family succession and planning for the future? just wondering how many of you find this a positive experience and have any tips and advice for others?

[WildHeather]

Hi morning all, sadly all we seem to hear about succession is horror stories and terrible tales of when things have gone badly but i always think for every bad experience there has to be at least two or three positive ones but we just don't tend to hear or talk about these!
I am privileged to work with many families all over the UK and overseas and it blows my mind the differences and the creativity that can come out of these conversations and experiences.
For me regardless of where you sit in the hierarchy and regardless of your age or seniority these conversations need to be had and the sooner they can be started the better, and ideally before there is fall out, health issues or financial issues as these definitely cloud our vision and change our perspective

 

[Blod]

Always an important topic though often uncomfortable for all sorts of reasons.

Like @WildHeather I also work in this “area” of business planning both facilitating families and businesses to be proactive and also as a qualified mediator.

I’ve mediated disputes arising from poor or no succession planning that have previously rumbled on for years, crippling the business and disrupting the family before it all comes to a head.

I enjoy mediating, its interesting and it pays well. Which is why you’re best bet is to get a good succession plan together with a facilitator then review it every few years to make sure it’s up to date.

Good succession planning isn’t just producing a Will allocating how the assets will be split after a death. It explores your options, acknowledges inputs and forms an agreement for the future of the business whether that’s a family farm or any other business with assets.

Get some help if it feels challenging - in Wales you’ve got Farming Connect Mentors (I’m on the list as a facilitator/mentor) and advisory services to support you.

 

[Thick Farmer]

I’m going through this currently and for someone as abrasive and confrontational as me, it’s difficult to watch my parents bumble their way through it.
It’s been a learning curve for me as realistically, I have to give them their own space to make these decisions as any ‘pressure’ from my wife and I is seen as us ‘trying to grab the farm’.
I fear that I have fallen into the trap of believing the promise that “One day...this will all be yours”, but who wants to inherit a farm when they’re 70?

 

[dinderleat]

It is a struggle I’m at the point where I need to know where I stand or I’m off we are only tenants but mum and dad see the farm as their own. I’ve tried to get some help to plan for succession but they have refused to have any advice. They have finally agreed to get someone in but it hasn’t been a nice experience to get to this point. Its very difficult when we are both at different points in our working life and finding a balance is difficult.

 

[Spud]

It is a struggle I’m at the point where I need to know where I stand or I’m off we are only tenants but mum and dad see the farm as their own. I’ve tried to get some help to plan for succession but they have refused to have any advice. They have finally agreed to get someone in but it hasn’t been a nice experience to get to this point. Its very difficult when we are both at different points in our working life and finding a balance is difficult.

Are you a partner of the business, or named on the tenancy?
Do you know what type of tenancy it is?
I echo Heather's points - I was very lucky, and knew what was what by the time I was 25, and with much more certainty from 30.

Happy to help if I can.

 

[George from SJM Planning]

Succession Planning is also starting to carry some weight when it comes to seeking additional accommodation on farms for example a second dwelling for the younger generation. We all understand how it can be beneficial but in broad terms it is against national planning policy but if a formal succession plan is adopted then these are starting to be recognised in the planning world.

 

[som farmer]

the biggest problem is the value of land, it has thrown 'greed' into the equation. My old man, assured me he had 'sorted' things out, and not to worry, he hadn't, and it's a mess 25yrs on. My side is sorted, or sorted as much as can be, before we finally sort out 'the previous mess'. If he had been honest, and said he hadn't, and he knew greed would surface, it could have been 'sorted' or, i could, and probably wouldv'e, moved on, instead we are stuck in limbo, with ww3 to look forward to, sometime in the next 10 yrs ! My advice to anyone farming with aging parents is, make sure it is sorted, or move on, otherwise siblings or the tax man will be the winners.

 

[dinderleat]

Are you a partner of the business, or named on the tenancy?
Do you know what type of tenancy it is?
I echo Heather's points - I was very lucky, and knew what was what by the time I was 25, and with much more certainty from 30.

Happy to help if I can.

Yes joint tenant with dad, and partner in the business with 33% share profit and capital. But was never discussed at the start. And only got answers when I’ve pushed, they treat it very much as their business which is fair enough they started it but I need to be able to push on and increase my capital in the business which they don’t want. Plus have made it clear they want 66% of profit going forward and they will decide what happens and when.
Im not asking to be given anything I just want to be in control of my life.

