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Keep farm viable for easier succession
21 Aug 2003
Careful planning is required when preparing to hand over the farm to the next generation, says Bill Beard, a director of RSM Bird Cameron Chartered Accountants in Ballarat. The transfer can cause tension within a family and even a breakdown of communication between family members. Succession is much more successful if it's achieved through careful planning than through a sudden event like death or illness.
Parents who are involved in two-generation farms have a range of different objectives to deal with, and sometimes these are conflicting: providing for their own retirement, treating all children fairly, and maintaining a viable farm for the next generation.
Financial security is vital for the older generation, but on the other hand the farm's finances can suffer if the parents hang on too long.
The challenge is to transfer a viable farm, as it's virtually impossible to hand on one that's an unviable business. However, parents should not feel guilty about handing on some debt.
Farming is different from other businesses in that the farm is also usually the family home, which creates some confusion between lifestyle and business decisions. For successful planning, tough decisions are often required involving the whole family but it's essential that everyone is satisfied with the result.
Weekly Times, 20/8/03, page 31.
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