Generational transfer can culminate in the immediate withdrawal and retirement of the parents or it can start well before the older generation is ready to retire. A transition over 10 to 15 years is often beneficial.
Key points:
- Farm generational transition can start well before the older generation is ready to retire. Commence with the transfer of management responsibility. Asset transfer should be the final focus.
- Financial security in retirement for the parents is the first and most important objective.
- Generations farming together and sharing business profits and access to land can be an important interim step.
- If both generations are farming together during the transition the profit allocation can recognise the contribution and needs of each generation to allow independent financial growth.
- Transitioning a viable business to the next generation is the next step. For broadacre farms, business scale sufficient to achieve farm income of $500,000 per on-farm family is a starting point to determine business viability.
- Business health check guidelines can help to determine what business income, costs, debt and assets are required for a viable transition to the next generation.
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