NOBODY lives forever and you can't take the farm with you.
These were the words of Andrew Beattie, the director of the consultancy business Proadvice, who spoke to farmers on the delicate subject of succession at a recent Grains Research and Development Corporation (GRDC) farm business update at Launceston, Tasmania.
"Succession planning will happen whether you are planning it or not ... it's a matter of whether you want to plan that process or just have it happen," Mr Beattie said.
He said families needed to seriously consider whether succession would occur the way they wanted, as well as the impact it would have on their farm, on their relationships and on wealth.
"Do something," Mr Beattie said.
"Don't just stick your head in the sand and let it happen, because ultimately it won't happen the way you want it to."
Succession planning takes time, and families need to integrate the process into their business from the earliest stage.
"The more time you take in the planning process, the more choice you have in the way that you do it," he said.
"And the more likely you are to get there with a reasonable outcome that won't cost you a whole lot of money."
Mr Beattie said the key piece of advice he could offer families starting their succession plan was to take as much time as possible.
He offered an example of a succession planning and estate transfer model (pictured), which outlined that farmers must first and foremost identify the ground rules of the decision-making, as well as discuss and define individual objectives.
Once that was done, the family should then explore all options and possible strategies for succession.
This included "what ifs", which could range through death, divorce, disease, disability and disagreement, to name a few.
He said if families completed their plan without considering all possible scenarios, this almost always led to disputes.
"One of the key things is to separate succession and estate planning; they are linked, but need to be treated separately," Mr Beattie said.
"You need 15 years to put a good succession plan in place in terms of going through the process."
He said having some level of flexibility in the plan was important too.
"You need to have a balance of some certainty - and a bit of flexibility to deal with change," he said.
"But before assets and land are divided up, you need to absolutely understand that things can change.
"Assets will move at different times and shares will move up and down.
"Education is the key."
As a case study for his discussion he used a Victorian farming family who had recently been through their succession process.
The parents were fourth-generation farmers who had two adult sons, both whom had worked on the property.
At the time of setting up their plan, one son wanted to work on the farm and the other son was working off-farm.
The parents were slowing down and spending less time on the property and the child who was working on the farm wanted to know what was going to happen in the future.
Mr Beattie said they then organised for a succession meeting to be facilitated in an effort to set up an agenda.
"They basically did the whole plan in one day," he said.
"They wanted security for the parents, a viable farm and equal distribution of assets."
Along with the farm, the family had some non-farm real estate and a small amount of debt.
"One son got the farm and business assets and a large debt, and he had to look after parents in terms of aged care," he said.
"The other son got some shares and real estate."
Everyone seemed happy with the outcome and the deal was signed off.
But eight years down the track there were some big changes which triggered a dispute.
So what went wrong?
Mr Beattie said the value of farmland shot up and the share market tanked.
"It really started to cause some concerns," he said.
"The farming son had also expanded so they had a case where one son was doing really well."
The other big change?
The parents had divorced.
"When you look at the 'what ifs' you have to look at many areas," he said.
"Emotional language started and there was a dispute between the siblings and the parents - no more happy Christmases."
He said families needed to remember that people mattered most in the plan.
"This family did not set down the ground rules on who decided what," he said.
A plan should be guided by family harmony, a viable farm, secure income for the parents, security for farm siblings and a fair distribution of assets in any estate plan.
"My general rule is whatever succession plan you have, that should be played out," Mr Beattie said.
"Look at all the eventualities and have a process that allows that plan to occur."
Documentation was vital, too, because people's memories could fade.
"The minutes of meetings need to be reviewed and initialled," he said.
"Have a strategic plan and get your wills updated."
And the most significant piece of advice?
"Succession is a journey, not a destination," Mr Beattie said.
Make you you check out Stock & Land's 'Start the Conversation' feature in next week's paper. This will be followed by an online forum on September 26, from 2-3pm, where readers will get the chance to ask the tough succession questions to experts.
