For many, the thought of succession planning can cause a lot of angst. The parents may worry about how to make things ‘fair’ between their children, on-farm kids may worry about taking on too much and off-farm kids may wonder where they fit into the equation.
But it is important that everyone realises that succession planning is not necessarily the end of one era and the beginning of another, it is just working out how the family business and assets are going to transition to the next generation.
A good succession plan should:
Ø Protect any family member that exits the business;
Ø Ensure the people who take over have the skills required and financial backing to continue to effectively run the business;
Ø In situations where the family business and assets are being transferred consider:
- any tax implications including the GST treatment, capital gains tax and whether the small business concessions apply; and
- any duty concessions available on any transfer such as the intergenerational transfer of rural land exemption; and
Ø Consider and include all family members even those who are not involved in the business, where possible, right from the beginning.
If transferring the family business and/or assets is not financially viable because of taxation or other reasons or is just not a good idea at the time, a great succession plan can also be achieved using a combination of estate planning documents such as a wills, powers of attorney and other family agreements.
A good way to start the process is to have a family meeting but whether this will be effective depends on how the family functions and what relationships are like.
If there are situations where a family meeting won’t work, you can talk to a trusted advisor such as an accountant or lawyer about what other options are available.
The hardest but most important step is getting started……
This article is general information only and should not be relied on without obtaining further specific information.