#039 - What Most Graziers Get Wrong About Structuring for Succession

The first major mistake is relying on unspoken assumptions.

In many family farming operations across Australia, this is a common story.

Parents put in a decade of hard work building up the property and the business, and naturally, they want their children to continue the legacy.

They assume the children who stayed on the farm know the plan that eventually they will take over.

But too often, that plan is never actually spoken about.

The child assumes that their years of hard work on below market wages are building sweat equity that will be recognized when the time comes.

They're putting in the hours, handling the cattle in the heat, managing the fences, and they believe that this effort means that they'll inherit the family farm one day.

Meanwhile, siblings who have moved to the city or pursued other careers assume something completely different.

They figure that when the parents pass away, the farm will be sold and the proceeds divided equally.

It's just like any other inheritance.

They might not understand or even be aware of the work their sibling has put in on the farm, so each person is operating on a completely different set of assumptions, and no one is talking about it openly.

And this is a ticking time bomb.

I've seen it happen in many cases where the parents finally decide to step back, or a sudden health crisis forces the issue quickly.

All those conflicting assumptions collide at once, and the result is usually devastating.

Families end up in a bitter dispute that sometimes goes to court, racking up massive legal bills that eat into the estate.

The worst case scenario, the farm gets forced onto the market, sold off, and the family legacy is lost.

An example of this, I worked with a family cattle operation in Queensland where the eldest son had been managing the herd for over 15 years.

He assumed the farm was going to be his one day.

But when the parents suffered a stroke, the siblings who lived in Brisbane pushed for a sale, wanting their share in cash.

Without a clear documented plan, it ended in a long, painful legal battle that drained the family farm financially and emotionally.

That's why communicating the plan with the kids from the very beginning is absolutely critical.

If a child is going to commit their most productive years to the family business, often their twenties and thirties, they need to know what the end game looks like.

Are they working towards full ownership, a partnership, or just a manager's wage? You can't expect the next generation to drive the business forward if they don't know if they'll ever actually own it.

Without clarity, motivation can fade and resentment can build.

The key is to lay out everything early and keep the conversations going as circumstances evolve.