Work & Assets

Why farmers need a will

Family farms involve land, businesses, and generations of work. Succession planning is essential to keep the farm in the family.

⚡ The Short Answer
Farm succession is notoriously difficult — balancing the needs of farming and non-farming children, managing debt, and keeping the farm viable. Without proper planning, families tear apart and farms get sold. A will is just the starting point.

Farms aren’t just assets

For many farming families, the property represents:

  • Generations of family history and work
  • A way of life, not just a business
  • Most of the family’s wealth tied up in one asset
  • Ongoing livelihood for those who work it
  • Emotional attachment that goes beyond dollars

This makes farm estate planning uniquely difficult and uniquely important.

The succession challenge

The classic farm dilemma:

  • The farm child — Has worked the land, expects to continue, may have already invested their life
  • Non-farm children — Expect a fair share of what is often the family’s main asset
  • The farm itself — Can’t be easily divided without destroying its viability
  • Limited cash — Most wealth is in land, not liquid assets

⚠️ Reality: Poorly planned farm succession breaks families apart. Siblings end up in court, farms get forcibly sold, and generations of work are lost. This is avoidable with proper planning.

It’s not just about the will

Farm succession requires more than a will:

Lifetime planning:

  • Gradual transfer of control and ownership
  • Training the next generation
  • Reducing expectations for non-farm children
  • Restructuring ownership progressively

Business structures:

  • Multiple entities (farming company, land trust, operating partnership)
  • Leases between entities
  • Asset protection for the farm
  • Flexibility for succession

Insurance and off-farm assets:

  • Life insurance to provide for non-farming children
  • Superannuation as a separate inheritance
  • Building assets outside the farm

Your will wraps up whatever remains after lifetime planning.

Equal vs fair

“Equal” and “fair” aren’t the same thing on a farm.

Equal approach:

  • Each child gets the same dollar value
  • Often requires selling the farm
  • May leave no one able to continue farming
  • Treats farm child’s years of work as “nothing”

Fair approach:

  • Farm child receives the farm (at less than market value, or with conditions)
  • Non-farm children receive other assets, life insurance, cash
  • Acknowledges different contributions and needs
  • Requires honest family conversations

🇦🇺 In Australia: Family provision claims mean any child can challenge a will if they feel inadequately provided for. Fair treatment and documented reasoning can help defend your choices.

CGT and farm succession

Capital Gains Tax significantly affects farm succession:

Small business CGT concessions:

  • Up to $500k lifetime retirement exemption
  • 15-year exemption for assets held 15+ years
  • Active asset reduction (50% discount)
  • Rollover relief when transferring to family

These concessions can dramatically reduce or eliminate CGT on farm transfers — but they have strict eligibility rules. Get specialist tax advice.

Primary producer concessions:

  • Averaging of income
  • Farm management deposits
  • Specific deductions and depreciation
  • Water rights and entitlements

Debt and viability

Many farms carry significant debt:

  • Mortgages on land
  • Equipment finance
  • Operating lines of credit
  • Water purchases

Your succession plan must address:

  • Can the farm support this debt under new ownership?
  • Should debt be paid from insurance before transfer?
  • Will non-farm children inherit debt obligations?
  • Is the farm viable as an ongoing concern?

Living arrangements

Farm estates often involve multiple generations:

  • Parents who built the farm
  • The farming child’s family who work it
  • Retired parents living in the homestead

Consider:

  • Right to reside for retiring parents
  • Separate titles for residences vs farming land
  • What happens if circumstances change

Water rights and entitlements

In many areas, water is as valuable as land:

  • Water entitlements may be separate from land
  • Can be sold or transferred independently
  • Have their own tax treatment
  • Critical to farm viability

Your will should specifically address water rights.

What to do now

  1. Start succession planning early — don’t leave it to your will
  2. Have honest conversations with all children about expectations
  3. Understand your farm’s structures and how they interact
  4. Get specialist advice (rural succession lawyers, farm accountants)
  5. Consider life insurance to provide for non-farming children
  6. Review CGT concessions and how to maximise them
  7. Make a will that complements your overall succession strategy
  8. Document your reasoning (letter of wishes)

💡 Start now: Farm succession planning takes years, not weeks. The earlier you start, the more options you have. Waiting until you're too old or sick to farm destroys value and options.

Related: Estate Planning for Business Owners · How to Choose the Right Executor