Friday, 07 August 2015 13:50

Farm succession best done in company

Written by 
Ian Blackman. Ian Blackman.

A company model tackles the farm succession problems common to all New Zealand farmers, says a Rotorua lawyer.

Ian Blackman told a recent Beef + Lamb NZ seminar on farm succession, in Gore, there is growing interest in the topic with the marked recent change in rural society. The seminar attracted 150 rural people from Southland and Otago.

Blackman says a company structure is the best way to ensure a good succession plan. This provides flexibility not possible in family trusts. 

Trusts have been popular as a vehicle for succession but Blackman warned of pitfalls. 

“Farms are often transferred to a trust for tax reasons, but succession is not about money only. Any small saving in taxation cannot compare with the emotional wellbeing from knowing you have a succession plan in place. It’s not about money.”

Failing to implement a plan is the biggest mistake farming families can make, he added.

Blackman says a company structure would see the company entity owning the farm assets, and the farm owner holding 100% of the shares. These would then be deposited in a trust and the farm owner could then create another trust for the succeeding child.

For succession planning purposes this created the opportunity over time to sell to the successor’s trust and shares in the farm company.

A farm owner’s preparation for a succession plan, based on a company model, need not start with a lawyer, but may be done at home “with a sheet of paper, a pencil and an eraser”. 

“You set out the things you want, in your own words. The eraser is needed because the farmer would not get the plan right the first time.”

Blackman says the plan should be reviewed annually to keep up with changing circumstances.  The company model is working all over New Zealand. 

“Production goes up and profitability goes up because every time 10% of the shares are sold to the son or daughter, the parents get 10% of the net equity of the farm.” 

Such a system benefits everyone, particularly the farming parents. “They want the joy of going into retirement, gradually selling the farm to the son and getting the capital off that to lend it to the other children. It’s meeting the needs of everyone.”

More like this

ETS will see more farmland lost

Beef + Lamb New Zealand (B+LNZ) believes the Emissions Trading Scheme (ETS) will see huge swathes of productive farming land converted into trees for carbon farming.

Beef and lamb exports looking good

Farmers affected by the drought and COVID-19 can take some heart from the latest forecast for sheep and beef exports for the 2019/20 season.



Limited feed puts ewes at risk

Severe feed shortages in parts of the country mean many ewes are on a nutritional knife-edge heading into lambing and could be at risk of developing metabolic disorders.

Jack’s unique solution

Jason Jack was left with severe spinal injuries after a wakeboarding accident when he was 29, but that hasn’t stopped him getting out and about in difficult environments.


A ticking time bomb

Our dairy industry risks being exposed to a ‘ticking time bomb’ of unethical players unlawfully passing off New Zealand-made and…

Nervous wait for winter

The unknown of what winter will bring is very much on the mind of the Hawkes Bay Rural Support Trust…

Be careful, Potatoes NZ!

Moves by the NZ potato industry to have anti-dumping tariffs imposed on European imports could play into the hands of…

China keeps dairy prices high

Whole milk powder (WMP) prices are now sitting above pre-Covid-19 levels and New Zealand farmers can thank a resurging Chinese…

Machinery & Products

Hydrogen excavator a first

While most motive industries are focused on hybrid or EV power plants, JCB has developed the construction industry’s first hydrogen-powered…

Jack’s unique solution

Jason Jack was left with severe spinal injuries after a wakeboarding accident when he was 29, but that hasn’t stopped…

HP and digital tech combo

The latest New Holland T8 GENESIS is said to capitalise on the productive combinations of Stage V horsepower and digital…

» The RNG Weather Report

» Latest Print Issues Online

The Hound

Spell check

Your old mutt was not surprised to see the NZ Dairy Industry Awards hastily remove the title of this year’s…

About time!

Your canine crusader has been a long-time critic of NZ governments – of all stripes – who, for the past…

» Connect with Rural News

» eNewsletter

Subscribe to our weekly newsletter