The age old handshake – the importance of formalising estate and succession planning for agribusinesses

Estate planning for agribusiness families commonly involves the protection, preservation and succession of legacy assets and a family’s wealth and assets when anticipated and unexpected life events occur.

It requires a multi-disciplinary approach, involving cooperation between lawyers, accountants, and financial, wealth and other business and succession advisors.

Estate planning is frequently associated with simply making a will. However, death is only one aspect of the estate planning process and a complete estate plan will prepare for a variety of potential life events, including:

Succession of family legacy assets;
Succession of the family business;
Loss of mental decision-making capacity;
Divorce and relationship breakdown;
Retirement planning; and
Manners in which to preserve family relationships.

As circumstances change, your estate plan also needs to change with it. Regular review and updating of your estate planning will ensure the arrangements you have in place are fit for purpose and meet the goals you are seeking to achieve.

What does an estate plan look like?

An estate plan should be tailored to the individual/family, depending on their goals and the structuring of their assets and wealth. Typically, in farming families, this will involve consideration of how the next generation may take on the family business and assets and/or planning for the ‘off-farm’ children.

Most estate plans include a will to deal with a person’s personal wealth when they pass away. Other key documents include enduring powers of attorney and guardianship, and medical treatment decision making documents, in the event a person loses capacity.

Certain assets such as superannuation and life insurance require special consideration, as these may not be dealt with by a will.

As is typical of many family agribusinesses, a person’s wealth is generally held within structures such as partnerships, trusts and companies. The assets in these structures are not part of an individual’s estate, and generally specific legal documentation is needed to ensure that succession is dealt with appropriately.

Family business and/or agribusiness owners may also require arrangements in place to deal with exit from a business, whether planned or as a result of a life event. Careful and well considered succession plans are important processes to reduce the risk of disputes arising between family members and the next generation.

What is achieved by an estate plan?

An estate plan should, at a minimum, achieve the following:

protect assets during a person’s life from risk and wasting, so they can be utilised to provide for the person, their dependants and to sustain the family agribusiness;
ensure the right structures are in place for flexible and tax-effective administration of the assets;
pass assets to the right beneficiaries on death and in the right proportions;
appoint the best and most responsible persons to important roles, such as executors, trustees, appointors, enduring attorneys, and guardians;
ensure a smooth transition of control and ownership of the family agribusiness and its assets with minimum room for disputes; and
avoid unnecessary costs, taxes, or litigation costs.

How do I start my estate planning?

Every day, our agribusiness team works with agribusinesses of all shapes and sizes, spanning many different locations, to manage their legal needs and requirements, allowing them to start planning for a successful transition now or in the long term.

We have a highly experienced cross-functional team who will take the time to understand your agribusiness, your family dynamics and to deliver technically excellent legal solutions that you will understand.

Please contact Fran Becker, Partner, and Jack Conway, Special Counsel, from Hamilton Locke Private if you would like to begin a discussion about your estate planning.

Fran Becker