There’s something quite special about farming families, particularly those whose relationship with the land is first and foremost a love, rather than business, affair. by JANICE HUGHES, DIRECTOR ASPIRING LAW

Of the hundreds of rural folk I’ve worked with over the years, many speak of guardianship, rather than ownership, of the land, together with an unwavering generational duty to pass on their acreage in an even better state than they received it in.

That’s not to say farmers aren’t astute and savvy – quite the contrary. It’s just that farming is often a different business beast all together: for many farmers, the land is their lifeblood, their lifestyle, their life’s work and livelihood. There’s no turning off the lights, locking the door and heading home at 5pm. When it comes to family-run farms, passions can run very, very deep, bringing an ongoing juggle of priorities – and personalities.

Keeping it in the family

Any family business brings its unique set of pros and cons. With farming, though, even further filial factors come into play, both on a day-to-day operational basis, and with longer-term succession planning. In short, trying to keep to the old "emotions and business don’t mix” adage in a family-operated farm is a pretty rough, perhaps nigh on impossible, row to hoe.

With a practical mix of good planning, sound, honest communication and regular reality checks, farming families stand the best chance of channelling their emotions into constructive, rather than destructive, outcomes for the everyday operations and longer-term succession. And, even if farming and family matters have gone, or are threatening to go, decidedly woolly, it’s never too early or too late to rein in difficulties.

I’ve seen absolute powder keg situations that looked certain to blow big time, not only diffused, but used as a springboard to better understanding and, ultimately, greater collective satisfaction and success.

Great expectations

Clear, well-articulated expectations. Good. Nebulous, non-verbalised expectations. Bad. Sounds so obvious, right? A large portion of the familial flare-ups I help farming clients work through are founded in quite conflicting aspirations, some of which only come to light when push comes to shove. Divergent goals can be tricky to manage at the best of times, but when they come unexpectedly to light amidst a pressure-cooker decision-making situation or when cashflow’s tight, both farm and family can rapidly come under significant stress.

There are way too many variables for a one-size-fits-all template for business or succession planning for farmers, especially when it’s a family affair. Just as no two farms or families are the same, neither can the plans and legal frameworks that underpin them be. The key is to, first, assess individual needs, then address financial security, control, and fairness, and, finally build that into a plan that reflects everyone’s reality. Make sure, then, there is a commitment to regularly and realistically reappraise and adjust it in line with changing circumstances and life stages.

Today, many farms are run under a company structure. Often that entity doesn’t exist in isolation, and operates alongside a myriad of further legal frameworks. By the time you throw in the likes of a family trust, wills for every family member, and relationship property protections, without proper management, it can become a pretty tangled tapestry that’s both complex and somewhat expensive to administer. Naturally, robust legal mechanisms need to be in place for everyone’s sake, but diligent administrative housekeeping can also help ensure everything stays streamlined, efficient and effective.

Money changes everything

A common issue is, not surprisingly, income. Over time, often the pie must cater for a few more segments to provide for grown children who are working the farm, together with their spouses and families.

This tends to coincide with parents starting to hand over the reins to the next generation. Particular care needs to be taken in planning for, and managing, this stage, including agreeing on, and setting, fair and realistic income levels for all parties – not least of all ensuring Mum and Dad aren’t relegated to a baked beans-and-toast existence in retirement.

It’s super important, in aligning farming and personal affairs, that each family member takes independent advice before committing to anything.

Exploring legal and financial issues from the different vantage points serves not only to protect everyone’s individual interests, but can also bring up innovative ideas and solutions that benefit all. It might just mean the difference between a cheery case of "a family that plays together stays together”, or a less-than-rosy "you can pick your friends, but you can’t pick your relations” quagmire.

Feedback, comments and questions are always welcomed – please feel free to e-mail me on [email protected].

T: 03 443 0900

W: www.aspiringlaw.co.nz

Janice Hughes is a director of, and senior legal adviser at, Aspiring Law. Please remember, this information is designed as a general guide, and should not replace specific legal advice on a particular issue.