Why Every Farmer Needs a Will…
It is so important to have a well-drafted Will, in order to ensure that upon your death, your farm, hard earned money, and other assets:
a) Pass to the people you want; and
b) Support your beneficiaries’ needs (such as a surviving spouse or children) in the way you want
We often hear farmers say, “But it’s too hard, I only have the farm”. Whilst initially, it may seem the case that your only asset is the farm, farmers often forget that they may have superannuation, with a large life insurance attached (sometimes which can be in the hundreds of thousands of dollars), which may be paid to their estate upon them passing.
There are also lots of ways in order to try to ensure each of your children receive a fair share of your estate.
a) Re-configuring boundaries to gift certain lots to certain children,
b) Implementing a right for certain children to buy the other children’s rights in the farmland for a certain price (a way to ensure the 'on-farm' children have a right to own the farm land and the 'off-farm' children get paid a sum of money and they take this as their inheritance to deal with it as they wish), or
c) Implementing a long-term leasing arrangement where the 'on-farm' children pay the 'off-farm' children a rent for use of the farming land which provides the 'off-farm' children an asset and an income whilst the 'on-farm' children continue to run the farming business and make a living from the farming business.
Losing a loved one is hard enough, without those you leave behind having to deal with the stress and complication of dealing with your affairs if you do not leave a properly drafted Will.
Also, a lot of people fail to appreciate that a Will is so much more than just giving away assets.
Executor: A Will allows you to choose and appoint one or more trusted persons to act as your ‘executor’. Their role is to collect all your assets (such as bank accounts, shares, insurance policies etc.), pay all your debts and distribute the balance to the beneficiaries in accordance with the directions laid down in your Will.
Guardian: Through your Will, you can appoint a guardian of your children that are under 18 years in the event both parents pass. Such an appointment is extremely important, particularly if you have specific views as to how you want your children educated, their religious faith and general upbringing.
Disposal of Body: You can express in your Will whether you want to be buried or cremated and any other specific wishes you have.
Business Structures: If you have any business structures (which are extremely common when running a farming business), you should consider these as part of your estate plan. For example, you may need to pass powers of appointment of family trusts through your Will, or gift shares in a company that operates the farming business, etc.
Not all Wills are made equal. You may like to consider including ‘Testamentary Trusts’ in your Will. A Testamentary (Death) Trust is, in essence, a trust contained in a Will. A trust is simply a relationship whereby a trustee (the manager of the trust) holds money and assets for the benefit of another person or persons (beneficiaries).
You can include “Testamentary Trusts” in your Will, which can offer considerable benefits by:
a) Minimising the taxation payable on the income payable to your beneficiaries from the inheritance;
b) Help to protect the inheritance, if any of your beneficiaries are at risk of being sued (ie. through being in business), are bankrupt (or could in the future become bankrupt) or have any problems managing money (e.g. spend thrifts, gamblers, alcoholics);
c) If carefully structured and drafted, they can also assist in the event any of the beneficiaries have a relationship breakdown; and
d) Ensure certain assets are preserved for the next generation.
Beware of ‘one size fits all’ Wills (such as post-office wills or wills from the Public Trustee) – as these may not suit your family circumstances. Rarely can a simple Will adequately deal with a farmer's succession planning needs.
This is similarly the case if you want to cut a family member out of the Will. Extra safeguards may need to be put in place to minimise the risk of the Will being successfully contested.
It is essential to obtain advice from a solicitor experienced in farming succession, to ensure your Will is well-drafted and your entire estate plan has been catered for (including any superannuation nominations, life insurance nominations, business structures and also putting in place an enduring power of attorney to deal with your financial and personal matters in the event you lose capacity during your life time).
Having your affairs in order can offer you considerable peace of mind, knowing your wishes will be carried out upon your death and your loved ones will be taken care of.
For more information please feel free to contact one of our team to discuss your individual circumstances.