Transitioning a viable farm business to the next generation

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.