Plan ahead to save the family farm
AUSTRALIAN producers are being urged to discuss succession farm plans now, before it is too late.
More than half of Australian farm owners are over 55 years old, and a recent study of more than 350 families on the land conceded that the large majority hope to be retired within 15 years.
However, the study – commissioned by the Charles Sturt University and i n conjunction with the business advisory firm Chapman Eastway – also showed that despite an intention to retire, many farm owners had not discussed their property’s future with the next generation.
The report warns that those who do not prepare risk divorce, family fall-outs, farm sales and even court battles.
‘Australian Farming Families: Succession and Inheritance’ is available on line and offers a variety of tips and hints on how to roll the property from one generation to the next.
One family leading the way in succession planning is Bill and Sue Parsons.
The Parsons spoke to the Courier back in 2014, their farming plan already in full swing.
The family had taken charge of their fate and initiated round table discussion with both their children, Sam and Sally, and their respective partners and families.
They had also sought legal advice on how to make the transition fair for all involved, as well as to ensure it was a reflection on what all the Parsons family members wanted.
The Parsons are a leading example of how effective succession planning can be, with many who do not discuss the matter ending up in court.
Australian Farming Families: Succession and Inheritance also looks at intergenerational changes in attitudes towards family business ownership and how this affects succession planning, as well as the consequences of inadequate succession and retirement planning.
Chapman Eastway principal and chief executive officer, Sean Cortis, said the report highlights many critical issues farming families need to consider when developing a successful plan.
“The major findings of the report pivot around significant social and intergenerational change in rural Australia,” Mr Cortis said.
“We’re also seeing growth in the likelihood of divorce and the prevalence of non-traditional family structures.”
Mr Cortis said the report revealed that more of the younger generation is pursuing further education or taking a ‘professional detour’, such as a tertiary education or a trade, with the average age of those returning to the land being 27 years.
“Australian farms are generally not large enough to sustain more than one family, and we know that two thirds of successors are expected to work off farm to supplement farm income,” he said.
Unfortunately, the study also found that those who did not adequately plan ahead often found themselves in a position where the farm was sold off to avoid family conflict.
Professor in finance at CSU, Adam Steen, said the report provides helpful recommendations to the agriculture sector to support the handover of farm ownership.
“The current generation of farm owners remains largely reluctant to retire; a harsh reality when coupled with the fact that only 54 per cent of families surveyed possess a formal business/ succession plan,” Mr Steen said.
“One of the biggest issues highlighted is that farmers underestimate how easy it is to access sufficient funds for retirement.
“There is also a significant lack of understanding of the legal, financial and taxation implications of transferring farm assets.”
To obtain a free copy of the report, along with additional hints, go to http://www.chapmaneastway.com.au/wp-content/ uploads/2016/09/SuccessionReport140916.pdf.
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THE RIGHT IDEA: The Parsons family has pro-actively dealt with succession planning from the word go. Pictured are Bill and Sue Parsons with son Sam, daughter in law Rachel and grandson Angus.