Planning for intergenerational success
March 2024

Planning for intergenerational success

To be able to pass on a family legacy to the next generation is one of the most satisfying accomplishments.

A succession plan will provide a farming family with the path towards ensuring their long-term sustainability and success. Without a plan, families can stumble.

Setting out how to transfer ownership and management responsibilities from one generation to the next, a well-thought-out succession plan shows the family how to navigate the complexities and challenges that arise when it is time to pass down the business.

A succession plan starts with determining who takes over the farm, also taking into account financial preparedness, legal considerations, communication between family members, and conflict resolution. An effective plan aims to create a smooth transition with minimal conflict, therefore assuring the continuity of farming operations.

Why succession planning is important

Succession planning makes good sense for several reasons. 

First, it allows the current generation to secure their own financial future and plan for retirement. By formulating a clear succession plan, one generation can confidently pass on the farming business to the next, and ensure its continued success.

Second, succession planning helps preserve the family legacy. Farming families invariably have a deep connection to their land and want to see it thrive for future generations. For most the overarching goal is to hand the farm over in better shape than when they took it on. Through proper planning a family can ensure that the values, traditions, principles and practices passed to them by their forebears are faithfully continued by the next generation.

Finally, succession planning provides stability and peace of mind for all family members. By addressing potential conflicts and establishing clear roles and responsibilities, families can avoid the tension that can arise during a transition. This enables everyone to work together towards a common goal, fostering unity and collaboration.


While essential, succession planning comes with particular challenges. 

Legal complexity: Farming businesses invariably have intricate structures, including land, machinery, livestock, and other assets that need to be properly accounted for and transferred.

Sibling rivalries and generational differences: Not all family members are equally motivated or willing to take on the farm, which can create tension and disagreement. 

Financial considerations: Transitioning a farm from one generation to the next requires careful financial planning and analysis, which should include evaluating the farm’s financial health, assessing potential tax implications, and ensuring the retiring generation has adequate funds.

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Creating a successful plan

Creating a successful succession plan requires care, consideration and collaboration:

  1. Start early: Succession planning should begin well in advance. Smart farmers start thinking about their own succession as soon as they take over from the previous generation. Everyone involved needs sufficient time to discuss and understand their roles and responsibilities.
  2. Involve all family members: Even if they are not interested in taking over the farm, it’s important to include every family member in the plan. Ensuring transparency helps address any concerns or conflicts that may arise.
  3. Communicate openly: Effective communication should include regular family meetings and open discussions aiming to establish clear expectations and foster understanding and cooperation among family members.
  4. Seek external guidance: Someone neutral and respected by the whole family can be your most valuable asset in this process. They don’t have to be a professional: find that person and preparing your succession plan will become much easier. As the plan takes shape, professionals such as lawyers, accountants, rural property specialists and financial advisors, particularly when they bring relevant agricultural experience, will also provide valuable insights and ensure compliance with legal and financial requirements.
  5. Develop a timeline and transition plan: A timeline for the transition, outlining the steps involved, will provide clarity and structure. This includes setting goals, defining roles, and determining the best way to transfer ownership and management responsibilities.
  6. Prepare the next generation: Mentoring and training the next generation is crucial. Providing them with the necessary skills, knowledge, and experience will help them successfully take over the farm.
  7. Review and update the plan: Succession planning is an ongoing process that needs to be regularly refreshed as circumstances change. Adapting to evolving market and family dynamics requires flexibility.

Including the whole family
Involving all family members when making the plan will help ensure a successful transition. By identifying and leveraging individual abilities, families can assign roles and responsibilities to align with particular skills and passions. Those who don’t stand to take over the farm can play their part by helping address potential conflicts and ensuring fairness and transparency.

Effective communication is the cornerstone of a successful succession plan. Bringing all members to the table, and ensuring each has a constructive part to play, with clearly defined roles, responsibilities, and expectations, can encourage unity, collaboration, and shared responsibility, therefore establishing a strong foundation for the farm’s future sustainability and success. 

