20 Jul 2015

Farmers advised on succession planning

2:09 pm on 20 July 2015

Southern sheep and beef farmers have been advised about the importance of succession planning.

Solicitor Ian Blackman spoke to farmers in Gore last week as part of Beef and Lamb New Zealand's winter seminars.

Mr Blackman said succession planning was important because many people wanted to keep farms in the family and pass them onto younger generations.

But he said gone were the days where a farm was just passed onto the eldest child, and it was not always an easy process.

Mr Blackman said the owners of the farm should be the only ones who made the decision.

"Sitting around the table with all the children, I think is the wrong thing to do because it sends the wrong messages about who has to make the decision and how it's to be done.

"I have a strong view that the decision should be made by the owners, who are the parents.

"I've seen very messy situations if the advisors are telling them [owners] the only way to solve this problem is, as a first step, to sit around the kitchen table.

"In my experience that is a recipe for disaster and generally after five years the relationship between the family members deteriorate and there's no outcome."

Mr Blackman said farmers needed to educate themselves on how to choose professional advisors and how to put a plan together.

And he said as more farmers chose to run their farms as a company, that could help as well.

"Which gives them the perfect vehicle for governance, which is an important part of running a business. It also provides the parents with what we call transferability, which is an ability to over time sell shares in the farming company to the succeeding child for value.

"Thus ensuring it's fair to the non succeeding children because if it works that way successfully over 20 years, the succeeding child has literally purchased the farm.

"That has to be fair to the non-succeeding children, but also provides capital and financial assistance to the parents in their retirement."