Understanding Succession Issues In Farms

After running your farm for many years, it may be hard to just get up and hand over to another person. It doesn’t make it easier if the person is part of your family. Nevertheless, there is need for you to properly plan how you will like to hand over and to whom.
Although it may be difficult, it is still necessary to have honest discussions with family members about your plans. The best time to start I immediately as you can never know when you may need to get a successor to take over. However there are a couple of things to be aware of when thinking of farm succession planning in Australia.
What you need to know
Unlike estate planning that focuses on the tax implications of transferring assets to a heir, succession planning is focused on the future leadership of the farm.When the main owner of the farm decides to hand over management to others, a succession plan is needed that includes;• Selling or transferring farm assets. This may be to a family member or to a third party. Considerations for any non family stakeholders should be clearly stated.• Include any procedures and processes for liquidating farm assets. This can include selling equipments, land and farm produce.• Options for expansion of farm through renting or leasing• Identifying a successor to take over the farm. This could mean selling, gifting or transferring the assets to the said person
Plan for the endIt is recommended that the owner have a desired end in mind if they are to succeed with the farm succession planning. There certain things to have in mind such as; whether you want your family to be involved in the farm, if you are ready to hand over to someone else, what you will be doing after you retire, the amount of financial resources you have available to sustain you after you leave.Since your farm is a business, it should be treated as one. Even if there is a family member who is interested in taking over from you, you should first be sure that they have the required skills. Think of your different family members and their interest in the farm.
Aim to get it rightWhen thinking of the farm succession planning always to do your best to get it done correctly. Most plans will fail because people fail to think of the risk involved. Consider the implications for limited cash flows, family disputes, improper estate planning and a host of other risks. it also applies to family business transition planning
That is why it will be better to get professional help early in the process. Get your banker, attorneys, accountants and financial planners involved. They should be able to guide you properly throughout the process.

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