Succession planning, when and how to start the discussion
Succession planning is a complex but necessary process which many graziers will have to go through at some point in time, if they are setting up their current property to be taken over by their eager children or purchasing more land to add to the family asset portfolio. Some find it a tricky process to navigate when both financial and emotional decisions need to be made. To make the topic a little bit easier to talk about we have reached out to trusted land valuer Roger Hill from Herron Todd White and rural financial broker Brecken Curtis from SproutAg Longreach, to gauge their expertise and thoughts on the subject.
When asked about the topic of succession planning, Mr Hill said that coincidentally in the most recent property cycle he saw a lot of people purchasing land for the purpose of succession planning. With interest rates at an all-time low, it’s not surprising. Mr Hill believes that he has seen many positive acquisitions occur when graziers use succession planning for expanding their business rather than basing a new purchase on emotional decisions.
Mr Hill advised that families should think strategically before handing over the family property to their kids, because interest rates have been low for most of the next farming generation’s lives. He stated that young people need to know how to manage finances, the way their parents had to when making repayments was a lot more financially demanding when interest rates were over 10%. Due to poor seasonal conditions for many years, a lot of young farmers about to take over family properties didn’t get this opportunity right after school like planned. Many went away and undertook university studies or completed trades. Thus, producing human capital which will benefit many family farming businesses in the future, due to having extra transferable skills and knowledge in more than one industry.
Understanding the complexities that come with succession planning means that doing your research and speaking to the experts is important.
Well-known Longreach local property owner and financial broker Brecken Curtis has offered some advice for succession planning, after years of experience helping families through very emotional decisions and times often filled with uncertainty.
Check out Brecken’s tips below.
What are your top 3 tips for managing on-farm finances?
Having a plan and some clear goals for the business. You need to know where you and your family are heading.
Having a budget and regularly monitoring how you are tracking towards that budget.
Keep on top of your statutory obligations – ATO, GST, PAYG and Superannuation.
RPL: Although every property/station is different, when do you think is the right time/most common time to start thinking about succession planning?
BC: Earlier than you think. The sooner you start nutting out the plan and putting it into place the easier it is to execute.
RPL: What is the most common issue for people trying to complete succession planning and how can families ensure this is a smooth process?
BC: Communication is key. Understanding everyone’s intentions and considering where everyone is heading for their future is key. Open communication with all members of the family is vital to making succession planning an effective transition.
Although it seems like a scary topic, we often see many property owners wishing they had prepared better for property or business succession and started the conversations with key stakeholders earlier. Even getting your property valued or talking to an agent about what the market is doing is a great way to start the process!
RPL: Wally Cooper
Sprout Ag: Brecken Curtis
HTW: Roger Hill