 

[Spud]

Yes joint tenant with dad, and partner in the business with 33% share profit and capital. But was never discussed at the start. And only got answers when I’ve pushed, they treat it very much as their business which is fair enough they started it but I need to be able to push on and increase my capital in the business which they don’t want. Plus have made it clear they want 66% of profit going forward and they will decide what happens and when.
Im not asking to be given anything I just want to be in control of my life.

You're on a better footing than most being joint tenant - at least you know it won't all come to a grinding halt if anything happens to your dad. Is there more than just two of you in the partnership? Three makes things much easier if one partner passes away, because two is still a partnership - one is sole trader, which means a change of entity and all bank accounts etc get frozen. After my dad died, my wife came into the partnership - it was to happen at some point, but dads passing was the catalyst to actually do it - both for the aforementioned reason, and to be more tax efficient.

Did / have you invested any of your private capital in the business, or has your share simply grown from whatever is left of your profit share after drawings?

When I first became a partner, I put my car in as collateral, and only drew the minimum. (I'd bought a house a few years prior, so had a mortgage and bills to pay) MY profit share started at 10% - reflective of the amount of responsibility taken at the time. As things developed, my profit share grew to 50%, with a longer term view that gradually I would take over and dad's share would decrease as he slowly stepped back. This was very fair to both parties, and essentially motivated me to build my share of the business for my and my families benefit, rather than that of my siblings.

I sold my house about ten years after I became a partner, made a few quid on it, and was able to put that money in the business, so that mum & dad could buy a bungalow, and allow my wife & kids & I to move in here. It was a work in progress at the time, but dad got his head around driving to work every day, mum was much happier (as was my wife) and it worked out well for all.

It helped enormously that there was essentially three parts to the business (both financially, and re responsibility). Potatoes (run by me) transport (run by dad) and the rest (pigs, cereals, beet, solar).
We both had our own areas of responsibility, where we basically had the final say in any discussions - we discussed lots, but were fortunately able to respect one another's opinions, and go with the decider, with no bitterness. The smaller enterprises were less significant anyway, but we had similar opinions re those anyway. It worked, and for that, I will be forever grateful.

How are your business enterprises and responsibilities divided up?

 

[flowerpot]

One problem is that there is no such thing as a retired farmer. The minute you say you are retired from farming, yet continue to live the in the house that you have been in for 40 years + you loose your agricultural reliefs. If you happen to live in a Georgian pile surrounded by its own land then everyone is thinking ££££ inheritance tax.

 

[Spud]

One problem is that there is no such thing as a retired farmer. The minute you say you are retired from farming, yet continue to live the in the house that you have been in for 40 years + you loose your agricultural reliefs. If you happen to live in a Georgian pile surrounded by its own land then everyone is thinking ££££ inheritance tax.

You don't have to be taking all responsibility and doing all the work though!

 

[dinderleat]

You're on a better footing than most being joint tenant - at least you know it won't all come to a grinding halt if anything happens to your dad. Is there more than just two of you in the partnership? Three makes things much easier if one partner passes away, because two is still a partnership - one is sole trader, which means a change of entity and all bank accounts etc get frozen. After my dad died, my wife came into the partnership - it was to happen at some point, but dads passing was the catalyst to actually do it - both for the aforementioned reason, and to be more tax efficient.

Did / have you invested any of your private capital in the business, or has your share simply grown from whatever is left of your profit share after drawings?

When I first became a partner, I put my car in as collateral, and only drew the minimum. (I'd bought a house a few years prior, so had a mortgage and bills to pay) MY profit share started at 10% - reflective of the amount of responsibility taken at the time. As things developed, my profit share grew to 50%, with a longer term view that gradually I would take over and dad's share would decrease as he slowly stepped back. This was very fair to both parties, and essentially motivated me to build my share of the business for my and my families benefit, rather than that of my siblings.

I sold my house about ten years after I became a partner, made a few quid on it, and was able to put that money in the business, so that mum & dad could buy a bungalow, and allow my wife & kids & I to move in here. It was a work in progress at the time, but dad got his head around driving to work every day, mum was much happier (as was my wife) and it worked out well for all.

