Succession & Estate Planning

Succession

Farm succession can involve individuals compromising their own individual personal aspirations to keep the ‘farm in the family’ and in part, this is dictated by the financial position of the farming enterprise.

A good starting point for many farm succession plans is a simple acknowledgement that parents are agreeing to the transfer of farming assets during their lifetimes and that this is often done to their financial detriment. Consequently, the transfer of assets during one’s lifetime is an extraordinary gesture that provides immediate benefits to their on farm children and their families.

This lifetime transfer of farming assets can be contrasted with most non-agricultural family business, where parents tend to sell their business to an unrelated party and use the proceeds to fund their retirement, with any remaining assets then left to children via their wills.

Therefore parents can have genuine concerns about their financial security in retirement and this concern can be heightened, where the farm will be paying for their retirement over time. 

Often a balance must be found between ensuring that retirement funding is guaranteed and taking into account that existing farm debt levels may need to be increased in the future as part of normal commercial farming operations. It at this stage parties often need to include their bank, accountants and financial advisors to ensure that the parties have a realistic understanding of what can be achieved within current equity levels.

This involvement of advisors can assist the parties in gaining a realistic understanding of the costs of retirement (which should include some consideration of potential future medical and care expenses) and once this is known, the parties can realistically work on finding common ground between the financial capacity of the farm to support retirement and still ensure the ongoing viability of the farming enterprise.

As lawyers, it has been our experience that it is at this stage that problems tend to surface because children that have joined the farming business with undertakings that one day the farm will be theirs, gain an understanding of the conditions of that transfer. 

These conditions may include providing ongoing retirement funding and being required to provide something for off farm children. Given the impact of any ongoing obligations, it is only fair that children working on farms should always be kept fully informed as to what undertakings they will be expected to abide by.

While each family farming succession plan is unique, the successful succession plans tend to be underpinned by three common factors. Firstly that planning commenced from the time a child contemplated entering into the family business, secondly that there has been full disclosure in regards to the parties’ wishes and intentions and thirdly that all parties have been prepared to compromise so that all participants were treated fairly and equitably.


Estate Planning

Estate Planning is more than just having a Will

It’s looking at your overall circumstances – financial and personal – and working out how best to plan your affairs so that your assets can be distributed as you wish.

It’s thinking about how to make sure that those you leave behind don’t pay more tax than they need to, and that they receive their inheritance in a way that gives them maximum flexibility to deal with changing tax and other laws.

It’s working out how to protect the interests of family members with special needs, and how to keep assets protected against threats from creditors, family law claims, and litigation from those who seek a bigger share of your estate.

And it’s about achieving peace of mind, knowing that you’ve done everything possible to put things in order for the next generation.

The members of the Pacer Legal estate planning practice work in the following areas: wills, probate and estate administration, superannuation and estate litigation.

Wills

If you die without a Will, your assets will be distributed according to a statutory formula. Even if your family situation is straightforward and your financial affairs are simple, there is every chance that this will not be as you would have wished.

As part of the estate planning process, we work with you, your accountants and financial advisers, to identify:

  • who should act as your executors;
  • what are the assets which will pass under your Will;
  • what other assets or financial resources do you have - for example do you have family trusts or companies, money in superannuation, insurance policies, or business interests through partnerships, joint ventures or other structures. Are there assets overseas;
  • how do you want your assets distributed on your death;
  • are there family members who need special consideration, and should have their inheritance dealt with in a special way to protect their interests;
  • how can the tax position of your estate and beneficiaries best be managed;
  • How can succession be addressed, for family companies and businesses;
  • might testamentary trusts provide valuable advantages for your beneficiaries.

Once we have a clear picture of your circumstances, we prepare a Will and other documents designed to achieve your objectives.

We also discuss “living” estate planning issues, and identify whether you need to put in place a power of attorney and/or power of guardianship to enable someone you trust to take care of your financial affairs, to make decisions about your medical treatment, and even to make lifestyle decisions for you, should you be unable for any reason to deal with these matters for yourself.

Superannuation

We identify your superannuation interests, and ensure that these are taken into account when preparing your estate planning documents. Superannuation does not automatically become part of your estate, and positive steps may need to be taken to ensure that your entitlements on your death go to those you wish to benefit.

If you have a self-managed superannuation fund, we work with your advisers to make sure that:

  • the fund trust deed is updated if required to support the strategy you wish to put in place
  • binding or non-binding death benefit nominations are in place as required
  • pensions are structured appropriately to achieve your objectives
  • entitlements are taken in the most tax-effective manner.

Estate Litigation

The Family Provision Act in Western Australia provides that certain category of peoples may bring a claim before the Supreme Court if they are not happy with what they receive pursuant to the terms of a will.

Importantly, we can discuss with you any aspects of your family circumstances which may ultimately result in claims being made against your estate, and help you to organise your affairs to minimise the prospects of such litigation being brought, or being brought successfully.

 

David Park

Director


Email:
Telephone:


dpark@pacerlegal.com.au
(08) 6315 0002



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Stephen Park

Director


Email:
Telephone:


stp@pacerlegal.com.au
(08) 6315 0001



Full Profile »

Melissa Adams

Senior Associate


Email:
Telephone:


madams@pacerlegal.com.au
(08) 6315 0066



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Patricia Walsh

Estate Planning Consultant


Email:
Telephone:


pwalsh@pacerlegal.com.au
(08) 6315 0013



Elizabeth Turton

Law Clerk


Email:
Telephone:


eturton@pacerlegal.com.au
(08) 6315 0004



Christina Ware

Principal


Email:
Telephone:


cware@pacerlegal.com.au
(08) 9964 6206



Full Profile »

Clare Venturini

Solicitor


Email:
Telephone:


cventurini@pacerlegal.com.au
(08) 9964 6206



Full Profile »

Ellie Gan

Solicitor


Email:
Telephone:


egan@pacerlegal.com.au
(08) 9185 2232



25 October 2018

Succession Planning and the Supreme Court

Read here about recent decisions in the Supreme Court in relation to succession planning.

Succession Planning and the Supreme Court (612 k)