Moving forward with succession

Families can be complicated. Not always, but often and particularly where there is a family business involved. In such cases it is not unusual for the bulk of the family wealth to be generated by the family business, say widget production, and often families are able to draw down profit from the business to invest elsewhere. The offspring that want to make widgets do so, those that don’t are allocated other assets.  BINGO! Both succession and inheritance issues sorted. Easy.

Then there is the farming family business which is unique in many ways.  Firstly the family assets are usually inextricably linked to both the business and the homestead.  Secondly the farmer lives in a constant dichotomy of striving for maximum profit whilst endeavouring to maintain the integrity of the land and pass it on in better heart to the next generation.  In a family farming business any ‘surplus’ money is often reinvested in the business, either by purchasing additional land, updating machinery or developing the farmstead. There is rarely any ‘spare’ to buy other assets or investments. So, what to do about succession and inheritance?

Let’s take another look at my old friend King Lear (Shakespeare 1606).  “Know that we have divided in three our kingdom; to shake all cares and business from our age; conferring them on younger strengths…”.  Lear announced that he wanted to plan his succession and asked each of his three daughters to declare their love for him. All they had to do was tell him how marvellous he was and how much they adored him and they would get at least a third of the kingdom.  But the youngest child, Cordelia, wasn’t comfortable with the task. She didn’t believe that she could truly demonstrate her love in words alone – “I am sure my love’s more ponderous than my tongue” and she fails to impress Lear.  He responds in a typically emotive manner – “Nothing will come of nothing, speak again.”  You all know how it ends – the kingdom is lost and Lear goes mad -  all because father and daughter were unable to say what they really thought.

When I am working with farming families helping to make a ‘succession plan’, I find Lear ringing in my ears.  One of the over-riding problems in helping sort out the future for a farming business is the family’s inherent fear of falling out.  Even where there is an identified and agreed successor to the farming business, there is often a lack of clarity about the role of any other, non-farming siblings. 

Will they inherit part of the farm and effectively be landlords to their sibling?  Will they inherit other assets or will these be required by the parents to keep them in their, hopefully, old age? Or will their lack of interest in the family business mean that they don’t inherit anything?  These are difficult subjects which lead to difficult conversations and families, understandably, tend to avoid them at all costs.  Once something is said, it cannot be un-said and emotion runs high when the stakes are high.  At the ripe of age of 52 there are still many things I find difficult to discuss with my father – we often automatically revert to a ‘parent-child’ relationship with one of us agreeing with the other just to keep the peace. It isn’t easy and there isn’t a farm at stake.

Lear and Cordelia are not unusual in modern day.  She knew her mind and she knew what she wanted to happen.  He knew his mind and he knew what he wanted to happen.  But they failed to communicate and it all fell apart. Throw in today’s often complicated family structures with step parents and step children and it can get really tricky. Succession planning sounds complicated and expensive.  It really isn’t.  Often I find that just having a conversation with clients helps to clear their mind, marshal their thoughts and clarify their objectives enabling them to move forward with a plan without my help.  Equally a few carefully structured hours with a family can help non-farming siblings to air their feelings, vocalise their fears and feel as though they have been allowed input into the future of the farm without any on-going responsibility or commitment.  When I trained with the Royal Institution of Chartered Surveyors as a Facilitative Mediator I gained great insight to dealing with emotional disputes. The most important issue is to keep an open mind, explore the facts and remain impartial.  It stands me in great stead with farmers! 

Louise Taylor is Managing Director of Taylor Millbrook and Partner in Barbers Rural Consultancy and specialises in Succession Planning.  Contact Louise on 01630 692500