. A limited liability partnership registered in Scotland, number SO 300336.
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