Structured facilitated meetings encourage everyone to express their thoughts and concerns, creating a safe, non-judgmental, comfortable environment for family members to reach agreement. Conflict resolution strategies, such as active listening, empathy, and compromise, can help resolve disagreements and find mutually beneficial solutions. In some cases a professional mediator or family therapist can provide guidance and support to navigate complex family dynamics.

External stakeholders
Establishing clear lines of communication with external stakeholders, such as lawyers, accountants, and financial advisors needs to be part of the process. Keeping these professionals appraised helps ensure the succession plan aligns with legal and financial requirements.

Financial and tax considerations 
Financial considerations play a significant role. Transitioning ownership and management needs to ensure the financial well-being of both the retiring and incoming generations, starting with evaluating the farm’s financial health through a thorough analysis of assets, liabilities, and cash flow, assessing the business’s profitability and sustainability, as well as any potential risks or challenges that may impact financial stability. 

Transferring ownership and assets can have tax consequences. Professional advice will assist comprehending these, including developing strategies to minimise any liabilities.

Financing is often a challenge. Finding adequate funds to compensate the retiring generation while also resourcing the next generation to take over the farm might involve options such as loans or grants to ensure a viable financial plan to support the transition.

Insurance is another important consideration. Appropriate cover can protect farm assets and provide financial security if unforeseen circumstances, such as accidents, natural disasters or health issues occur.

Through careful evaluation of the farm’s finances, understanding tax implications, securing adequate finance, and putting suitable insurance cover in place,  families can ensure a smooth and viable transition.

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Our Experiences

Need to be fair
I’ve worked with several families to help them successfully execute succession plans. 

One particular family established offspring in separate substantial farms, where they are already planning their own succession through the likes of off farm investment. While the plan doesn’t necessarily need to treat everyone as equal, it does need to be fair. You might have one sibling on the farm all their life, while a couple of others prefer to go out to develop non-farming careers elsewhere. If the succession splits the farm three ways, that is likely tough on the sibling who stayed home working for wages, and therefore might have nothing much to show for it compared to the ones who left.

When nothing is done to make a plan you hear of absolute disasters. Failure to act risks dragging the family into the courts, decades of acrimony, and only the lawyers left with anything out of it.

From John Murray, PGG Wrightson Real Estate, Masterton

Becoming more relevant
Succession planning seems to be a growing part of the business: it’s becoming more and more relevant as the average age of farmers increases.

In the dairy industry succession is easier. With greater revenue, more certain cashflow and the opportunity for the younger generation to become lower order sharemilkers, accumulate some capital, or borrow against an existing asset, there are options.

For those with sheep and beef farms, particularly smaller scale properties, succession needs to be focused on well in advance, maybe by diversifying investment off the farm as soon as possible.

Anyone I talk to, I encourage to think about this sooner rather than later.

From Andrew Patterson, PGG Wrightson Real Estate, Invercargill

A natural part of family life
It’s never too early to start thinking about your succession plan.

Families who are completely open about it make it work best. If talking about succession is a natural part of family life, that’s ideal: the same as ‘Where do we shift the ewes next?’ or ‘When are you going to bale the hay?’

Sometimes the younger generation might think mum and dad don’t want to talk about it: it’s almost a taboo subject, while the parents think their kids don’t want to crack the ice either. That can be problematic.

You need to make sure it’s not an intimidating subject: ‘This is what I’m thinking. This is my intention. I’d love to see your kids here one day.’ Having that conversation early, often and naturally, without putting any obligations on it.

Often initial succession discussions are better held in a friendly, comfortable environment, rather than a  professional’s office.

From Brent Irving, PGG Wrightson Real Estate, Dunedin

Professional support 

Although succession planning can be complex, professional advisors, such as lawyers, accountants, valuers, financial planners, and specialists in marketing rural property can provide personalised guidance, helping families develop comprehensive plans that align with their goals and circumstances.

For many, creating a team of trusted professional advisors will be the first definite step towards ensuring a successful and smooth transition to the next generation.

Explore similar articles in our most recent edition of the Property Express.

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