In most cases the older generation will make the decisions on how their assets will be divided and who will take over the management responsibility of the farm.
These decisions will often be considered fair and reasonable if all family members understand the reasons behind those decisions and express their thoughts in the process.
Over the last 12 months, I have raised some of the basic principles that farming families could or should consider when making decisions.
- Dividing assets fairly and not necessarily equally
- The financial security, independence and peace of mind of all parties is crucial
- Farming children are often expected to pay for a share of the farm, how much is the question
- A timeline on when the management of the farm takes place should be clear and abided to
- Not spending money on the right professional advice can be penny wise and pound foolish
- The younger generation should know what to expect so they can plan for the future
- All children have equal rights
- Selling the farm and allocating the proceeds could just be the best option.
And to make sure that your succession and estate plans are in good shape, why not test yourself with the following questions:
- Do you have an up to date Will?
- Are you confident that your Will meets all your current wishes and intentions?
- Are you confident that your Will minimises the risks of being disputed or having a family member make an inheritance claim?
- Are you comfortable that your executors are capable of administering your estate in a timely fashion?
- Do any beneficiaries have special needs (disability, relationship problems, require asset protection, spendthrifts, gambling problems, substance abuse)?
- Have you considered what happens to your superannuation when you die?
- Do you have a valid Power of Attorney? If not, what happens to your financial affairs if you lose mental capacity? What impact will this have on any companies you are involved in?
- Who will control your trust or trusts (including self - managed superannuation) when you die or if you lose mental capacity?
- Who will run the farm if you die or lose mental capacity?
- Who should provide the funds if you or your spouse requires home based or residential aged care?
Having a good succession plan will allow the family farm to have a reasonable chance of continuing as a viable operation. Having no plan, avoiding discussions with the family or not seeking professional advice could well lead to the demise of your family farm.