Transferring the family farm among generations

The pressures of modern farming, whether it be climate change, dynamic markets and new methods of farming are just some of the contributors to why it is important for farming families to make sure they have a robust plan for the future.

Often farming families will work with agricultural consultants or their accountant to formulate the families plan for the future. With improved health and longevity, it is common for these plans to have to now cover 3 or 4 generations of the family and cope with equitable arrangements for those both on and off the farm.

It is important that a family preparing for the future includes an experienced lawyer in those planning discussions — as well as the documents and actions that come out of those planning decisions.

Too often as a lawyer I see what goes wrong when not thinking about the legalities of farm planning. The wrong business structure leading to extra tax being paid, estate disputes, complicated family law settlement fights, Supreme Court applications about who owns what – this list goes on.

In contrast, working with farming families to devise and implement their ownership and succession plans is a much nicer way for me as a lawyer to work. There’s a lot of satisfaction in working with a family and their trusted advisers to navigate the future and make sure that everyone’s best interests are considered now and into the future.

In those matters, I regularly see that a sensible set up includes the transferring of farmland between family members or their businesses. You can imagine the type of things — that it makes sense for the kids to hold farmland that is adjacent to their other land, or for mum and dad to move into town and transfer the farm to the kids now.

When considering such transfers, it is essential to understand how the land is held, whether a trust or company has the power to complete the transactions you would like to have occur, and what kind of tax or stamp duty implications it will have. It is worth considering the benefits of transfers now as opposed to through inheritances.

It is also vital to have advice regarding what the stamp duty ramifications of such transfers will be and what stamp duty exemptions – such as the young farmers exemption or the family farm exemption — are available. I have seen situations where a family trust set up many years ago was not compatible with the family farm exemption, despite the controlling minds of the trust, being a mother and father, wanting to transfer their farm to their children. This meant stamp duty was payable when it otherwise could not have been.

So, if you are a farming family, while the day to day is tough, it is vital to not lose sight of the long term and think now about how to structure for the future. If you are already having that conversation with your advisors, make sure you include us as your lawyer, if you haven’t yet started the conversation, give me a call to have an initial chat.

Lachlan Edwards is an experienced business lawyer with a background in consumer, insurance, banking and finance law. you can call Lachlan on 0427 916 442.