Recently, I participated in a Rural Succession and Continuity Roadshow that toured through Central Queensland. Together with colleagues from Anderssen Lawyers, Resource Consulting Services and The Entello Financial Group, we presented a series of seminars in Emerald, Biloela, and Rockhampton.
Succession Planning and working out how assets will pass from generation to another can be a topic that some people don’t want to think about. It can be quite emotional when you are dealing with family farms or enterprises that have been in the family sometimes for generations. One of the major issues that we dealt with during the presentations was the fact that it can be awkward about having these types of discussions with family members. Sometimes it requires the assistance of a rural consultant or facilitator to get discussions started and to provide some options moving forward.
As part of the Roadshow, we covered a number of topics including planning for the next generation, farm management and education programs to assist families in running and expanding enterprises, business structuring and estate planning and off-farm investment strategies to provide options for investment and expansion.
One of the aims of the Roadshow was to showcase the different issues that can arise when intergenerational succession planning isn’t put in place or is done so in a less than optimal manner. This can cause issues when one generation passes control to the next. Capital gains tax and stamp duty issues or poorly implemented family company/trust structures can cause nightmares when moving from generation to generation.
Another issue that is frequently experienced and was the subject of my presentations is the fear of control passing from one generation to the other and the possibility of family farming properties becoming the subject of property settlement claims on the breakdown of a family relationship. There are several estate planning strategies that can be used to avoid this happening. The most common is for Financial Agreements to be entered into between spouses which provides for what might happen on the breakdown of a relationship. These types of agreements can quarantine property or make provision for property settlement and maintenance entitlements on the breakdown of a relationship. I like to think of these types of agreements as an insurance policy. For the family that has contributed property, it can provide certainty about how family property will be treated on the breakdown of a relationship. For a spouse, it can provide certainty about what resources they will have available to them to rebuild and move on with life if a relationship breaks down.
Intergenerational succession planning has a number of facets that need to be properly addressed if they are to work properly. Working together with your accountant and other experts like specialist lawyers, consultants, and financial planners will help you achieve a workable succession plan and hopefully save you from having some sleepless nights.
First published in Border Living Magazine.