Succession Planning for Farming Businesses
Farms, on the whole, are likely to have been passed down from generation to generation. However, there are plenty in the agriculture industry who make no succession planning. Farmers are too busy with the day-to-day running of the farm, and all the problems that entails, to consider what will happen in many years time.
Common succession problems may be:
1. The older generation is loath to pass on responsibilities to the next generation
2. There may be too many people trying to make a living from one farm
3. Differences of personalities within the family mean people can’t work alongside each other
4. More common now, there may be no direct relatives who want to take over the business
5. Some of the assets of the farm business are owned by all the partners but, for instance, the land may be owned by only one of the partners.
As a rule, the business should consider planning five to ten years ahead for a smooth transition. Advice should be sought, for instance, on the legal implications regarding the occupation of the farmhouse, as well as whether the older generation should remain involved in the business on a formal basis. There needs to be consideration for those members of the family that do not want to be involved in the farm but are entitled to a share in the value of the farm.
This is a very complicated legal area which needs specialist advice. At Green and Co, we have many years of agricultural experience with specialist knowledge in this field. Contact us before you plan to make any long-term changes to the business to ensure any tax liabilities are minimised.