By Gearoid Condon
In looking at succession planning, many people look at the tax issues before looking at the main issues. Tax should facilitate the succession rather than drive it.
Succession is about securing the farm’s future and bringing about a sustainable income for both the retiree and the next generation, so it is a good idea to get everyone around the table to ensure everyone’s voice is heard.
Communicating this openly is important as is communicating it early within the process.
Ifac’s 10 steps for successful succession:
1. Clarify your goals.
2. Collect and analyse the information.
3. Assess your farm’s viability.
4. Explore your family options.
5. Liaise with your team of professional advisors.
6. Make decisions.
7. Develop and implement your plan.
8. Review your plan at least once a year.
9. Review and update your Will.
10. Ensure that the incoming generation to farm is happy with this plan.
Now you know the steps, what are the other considerations?
Decide when you plan to retire and how much, or little, you want to be involved in the business.
Suitable and Willing Successor
Once you identify who you want to take over, a timeline of when this will happen should be created.
No Successor? Other options include skipping a generation, a partnership or even selling out.
Evaluate if the business can provide adequate income for both the retirees and the new generation.
Consult with your family, employees and any other relevant parties to the business.
Making sure everyone understands the plan early on is crucial to a seamless succession. Be sure to seek professional advice to ensure you are maximising your structure and planning.
Have your Will, Enduring Power of Attorney and Living File in a secure place and ensure others know where to find them.
Allow for unanticipated events such as divorce, illness, accident, death or disaster.
Have you considered insurance cover for any of the above?
Succession is a tough task but is something that if addressed properly and if taken time all the challenges can be met.
Gearoid Condon is a partner at IFAC Ireland