It's important to have a succession plan in place. Especially when it comes to families engaged in agribusiness, as asset protection and estate planning can often be a particularly difficult subject to navigate through.
Asset protection and estate and succession planning can often be a particularly difficult subject in families engaged in primary production businesses, such as viticulture, broadacre cropping, livestock production, and dairy for example. Much of the value of the estate is often in land, rather than “off-farm” assets, and inevitably one or more children may be involved in the business and reliant on an income from that business, and others may not be.
Ideally the trading aspect of the business will be conducted by a separate entity to the asset-holding entity, separating risk. Farm assets and non-farm assets can be held within separate entities outside of the estate, to ensure that control of the entity holding the farm assets can pass to a farming child, and the entity holding non-farm assets can pass to a non-farming child, reducing the risk of an inheritance claim.
Often however, farmland and vineyards may be owned personally, therefore falling into the estate on death and being susceptible to a claim.
To ensure that the farm assets pass to a farming child without issue, consideration should be given to ensuring that they are not within the estate but owned by a non-estate entity. Ordinarily a lifetime transfer of assets to achieve the desired restructure can have tax and duty implications.
However, we have successfully assisted many agribusiness clients, alongside their accountants, to put the appropriate structures in place, and to transfer assets into those structures using stamp duty exemptions for land transfers within family groups, capital gains tax reliefs, such as small business concessions and rollovers, and GST exemptions such the farmland exemption.
This Alert is intended as general information only. It does not purport to be comprehensive advice or legal advice. Readers must seek professional advice before acting in relation to these matters.