Legal comment by Mark Illidge of Hinterland Lawyers

July 2005

While a popular press topic in recent times, many authors fail to go beyond the issue of who inherits rural land and the resultant family trauma.  There has been a lack of focus on the benefits of planning ahead to facilitate a workable transfer of assets and minimise disputes.  If you wait until the owner or part owner of the land dies, it may be too late to structure ownership of the farm assets in such a way that the assets or capital are easily transferred to the desired party or parties. 

While it may be a difficult subject to address, family members need to communicate to establish: the continued viability of the farm; who is interested in running the farm in the future; alternate uses for the property; whether retirement funding is required for an outgoing farmer/s; whether you need to cater for a widowed spouse; and what is fair and equitable for all family members.  With regards fairness and equity, if on the death of the farmer no provision is made for a surviving spouse, they are almost certain to consider a Family Provision Application (FPA).  Depending on the circumstances adult children, who are not left the farm, or anything else, may also bring an FPA.  Adult children could also bring a claim in equity if a promised inheritance of the farm is not kept in the will of the parent.

It is vital to determine how the farm assets are currently owned.  Some farms may have different entities owning the land, plant and equipment, and stock.  Many would also be tied up in partnerships or company or family trusts, which may have been established via uncertain agreements and poor documentation, and further blurred over time.  An independent valuation of any property that is the subject of an intra-family transaction is strongly advisable.  We also recommend that you seek integrated professional advice - get your accountant, your solicitor, and any other relevant advisers working together.

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