Walk a mile in their shoes
Identifying everyone’s needs and concerns
By Phillip “Dibbo” Dibben
“Five Steps for Succession Success is a collaboration between Kelly Kelly Legal and Financial Services SA”
“We knew we needed to have some frank discussions but we didn’t know how to engage with the whole family and manage the process calmly and respectfully. We decided to engage a professional to facilitate the process to create a neutral environment, and most importantly, give everyone a chance to have their say. I feel so relieved to have started the process and know that we are identifying the best way forward for our family and the business.”
One of the most important aspects of succession planning is identifying the needs of each family member – those who work in the farming business and those who don’t – it’s important to ‘walk a mile in their shoes’ to understand their feelings and concerns.
Succession planning is emotional and all encompassing. It should identify the needs of all parties.
Offering experience and understanding of the often-differing expectations and opinions which go hand in hand with succession planning, professional advisors, including your financial adviser and solicitor, can act as objective and independent facilitators able to open up and lead difficult conversations about the future of your family and your farming business.
A comprehensive succession plan should account for the personal needs of all parties and the future for your business, including:
- Business Outcomes – Succession planning should never be at the expense of the long term goals and profitability of the farming business, rather, a sound succession plan will work in alignment with business outcomes. Planning should always consider the long and short term strategies of the business such as managing growth, raising capital and managing cashflow.
- Needs for the retiring generation – Typically the net worth of the retiring generation is tied up in the farm and there is often little or no entitlement to social security pension benefits or superannuation savings that can support retirement or aged care needs. Succession planning should consider how retirement, and later aged care, can be funded without creating unsustainable debt for the farming business.
- Transitioning ownership to the next generation – Transitioning the ownership of land to the next generation is important and there are many variables, including the prospect of the land skipping a generation. Succession planning involves addressing inequity in the financial capacity for some generations to plan for the future, providing balance in the estate and providing a future for farming and non-farming children.
- Children and their spouses working in the farming business – Adequate remuneration, either monetary or equity based, for children working on the farm (which can often be unpaid) while considering their individual aspirations and own plans or expectations for the future of the business is an important matter in the succession process. Factors including family members who supplement their incomes through paid employment outside of the family business, concerns about lack of borrowing capacity or how to build a financial foundation off the farm for their own families and how the farming business will be managed in future, all need to be addressed.
- Children and their spouses not working in the farming business – Adequate provision and inheritance for blended families and children not actively involved with the farm also needs consideration. Family members excluded from the process can feel resentful and this not only causes friction between family members it can cause delays in achieving outcomes and at worst, costly legal action.
At Financial Services SA, we have a specialist skills in helping family farming businesses implement succession plans to make the most of their personal and business situation. Dibbo has been helping primary producers and family business owners in rural and remote locations for more than 30 years.
If you would like more information about starting the succession planning process, I invite you to contact me today on 08 8253 2906 or email info@financialservicessa.com.au.
Five Steps for Succession Success Articles
- Step 1: Setting Expectations Great expectations | A successful strategy for your family and your business
- Step 2: A Structured Approach Everyone at the table | We thought we were doing the right thing…
- Step 3: Identifying Everyone’s needs and concerns Walk a mile in their shoes | Planning a seamless transition from one generation to the next
- Step 4: Strategise What’s fair is not always equal | Horses for courses
- Step 5: Implementation Head in the sand about the future of your farming business?
Working in collaboration for a number of years, Financial Services SA and Kelly Kelly Legal offer insight and expertise in rural and family farming business succession planning. Accustomed to opening up meaningful discussions, we cut through technical-talk in favour of straight-talk, to offer integrated solutions that consider the often-complex nature of succession plans to incorporate business transition arrangements, wills and estate planning and retirement and superannuation planning.
The Kelly Kelly Legal team provide advice and representation across a broad range of legal areas including Deceased Estates, Employment Law, Family Law, Farming Leases, Liquor Licensing, Personal Injury Claims, Wills & Succession Planning, Commercial & Business Law, Conveyancing & Property Law and Criminal Law.
Succession Planning Case Studies: The McIntyre Family | The Jackson Family
This advice is provided by Phillip Dibben under Financial Services SA rural business consulting services.
Phillip Dibben is an MFAA Approved Credit Adviser, including SMSF lending, and is an Authorised Credit Representative with Riverland Lending Services Pty Ltd, ABN 37 1415 814 080 ACL 391835, and is licensed to provide advice in all consumer and business loans including equipment finance. All loans are subject to lending and approval criteria.
Phillip Dibben is also a financial adviser at Active Financial Management. Active Financial Management and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306.
This information does not consider your personal circumstances (including taxation) and is of a general nature only. You should not act on the information provided without first obtaining advice specific to your circumstances.