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DAIRY NEWS AUSTRALIA // october 2011
news:succession planning
External advice aids smooth transfer Liz Cotton Seekingprofessional
advice from a range of sources and starting early are important factors in planning for the future of a family’s dairy farm business, according to an industry expert. Pauline Brightling, leader of Dairy Australia’s The
People in Dairy program, says planning for the future of a dairy farm business involves complex financial, legal and operational issues. “It is important to seek professional advice to deal with the complexity involved and to get a range of perspectives,” Brightling says. “Plans need to consider
the unique circumstances of the people and the business.” Brightling says there are numerous important issues to take into consideration when looking into succession including taxation implications and options, retirement income planning, personal risk management insurances and contingencies
(income protection and death cover), provision for active and nonactive family members, financial implications of transferring ownership of the business and people joining or leaving the business and appropriate structures. “Each adviser has their own area of expertise. Rarely will one individual,
Pauline Brightling
or a single profession, be able to provide all of the advice that is required.” Brightling says dairy advisers with human resource training specifically tailored to the industry are a great first option and The People in Dairy website (www. thepeopleindairy.org. au) contains a full list of advisers in each state. “These consultants can help with the people issues that occur on a dairy farm, as well as defining objectives, evaluating the business and exit strategies; reviewing financial implications; helping resolve conflicts and confusion; assist in employee transition management and help develop the business continuance plans and strategies. “They can also have input into the overall operations planning.” Accountants can assist with issues such as minimising capital gains tax, estate and other taxes for all parties. There are two professional accounting bodies, both of which represent accountants across a broad range of skills: the Institute of Chartered Accountants and the Certified Practicing Accountants Australia. “Given the regional basis of dairy farming, it is often the case that the accountants who have most experience in our industry will operate from regional centres,” Brightling said. “Word of mouth from other farmers or advisers may be the best way of connecting with the right professional accounting assistance for each individual farm business.” Financial planners can provide a broad range of financial advice. Advice can be given on investment strategies for personal assets outside of the business or for funds from the sale of
the business. The adviser can help develop an appropriate strategy for investment and retirement funding. Many financial planners can assist with Centrelink advice and insurance matters (income protection and death cover). Rural Financial Counsellors offer a free service to farm businesses under financial hardship on a range of issues; the federal government has announced that funding for rural financial counselling services will continue at least until 2015. A legal adviser can help the team chart a course of action by advising on legal issues as they arise. Once a succession strategy is determined, the legal adviser can play a key role in drafting partnership agreements, buy- sell agreements, employee equity agreements, create trusts and restructure corporate capital. A key role for the legal adviser is assisting with the development of the estate plan for distribution of assets upon the death of an individual. A bank or fund manager will have an interest in the impact of succession on the business debt and future performance. They may also play a role if financing is a requirement in the plan. “When planning for the future of the dairy business it is important to recognise ‘who owns what’ from a business perspective, and the level of equity each individual may have in the business,” Brightling said. “For some businesses this can be quite complex. “The ‘Taking Stock’ program can make this easier. You can either complete the Taking Stock worksheets, or have an accountant or external adviser do this for you. Follow the links from The People in Dairy website.”
Useful weblinks The Grains Research and Development Corporation has developed a comprehensive guide to succession planning titled: A Guide to Succession: Sustaining Families and Farms. It can be downloaded from www.thepeopleindairy.org.au Youth central has some resources to help manage your finances: www.youthcentral.vic.gov.au Rural Law on line has some excellent information and an online forum: www.rurallaw.org.au/resources/ FarmSuccessionPlanningForumReport.pdf The Conflict Resolution Network has a range of practical tips and reading materials (DVDs and CDs): www.crnhq.org