It helped enormously that there was essentially three parts to the business (both financially, and re responsibility). Potatoes (run by me) transport (run by dad) and the rest (pigs, cereals, beet, solar).
We both had our own areas of responsibility, where we basically had the final say in any discussions - we discussed lots, but were fortunately able to respect one another's opinions, and go with the decider, with no bitterness. The smaller enterprises were less significant anyway, but we had similar opinions re those anyway. It worked, and for that, I will be forever grateful.

How are your business enterprises and responsibilities divided up?

Yes three of us, my parents and my self. No I haven’t invested any of my own savings mainly because I’ve only ever taken a peppercorn drawing (£600month) of which I was happy to do this as this would grow my Share. The little bit I did save went towards buying a house with my wife that we rent out.
I lived at home until we got married then my parents bought a cottage that we moved into of which the business rented but my wife and I paid all the bills. Then when our second child was due when wanted to move into one of the farm houses so mum and dad decided to move to the other house and I would move into the house at the dairy.
Responsibility wise I basically run the farm (Dad refuses to have a phone ) sort staff, order all inputs, sorting contractors and manage the dairy plus cropping decisions. Make future plans/direction of the business. This side of things works well With dad (I just have to remind him to tell mum) as he’s quite happy to let me get on with it.
One of the things this process has brought up is the need to have regular business meetings to discuss everyone’s feeling goals and ambitions.

 

[Spud]

Yes three of us, my parents and my self. No I haven’t invested any of my own savings mainly because I’ve only ever taken a peppercorn drawing (£600month) of which I was happy to do this as this would grow my Share. The little bit I did save went towards buying a house with my wife that we rent out.
I lived at home until we got married then my parents bought a cottage that we moved into of which the business rented but my wife and I paid all the bills. Then when our second child was due when wanted to move into one of the farm houses so mum and dad decided to move to the other house and I would move into the house at the dairy.
Responsibility wise I basically run the farm (Dad refuses to have a phone ) sort staff, order all inputs, sorting contractors and manage the dairy plus cropping decisions. Make future plans/direction of the business. This side of things works well With dad (I just have to remind him to tell mum) as he’s quite happy to let me get on with it.
One of the things this process has brought up is the need to have regular business meetings to discuss everyone’s feeling goals and ambitions.

Who does the paperwork?

 

[dinderleat]

Who does the paperwork?

I do most of it I just don’t pay bills or the vat.

 

[Spud]

I do most of it I just don’t pay bills or the vat.

Do you get involved in bank manager or accountant meetings?

 

[dinderleat]

Do you get involved in bank manager or accountant meetings?

Yes

 

[Spud]

Yes three of us, my parents and my self. No I haven’t invested any of my own savings mainly because I’ve only ever taken a peppercorn drawing (£600month) of which I was happy to do this as this would grow my Share. The little bit I did save went towards buying a house with my wife that we rent out.
I lived at home until we got married then my parents bought a cottage that we moved into of which the business rented but my wife and I paid all the bills. Then when our second child was due when wanted to move into one of the farm houses so mum and dad decided to move to the other house and I would move into the house at the dairy.
Responsibility wise I basically run the farm (Dad refuses to have a phone ) sort staff, order all inputs, sorting contractors and manage the dairy plus cropping decisions. Make future plans/direction of the business. This side of things works well With dad (I just have to remind him to tell mum) as he’s quite happy to let me get on with it.
One of the things this process has brought up is the need to have regular business meetings to discuss everyone’s feeling goals and ambitions.

It strikes me that you either ought to be taking a much bigger drawing (like 5x + current level) or at least a profit share that mirrors a similar level (on average), particularly if you have siblings.

 

[dinderleat]

It strikes me that you either ought to be taking a much bigger drawing (like 5x + current level) or at least a profit share that mirrors a similar level (on average), particularly if you have siblings.

That’s the thing I don’t want to draw the money out I want to drive the business forward or start to pay my parents out.

 

[Spud]

That’s the thing I don’t want to draw the money out I want to drive the business forward or start to pay my parents out.

I've pm'd you

 

[thorpe]

not read this thread but i need help want my sons to have it all , mrs is safe i think but i am sure they would take care of her anyway. idont know who to ask for advice, land agent , idont trust poor advice on other matters. i think he works for himself only! solicitor is very good but im not sure. accountant might be the first call but this covid bu££ers everything , i like to talk face to face .