Are your affairs in order?
Key Points
- Well-thought-out wills are an essential part of modern business planning and management
- Not having a will- or having an out of date will- can have severe, unintended consequences for the business and family members
- Business and estate plans should be revised regularly to ensure they reflect your goals and wishes both now and in the future.
Introduction
Death and taxes are often quoted as the only two certainties in life. However, many people proceed under the expectation they will be around in the old age to guide outcomes in their desired direction and underestimate the potential negative consequences of unexpected events. Modern farming business involve significant capital investments in land and other assets, and the associated debt levels are also often substantial. It is essential that farm business partners include in their business’s strategic plan what should happen if they become chronically ill, incapacitated or deceased.
Having these affairs in order can alleviate stress at a time when emotions are stretched and can avoid unintended consequences negatively impacting your business and the surviving family members. This fact sheet outlines the different ways wills, Powers of Attorney and estates can be managed as part of an overall business plan.
Illness and incapacity
Every adult needs to consider making an Enduring Power of Attorney which enables financial decisions to be made during a temporary illness or permanent incapacity. Most people who suffer from a sudden illness, such as a stroke, have no warning symptoms and do not have time to prepare an Enduring Power of Attorney.
The best time to make an Enduring Power of Attorney is when you are fit and healthy. Your spouse as your attorney is usually a practical choice; however, if your spouse is unavailable or not suitable, then you can choose one or more to act as the attorney.
Adult children, close friends or other family members with farming knowledge may be a sensible choice. They can act together or either one can sign documents. It is important to choose an option that best suits your circumstances and increases the likelihood that your interests and the interest of the business will continue to be served.
Death
Proper estate planning is an essential part of modern business management. Making an appropriate and valid will is the first step in estate planning. It is also important to consider your assets and how they are held.
As a starting point the questions you should consider are
- Is your land jointly held or as tenants in common? Is owned by a family trust, a company or superannuation fund?
- How are the assets of farming operations, such as machinery, plantain livestock, held? Is there a family trust or company involved?
- Are there enough non farming assets to be gifted to non-farming children? If not, is life insurance an option to provide for these children?
- Is there an ability to adequately pay the debts that I asked ending if there is a death or, if those debts are to pass with certain assets, were those assets be viable?
- Are there any tax implications that might occur? Generally, death doesn’t trigger any text be paid, but it can impact significantly on the beneficiaries of the will.
Summary
A well thought out will is the best contribution you can make to creating a sensible and fair outcome. It may not be perfect result, however no will, or out of date will, can be a nightmare for surviving family members and business partners. Wills are documents that need to be revisited regularly and this is particularly so when life circumstances change.
Talk to us for guidance when developing or renewing your business and estate plan to ensure they reflect your goals bad wishes, both now and in the future.