1. The primary outcomes of succession planning should be certainty for all parties and improved family relationships. Use the process to improve family relationships, not to have them deteriorate.
2. Start early. Many Australian farmers and business owners retire or semi retire after the age of 70. That ok, but the younger generation need responsibility, direction and certainty prior to that time.
3. An open mind and an open heart. All people and different generations have different ways of doing things. Be open minded and have regard for where people are coming from. Consider discussions from a first person “I”, second person “you” and third person perspective.
4. Communication, communication, communication. But acknowledge there is an appropriate time for succession planning (i.e. we do not recommend succession planning on Christmas Day).
5. Treat succession planning as a normal business process, and not a one off event. It should form part of annual business planning. I.e. develop a plan and review its progress and appropriateness annually.
6. A business or farm must be viable. Succession cannot take place when a business or farm is not viable. Doing so will bring reality to the joke that handing of a farm or business to the next generation is “child abuse”. Its just a joke, not an action item.
7. Provide financial security and certainty to the “first generation”. How sad that parents, having handed on assets must ask their children for money, or worse, suffer in silence. How terrible that a son or daughter may be placed in a situation where they are required to choose between education costs, basic necessity or their parent livelihoods. Ensure that the first generation are looked after first.
8. Hand over more than assets. Succession involves handing over management as much if not transferring assets.
9. It will take time. You can only move as a fast as the slowest person in the room. Be patient, and for many people succession planning represents life changing decisions.
10. It will cost money and probably more than you think. Succession planning usually involves project management, financing, property valuations and transfers, updating wills, consideration of personal insurances, possible legal agreements and the consideration of taxation and stamp duty consideration. When you sell a farm or business, the agent normally collects 3% to 5% commission, for just selling the asset.
Peter Debus is a director of PrincipleFocus NSW, a Chartered Accountant and Chartered Tax Adviser.
2. Start early. Many Australian farmers and business owners retire or semi retire after the age of 70. That ok, but the younger generation need responsibility, direction and certainty prior to that time.
3. An open mind and an open heart. All people and different generations have different ways of doing things. Be open minded and have regard for where people are coming from. Consider discussions from a first person “I”, second person “you” and third person perspective.
4. Communication, communication, communication. But acknowledge there is an appropriate time for succession planning (i.e. we do not recommend succession planning on Christmas Day).
5. Treat succession planning as a normal business process, and not a one off event. It should form part of annual business planning. I.e. develop a plan and review its progress and appropriateness annually.
6. A business or farm must be viable. Succession cannot take place when a business or farm is not viable. Doing so will bring reality to the joke that handing of a farm or business to the next generation is “child abuse”. Its just a joke, not an action item.
7. Provide financial security and certainty to the “first generation”. How sad that parents, having handed on assets must ask their children for money, or worse, suffer in silence. How terrible that a son or daughter may be placed in a situation where they are required to choose between education costs, basic necessity or their parent livelihoods. Ensure that the first generation are looked after first.
8. Hand over more than assets. Succession involves handing over management as much if not transferring assets.
9. It will take time. You can only move as a fast as the slowest person in the room. Be patient, and for many people succession planning represents life changing decisions.
10. It will cost money and probably more than you think. Succession planning usually involves project management, financing, property valuations and transfers, updating wills, consideration of personal insurances, possible legal agreements and the consideration of taxation and stamp duty consideration. When you sell a farm or business, the agent normally collects 3% to 5% commission, for just selling the asset.
Peter Debus is a director of PrincipleFocus NSW, a Chartered Accountant and Chartered Tax Adviser.
