(Succession) Planning for peace of mind
Death is an unpleasant topic that most of us choose not to consider. Further, most of us consider ourselves invincible and free from serious injury or incapacity during our lifetimes.
However, death is one of the certainties in life and if given the chance, it is usually preferable to ensure that the benefits of our life’s work pass to those we love. Further, unfortunately, none of us are exempt from accidents or serious health events. Good succession planning advice can provide you and your family peace of mind in the event of your incapacity or death.
There are a variety of succession planning documents that can give effect to your wishes and intentions in the event of your incapacity or death. The most common of those is a Will.
“I’ll be dead, I don’t care” is a common statement made to succession lawyers. However, if you die without a Will (referred to as intestate), your assets may not go to those that you wish. Instead, the intestacy laws of your State or Territory determine how your assets pass on your death with an order of priority starting with your partner and then your biological children.
A Will saves you time, money and stress by allowing you to appoint a trusted person/s as your Executor (the person responsible for administering your estate and distributing your estate in accordance with your Will) and conveys your final wishes and intentions.
Ownership of assets
Do you know what you own? Do you know precisely how you own it? Before recording your intentions and wishes for the distribution of your assets when you die, it is important to take a step back and review your structure and understand the ownership, description and alignment of your assets (whether they are owned solely, jointly with another or by a corporate structure such as a partnership, company or trust).
In many agricultural operations, there is a common desire to keep the farm within those that have poured their blood, sweat into tears into the land, whether that is a member of your family or another. However, it is important to consider whether you have made any ‘promises’, and to consider if your promise creates an expectation or a legal right.
Any promises you make should be reflected in your Will to ensure it is not contrary to your succession plan (for example, your nephew works on the farm with you during your lifetime, and you have promised him the farm on your death but you don’t have a Will and in accordance with intestacy laws, your farm goes to your partner).
Business (not) as usual
It is important to not only consider the succession of your personal assets (in your Will) but also your business assets that you own or control through a partnership, company or trust. Business succession can provide you the comfort that your business endeavours can continue on your incapacity or death.
Further, business continuity is one of the most important succession planning considerations in agricultural settings. If you were to become incapacitated and unable to run the enterprise, do you know who can legally step into your role and run the operation (for example, who can give the authorisation to sell your produce to customers?).
Enduring Power of Attorney (Financial & Personal)
Do you know who would make financial and personal / lifestyle decisions on your behalf if you were unable to make them yourself, due to your injury or incapacity?
An Enduring Power of Attorney (Financial & Personal) is an estate planning tool that enables you to appoint a trusted person/s (known as your attorney) to make financial and personal / lifestyle decisions on your behalf.
If you do not nominate someone, and a financial or personal decision needs to be made for you, the person intending to make those decisions would need to get the approval of the Court / Tribunal to do so. This person may be someone who you do not wish to manage your affairs and can take a long time to get in place, which may be time you don’t have in an agricultural setting.
Appointment of Medical Treatment Decision Maker
Do you know who would make medical decisions on your behalf if you were unable to make them yourself, due to your injury or incapacity?
An Appointment of Medical Treatment Decision Maker is another estate planning tool that enables you to appoint a trusted person (known as your decision maker) to make medical decisions on your behalf and determine how medical treatment is administered or refused.
If you do not nominate someone and a medical decision needs to be made, the law dictates who makes those decisions. This person may be someone who you do not want to make these decisions.
Being well prepared for your incapacity or death can positively impact the well-being of you and your family. If you would like to review your existing succession plan to ensure it accords with your current circumstances and wishes, or would like to implement a succession plan, please contact our team for a confidential discussion today.
Macpherson Kelley is a national full-service commercial law firm with offices in Melbourne (Victoria), Dandenong (Victoria), Sydney (New South Wales) and Brisbane (Queensland) and also available for consultations via video conferencing.
Disclaimer: Whilst all reasonable efforts have been made to substantiate the information contained in this update, it is of a general nature only. Comments do not represent specific advice therefore you should not try to act on this information. If you require personal advice you should contact our office. No responsibility can be accepted if the information is incorrect or inaccurate. Please note this update is specific to Victorian laws.
Originally published 20 July, 2021.