Succession and Estate planning in a family farming business is a complex and sensitive matter that has the potential, if not done properly, to tear families apart. This is partly due to farming combining business with family.
Succession planning involves considering the needs of retiring parents, the next generation of farmers who intend to take over the farm and their siblings who will not be farming in the future.
This joined with each sibling’s partners can be a difficult combination to work with and formulating a plan where everyone is happy takes time and effort.
Recent litigation in South Australia between farming families has almost undoubtedly been due to the absence of a clear, early implemented succession plan.
In these matters’ informal agreements between father and son have been relied upon in determining how to split up the farm. Such informal agreements are often disputed, and a judge will spend a significant amount of time on deciding who to believe.
It is extremely sad to witness families fighting in court over farms, not just because families are torn apart, but because more often than not the farms wealth is depleted through having to pay hundreds of thousands of dollars in legal fees.
Communication is essential in succession planning in order to ensure that everyone is aware of each other’s future plans and goals.
Formal agreements are also vital; this can be done by getting a deed of arrangements drawn up. This adds a degree of confidence to any arrangements made rather than everyone involved having to rely on conversations held around the dinner table!
Kelly Kelly Legal has over 15 years of experience dealing with farm succession planning, our lawyers as well as outside professionals collaborate to achieve a smooth transition for farming families. Creating or updating a Will is only one of many steps required in a succession plan.
Please refer to our previous articles about farming succession planning below.
This article was written by Ben Heaslip.