Succession planning tailored to your family and business goals

By Kelly Morgan

“Five Steps for Succession Success is a collaboration between Kelly Kelly Legal and Financial Services SA”

When it comes to succession planning, it’s certain that one size does not fit all. Every farming family will have different goals and issues so don’t expect your succession plan to be the same as the farmer next door.

Successful succession planning is about putting in place a tailored strategy for achieving your family’s goals, be it funding aged care, achieving tax efficiencies, avoiding legal challenges or building a legacy for the future.

The goals of farming families often include personal wishes as well as targets for the farming business, so it’s important to seek professional advice to help you prioritise outcomes and understand the implications of different strategies. The outcomes described below may be available as part of a comprehensive succession planning process.

Outcome #1: Avoiding exorbitant aged care costs

“Sarah and John Keogh have built a successful farming business over the last ten years and their only son Tom has been an integral part of the business. When Sarah first became ill, John and Sarah knew they needed to seriously plan not only for their retirement, but also to fund potential aged care options.”

For the Keogh family, minimising the aged care costs and handover of the business to Tom are the key goals for their succession plan.

Aged care costs are increasing and can be complex to understand and without advice, you could end up paying more than you need to. Certain aged care fees are means tested through an assets and income test, and there are also ongoing fees, so you require strategies which enable ongoing cash flow to cover your needs.

Successful succession planning strategies for the Keogh family may include divesting assets in the lead up to retirement; or holding land as joint tenants with Tom, to reduce assessable income and assets for Sarah and John for aged care planning, assist with recognition for Tom, and prepare for the eventual transition of the business to him.

Outcome #2: Avoiding estate planning challenges through divorce

“I’d hate to think that all our decades of hard work could be undone in an instant if the farm had to be sold due to the failure of one of our kids’ marriages.”

There are strategies which can outline the fate of your farming business in the event of divorce, including the use of Prenuptial Agreements or Buy Sell Agreements.

A Prenuptial Agreement can specify particular actions, such as that an inheritance will not go to a spouse in the event of divorce. A Buy Sell Agreement is like a Will for the farming business in that you can specify individuals or trusts that are able to buy into the business and, importantly, inherit shares of a business. A Buy Sell Agreement allows you to nominate events (such as death, retirement or divorce of a shareholder) which may trigger a buy out of farming shareholdings, and allows you to outline where entitlements will be directed.

Outcome #3: Reducing tax liability

“I know we’ll need to transfer the ownership of the farm at some point, but we don’t want to be stung by a huge stamp duty or tax bill. This is what’s stopped us from taking action as yet.”

Successful succession planning is also about implementing tax effective strategies for the transfer of land to the next generation. One of the most successful ways to minimise CGT and stamp duty is through holding the land as joint tenants, which means the survivor of land will become the registered proprietor.

We can also help you understand land tax obligations and CGT implications for main residences and take advantage of available stamp duty exemptions, CGT and work with your accountant in relation to discounts or small business CGT concessions as part of your overall succession plan.

Outcome #4: Keeping the legacy alive. . . as per our wishes

“We just want to know that after we’ve gone our legacy will continue well into the future, not just for our kids but for our grandkids and beyond.”

There are many ways to ensure your assets will be distributed as per your wishes in a manner that avoids legal challenges and continues the legacy of your hard work for the future generations. Holding the farming land in trust and establishing a Family Deed is one way to keep the land for the benefit of your nominated beneficiaries. You can also establish binding death benefit nominations to distribute assets and benefits from your super or SMSF according to your wishes.

Succession planning truly is a case of ‘horses for courses’ and it’s vital to seek professional advice to tailor your succession plan according to your personal wishes and long-term goals for your business.

We have years of experience helping farming families achieve successful succession plans. Contact the team on 08 8664 1162 or email to discuss your succession planning requirements and arrange an obligation free appointment.

Five Steps for Succession Success Articles
Step 1: Setting ExpectationsGreat expectations I A successful strategy for your family and your business
Step 2: A Structured ApproachEveryone at the table I We thought we were doing the right thing…
Step 3: Identifying Everyone’s needs and concernsWalk a mile in their shoes I Planning a seamless transition from one generation to the next
Step 4: StrategiseWhat’s fair is not always equal

Working in collaboration for a number of years, Financial Services SA and Kelly Kelly Legal offer insight and expertise in rural and family farming business succession planning. Accustomed to opening up meaningful discussions, we cut through technical-talk in favour of straight-talk, to offer integrated solutions that consider the often-complex nature of succession plans to incorporate business transition arrangements, wills and estate planning and retirement and superannuation planning.

Financial Services SA is a multi-discipline professional services practice offering farm and business consulting, financial planning, specialist rural finance and mortgage broking. Financial Services SA has a particular interest in developing and implementing practical and achievable succession plans and integrated solutions to consider all aspects of personal, business and farming lives.

Succession Planning Case Studies: The McIntyre Family | The Jackson Family


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