David Foster Smart Law Harris Tate Solicitors, Tauranga

The process of transferring the family farming business from one generation to the next can be time-consuming, particularly given the challenges of dealing with and distinguishing between family and business issues.

As part of the process, communication with all family members is critical – as is obtaining advice and guidance from suitable professionals.

One important component of the succession planning process is reviewing existing legal structure of the family farm in order to ensure protection of family wealth that's been created during a lifetime, or generations, of hard work.

The family farm needs to be sheltered from potential challenges arising from, for example, the remarriage of a surviving spouse, disputes arising between family members on the death of a surviving patriarch or matriarch, or upon distribution of assets to the children – not to mention protection from government policies, whether now or upon death.

In addition to these asset protection advantages, a well-designed structure will provide for the succession plan.

An appropriate and robust legal structure will be created, or an existing structure reviewed and fine-tuned, with all the family needs and objectives in mind. A structure that doesn't take the needs and objectives of all family members into account is, perhaps, doomed to fail from a succession planning perspective.

Your lawyers may be able to assist with the facilitation process and provide the necessary expertise to create a strong foundation for each family's unique succession plan.

The key objectives include prioritising:
1. The protection and maintenance of the surviving spouse's financial and emotional needs, including ease of access to capital

2. Providing for the succession for one or more of the children

3. The fair treatment of non-succeeding children.

At Harris Tate, we're experienced in creating and managing the correct process.

We also understand the need to work closely with other necessary specialist professional advisors to advance to desired outcome.

The legal structure will include clear written guidance as to how the succession plan will operate and also provide the necessary flexibility so it can be reviewed regularly to ensure any changes in circumstances – whether personal, or in respect of profitability or viability of the farming enterprise itself – are taken into account.

Planning the future direction and transfer of the family business should start as soon as possible – it will maximise and protect the value of the family business.

The emotional and financial costs of getting the process wrong, including not having the appropriate legal structure, are extremely high and could potentially lead to costly and time consuming litigation – which could be avoided with some proper planning and structuring.

David Foster is a director of Harris Tate Solicitors, Tauranga.