Lack of succession plan putting thousands of farms at risk

Rural insurer NFU Mutual is holding Succession Sunday on May 29 to encourage farming families to get together and talk about the future of their business.

Rural insurer NFU Mutual is holding Succession Sunday on May 29 to encourage farming families to get together and talk about the future of their business.

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Farming families are potentially putting their future livelihoods at risk by avoiding difficult conversations about who will take over their businesses when the time comes.

The warning by rural insurer NFU Mutual comes as it launches a new initiative that aims to break down the barriers to families having frank discussions about their farming futures.

In a recent survey, around six of every 10 farming families admitted that they did not have an effective succession plan in place to protect their business in the long-term.

With another 64 per cent of farming families agreeing that they do need to take action to address succession, it seems there are plenty who know they need to have a plan in place but that they do not necessarily know how to confront what can be a delicate issue with other family members.

To address these situations, NFU Mutual is launching ‘Succession Sunday’ next weekend, on May 29, to publicly encourage families to sit around a table together and have those difficult conversations.

Action is urgent, according to the insurer, which said that the survey findings suggest that as many as 40,000 family farms are at risk - even though their main priority is to keep the farm working for the family.

Sean McCann, chartered financial planner at NFU Mutual, said: “Many farmers know they need to talk to family members about succession, but find it difficult to pick the right time.

“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.”

Having talks on neutral ground sometimes helps, Mr McCann said.

“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.”

To help families start talking about succession and then move on to bringing in financial and legal experts to help family members’ visions become reality, NFU Mutual is providing information on its website - nfumutual.co.uk - and will be using Twitter to help focus farmers’ minds on using Succession Sunday to break the ice on conversations about the future of the farm.

It has also developed a Succession Planning Service, delivered by specially-trained members of its financial adviser network to offer advice.

A series of seminars are due to be held across the UK throughout the year.

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