Freddy is still in hospital but now feeling well enough to talk with Wilma and Pebbles about the farm and the future.
“I am a little better but I know that I won’t be actively farming our property any longer Wilma. If we want to carry on with the farm, you will need to lead the way and we need to put plans in place for the future,” said Freddy sadly.
“Freddy, you and I have wanted to put some good plans in place for the future for a long time but we have always put it off,” said Wilma. “Now it’s time to act to ensure our future is secure and to decide what is going to happen to our farming business in the long term.”
Just then, Pebbles, Freddy and Wilma’s lawyer daughter, and her brother Joseph arrived.
“You know Joseph and I would love to farm one day but right now we are both busy with off farm careers,” said Pebbles.
“I’m keen to continue farming for at least another five to ten years and then I hope one or both of you can take over the farming business,” said Wilma.
“There are a lot of farmers who are in a similar position to you,” said Pebbles. “Most farmers do not have a succession plan but many are thinking about it. Dad’s accident is a timely reminder to us all of how important it is to put a succession plan in place.
The first thing that you need to do is to make sure that the farming business is strong. That way it will be able to provide a good income for the two of you (even if you are not actively farming anymore) and also a good income for whoever is farming the land.
You should have a conversation with your accountant, lawyer and bank manager about your farming business and assess its strength now and potential for future growth. It is essential to have the right structures in place so that you can achieve your goals.
Once you are confident that the farming business can sustain both yourselves and the next generation, we should all have a conversation as a family so that we all understand what is important to us and where we might want to go with the farming business in the long term.
Fair is not always the same as equal. It might be that the fairest thing is for Joseph and I to be treated differently rather than you simply dividing the farm up between us equally. Once we all discuss together what we (and our partners) want for the future, we will have a better understanding of what is a fair outcome for Joseph and I.
Ownership and control of the farming business needs to be carefully considered. Dad, do you remember your friend Bill who stayed on the farm making all the decisions long after his son and partner had become the owners of the farm? Bill just wouldn’t let go and that caused a lot of friction in their family. And I have seen other families who have handed over day-to-day control (but not ownership) of the farming business to one child without discussing with them (or the rest of the family) about how ownership was to be structured in the long term. The result was a lot of frustration and loss of trust between family members.
Good communication is essential to a successful succession plan.”
“I feel better already just knowing that there is a way to sort out the future of our farming business,” said Freddy. “Not well enough to think that I will be doing the farming but well enough to have that conversation with our accountant, lawyer and bank manager. Thanks Pebbles, you always give us good advice. Wilma, I might even be well enough for some of your Belgium biscuits. I need to build up my strength so I am ready to make plans and put them into action!”
The content of this document is necessarily general and readers should seek specific advice on particular matters and not rely solely on this document.
If you would like more information on any of the topics in this document, please contact your usual Auld Brewer Mazengarb & McEwen adviser.