One of the toughest conversations farm families have to have is how to distribute farm assets after the senior generation has passed away. That conversation however, is a lot easier than the one on how a business is to be transitioned whilst everyone is fit and well!

As difficult as it is, it’s a conversation that farm families simply must have – and the sooner the better.

There are two major plans that every family business owner needs to consider. The ‘Dead Plan’ – otherwise known as your Will. People often tackle this plan quite easily and it is not uncommon for people to only consider this plan. However, the job is only half completed at this point.

The ‘Living Plan’ is how you would like life and work to turn out if everyone were to be around for a lot longer. This plan is more complicated and emotional, but it is crucial.

Farm families are very different because the major asset is often the farm itself. If one child is farming the land and the other children live away from the farm, dividing up, or selling the land is usually not an option.

If the land is divided equally among the children, the child farming the land may not have the wherewithal to purchase the non-farming siblings’ share. If the non-farming siblings’ land shares are sold to others, there likely won’t be enough of a land base left to support a viable business.

To Facilitate a Workable Solution

The senior generation ideally needs to do three types of planning:

  1. Estate Planning – who will receive the assets in the event of death?
  2. Succession Planning – who will run the business and who will own the business assets?
  3. Business Planning – will the business be viable, especially if the land is split up and sold?

These are critical questions to consider if you want the family farm to continue after you have passed away. Unfortunately, there is no ‘one size fits all’ right answer to these questions. Every family is different and the most important part is to communicate.

With good planning and great communication, farm operations can pass through many generations. It is a journey not a destination that every member of the family must commit to.

Please contact the team at Catapult Wealth for more information.