FOR FARMING FAMILIES

Wills, powers of attorney and protecting your succession plan

Your succession plan and your estate plan have to line up.

If your will says one thing and your succession arrangement says another, your family could end up in court. The guide puts it plainly: this one can't be skipped.

The documents need a solicitor experienced in farm succession.

Wills and estate documents

• Does every adult in the family have a current will?
• Does each will reflect the succession plan? If not, update them straight away.
• Have you considered a testamentary trust to protect assets for beneficiaries?
• Is there a risk of a will being contested by a family member who feels unfairly treated? If so, get legal advice now, not later.
• Do you have letters of wishes alongside your will, explaining the reasons behind your decisions?

Powers and directives

These are the documents that count if the retiring farmer can no longer make decisions.

• Has the retiring farmer signed an enduring power of attorney for financial matters?
• Is there one for medical or personal matters as well?
• Is there an advance health directive, sometimes called a living will, in place?
• Who has authority to make decisions about the farm if the retiring farmer becomes incapacitated?
• Are these documents current, and do the people appointed know they've been appointed?

The agreements your option needs

• What legal agreements will your chosen succession option need? A lease, a share farming agreement, a vendor finance agreement, a shareholder agreement or a trust deed.
• Do you need a binding financial agreement, much like a prenup, to protect the farm if the incoming farmer's relationship breaks down?
• Are there clear exit clauses if the arrangement doesn't work?
• What dispute resolution process is built into the agreements? Mediation, arbitration?

The land itself

• Have you done a title search to confirm ownership and any encumbrances?
• Are there easements, covenants or caveats on the title?
• Are water rights attached to the land, or held separately?
• Are there environmental or heritage overlays that affect what can be done with the property?
• Are there any native title considerations?

When things don't go to plan

Every plan needs to answer one more question: what if things don't go to plan?

• What happens if the retiring farmer's health declines suddenly during the transition?
• What if the incoming farmer wants to leave?
• What if the incoming farmer dies or is disabled?
• What if a key family relationship breaks down?
• What if the farm has two bad seasons back to back?
• What if commodity prices collapse during the transition?
• What if a family member who agreed to the plan changes their mind?
• What if a family member's marriage breaks down and the former partner claims a share?

And the last one: what's the break glass plan if everything falls apart? Who decides, how quickly, and what's the fallback?

Write the answer down with the rest of the plan. You hope never to need it.

General information only

All of this is general information, and every situation is different. Before you make decisions, get qualified advice: an agricultural accountant, a farm succession solicitor and a financial adviser.

Take these questions to your solicitor, and let them tell you what yours needs.

The full guide, The Cultivate Farms Succession Guide, is free at cultivatefarms.com/resources.

You can build your own plan at cultivatefarms.com/plan.