Only 40% of farmers have succession plans, says survey

Research into succession planning revealed only 40% of farmers have an effective plan.
Research into succession planning revealed only 40% of farmers have an effective plan.

Only 40% of farmers have an effective plan in place to pass the farm on to the next generation, according to a survey.

Despite revealing a low number of farms that have succession plans in place, most of those surveyed agreed that it was a vital way to safeguard the future of a family farm.

On May 29, NFU Mutual is urging farming families to get together for 'Succession Sunday' to start the discussions about plans to secure the long-term future of the farm.

The drive to get farming families to create a formal succession plan is supported with a social media campaign on Twitter as well as a series of animated videos designed to help get the initial discussions started.

The research revealed family dynamics are the main barrier to farmers starting conversations about succession. Families come in all shapes and sizes and each has its own way of dealing with planning for the future.

Sometimes avoiding potential confrontations or putting off tricky conversations might seem the right thing to do – but delaying these discussions can jeopardise everyone’s futures; being brave enough to act now will help clear up any misunderstandings and make decisions fair and transparent.

Some of the key challenges researchers heard included the difficulty of the conversation, farming businesses can only support one successor and the owner does not want or cannot afford to retire.

But the respondents to the researchers' questions acknowledged that creating a succession plan would help with tax, ensuring the future of the business and removing doubt and family tensions.

"Many farmers know they need to talk to family members about succession, but find it difficult to pick the right time," said Sean McCann, Chartered Financial Planner at NFU Mutual.

"A succession plan can play a big part in securing the future of the family farm.

"There’s a risk that putting off planning for another day means that it can be left until it’s too late for families to put in place arrangements to maximise tax concessions such as Agricultural Property and Business Property Relief potentially putting their farm at risk.

"That’s why we are suggesting members of farming families get together on what we are calling ‘Succession Sunday’ to listen to each family member’s ideas for the business.

"Often meeting away from the farm with an independent intermediary on hand can reduce the tensions in what can be a very emotive subject.

"They can make sure that everyone has their say, and that the more difficult to talk about subjects get discussed.

"Involving your financial adviser and solicitor at an early stage means they can work together to help you identify options as well as potential pitfalls to avoid."