Understanding your options
There is no single right structure for farm succession. The best approach depends on your family situation, tax position, and goals. Understanding the options helps you make an informed decision.
Legal structures for farm succession
Family Trust
The farm is held by trustees for the benefit of family members. Trusts provide flexibility in how and when beneficiaries receive their share.
Advantages: Asset protection, flexible distributions, potential tax benefits
Company Structure
The farm is owned by a company or the family trust. Family members hold shares which can be transferred, sold, or inherited separately from management control.
Advantages: Clear ownership shares, separation of management and ownership, easier transfers of part shares
Limited Partnership
Combines active management by general partners with investment by limited partners. Can allow non-farming children to participate financially without management involvement.
Advantages: Separates management from investment, tax transparency, flexible profit sharing
Direct Ownership Transfer
The simplest option: parents transfer ownership directly to the farming child. Other children receive inheritance through other means. Alternatively, parents sell part and gift part of farm. Farming child repays debt over time. Parents live on debt repayment and transfer the balance of their farm loan to the other children on the parents' death.
Trust considerations
If you have an existing family trust, succession planning works within that structure. The Trusts Act 2019 brought changes that may affect your trust:
- Trustee duties are now clearly defined in law
- Beneficiaries have enhanced rights to information
- Trustee selection is important for farming operations. The trustees' skill matrix ideally includes family, farming & financial knowledge.
Our Trust Review Guide explains what we examine when reviewing existing trusts.
Working with your accountant
Financial and tax planning is critical in farm succession. We work alongside your accountant to achieve the optimal financial & tax structure for a successful transition.
- Income tax implications on transfer
- GST considerations
- Income splitting opportunities
- Timing of transfers for tax efficiency
"We work with farming families and their accountants to find the right structure. The legal structure needs to work for your family, your tax situation, and your farm."