Most farming families have already done the hard part. Two or three generations of early starts, bad seasons, borrowed money, and quite often land bought back off their own relatives at full price. The farm is still there because somebody wouldn’t let it go.
What far fewer have done is sit down and work out what happens to it next, and who ends up with what.
Succession is awkward because the sensible technical answer and the sensible family answer are often not the same thing. What looks neat from a tax point of view can cause a rift, and the split that feels fairest at the kitchen table can leave the place too small to be worth running. Working through that properly takes years, which is why so many families leave it longer than they should.
The conversation nobody starts
Ask a farmer when he’s retiring and you’ll get a joke about being carried off the place. Ask what the plan is and there usually is one. It just hasn’t been said out loud to anyone, including his wife in a few cases we’ve seen.
The trouble with a plan that only exists in someone’s head is that everyone else is guessing at it, and they’re all guessing slightly differently. The son who came home at 24 assumes the farm will be his. The daughter who went off to university assumes she’ll be looked after somehow. Neither has been told anything, so both are making decisions about their own lives based on something nobody has actually said.
The standard advice is to start five or ten years out because the tax positions, the finance and the family conversations all run on their own clocks, and none of them can be hurried along at the end. Leave it late and you’re reacting to whatever turns up rather than planning anything.
Fair is not the same as equal
The hardest question in all of this isn’t tax. It’s what to do about the child who doesn’t farm.
Splitting everything down the middle feels fair, and with a share portfolio it would be. Farms don’t work that way. Halve one and you’ve handed a share of a working business to somebody who doesn’t want to run it, while leaving the one who does with an operation too small to service the debt. Land that works as part of a larger operating farm can quickly become a lifestyle block once it is carved off on its own.
A better question is what each of them actually needs. The one on the farm needs the operating assets, which means land, stock, plant and the authority to make decisions about all three. The one off the farm needs something that works without a tractor attached to it, whether that’s cash, property or a portfolio.
Fair, in our experience, means both children end up with something that suits the life they are actually living. It very rarely means an even split, usually because the farm cannot support two or three families if the land is divided. The right answer depends on the scale of the operation, but in most cases splitting the farm into equal pieces weakens the very business the current owners are trying to preserve.
Which means the hard conversations have to involve everyone affected by the decision, not just the person currently making it.
The problem usually looks simple until you start pulling it apart
On paper, the family farm looks like one asset. In practice, it is home, workplace, business, retirement plan, family history and future inheritance, all tied up in the same paddocks. That is why these conversations are hard. You are not just deciding who gets an asset. You are deciding who gets the ability to earn a living, who carries the debt, who takes the risk, who gets liquidity, and who gives something up.
For the child on the farm, the issue is rarely just ownership. They need enough scale to make the business viable. They need control of the stock, plant, machinery and day-to-day decisions. They need confidence that if they commit their working life to the place, the goalposts will not move later.
For the child who is not coming home, the problem is different. They may understand why the farm cannot be split equally, but that does not mean they want to be treated as an afterthought. Their inheritance needs to be in a form that suits their life, not in a half-interest in land they do not farm and cannot easily turn into cash.
For Mum and Dad, the challenge is usually harder again. They want the farm to continue, they want to be fair to all children, and they need enough money to live on without remaining financially dependent on the very business they are trying to hand over. That is the part many plans miss. If the parents still need the farm to fund their retirement, then the next generation has not really been given a clean start.
Tax adds another layer, because the right answer for the family may not be available on the date everyone wants it. Some titles can be transferred cleanly because of when they were bought or how they are held. Others need time before the concessions are available. The handover is often less a single event and more a sequence: control might move first, income arrangements might sit in place for a while, and ownership may follow only when the tax position allows it. Get that order wrong and a plan that felt fair can create a tax bill large enough to change the outcome for everyone.
Once you lay all of that out, the question changes. It is no longer “how do we divide the farm?” It becomes “how do we build a structure where the farm can survive, the farming child can run it properly, the non-farming child receives something meaningful, and the parents can step back without being exposed?”
That is where the real planning starts.
Fair is rarely a straight split. More often, it means the farm stays viable, the child on the farm has real control, the child off the farm receives something useful and meaningful, and Mum and Dad are not left relying on the business they have just handed over.
How this can work in practice
Take a farming family with several parcels of land, some bought decades ago and one acquired more recently. One child is already working in the business and wants to keep farming. Another child has built a life and career away from the farm. Mum and Dad want to be fair to both, but they also know the farm cannot simply be cut in half and still work.
The land has a meaningful value, but not every title can move at the same time. Some of it may have been held long enough to transfer cleanly. Other parcels may need time before the tax position is workable. At the same time, the operating child needs enough control to run the business properly, while the non-farming child needs an inheritance that makes sense away from the farm.
Succession is much harder for families who think of the farm as a possession, because then handing it on feels like losing something and every decision gets made defensively. If you’ve always understood yourself to be looking after the place for the next lot, the handover is simply the last part of the job.
An even split might look simple on paper, but it can leave the farming child without enough scale and the non-farming child with an asset they do not want to own or manage. A better plan is usually staged, with control, income and ownership dealt with separately.
Illustrative transfer sequence
| Asset or parcel | Relative value | Intended outcome | Timing | Key issue |
| Operating assets | Material | Control to farming child | Early | Business control |
| Older land parcels | Significant | Usually to farming child | When family ready | Tax history |
| Later-acquired land | Significant | Staged transfer | Later | Concession timing |
| Off-farm inheritance | Balanced against farm outcome | Non-farming child | Often brought forward | Liquidity and usefulness |
The farming child may end up with more of the land and the operating business, because that is what gives the farm a chance of surviving. The non-farming child may receive a different mix: an off-farm property, investment assets, lease income or an earlier inheritance structured around their own life. It will rarely look equal if you only measure the land. The better test is whether each child receives something useful, and whether the farm can still operate as a real business.
Separate who runs it from who owns it
Ownership and management don’t have to move at the same time, and in most cases they can’t.
The livestock, machinery and vehicles might sit in a family trust with a corporate trustee. Control of that trust can move to the farming child before the land does. They become a director of the trustee company, take formal responsibility for the operating assets, and run the business from that point. The land may stay with Mum and Dad for some time after.
There are two reasons for doing it that way round. The farming child gets genuine authority early, which matters if you want them to stay and build the business rather than step away. Mum and Dad keep the land, and any lease income attached to it, while the tax timing is worked through.
One or both parents may also need to stay connected to the operating structure for a period, particularly where a tax concession depends on that connection being maintained.
Tax sets more of the timetable than you’d like
Most families are surprised by how much of the timing gets decided by tax rather than by what they’d prefer.
Land bought before 20 September 1985 sits outside the capital gains net, so those titles can move whenever the family is ready. Anything bought since is a different proposition, and that’s where the small business CGT concessions can fix some of the tax problems from transfer. The 15 year exemption can wipe out the gain altogether, but the asset has to have been held for at least 15 years and the owner has to keep a genuine connection to the farming business.
In a composite example, the older land parcels may be able to move when the family is ready, while a later-acquired parcel has to wait until the relevant concession timing is met. The plan runs to that timetable so tax does not drive a worse outcome than necessary.
That is also why the older generation may remain involved in the structure for a period. If the connection is severed too early, the concession may be lost and the transfer can arrive with a tax bill nobody planned for.
Farm Management Deposits work on much the same principle. Stop farming and withdrawals become assessable income. Keep the farming going and keep the distributions flowing, and the concessional treatment holds.
Victoria also has a stamp duty exemption for transfers of primary production land between family members, and Centrelink’s forgone wages policy can shorten the usual five-year gifting period where a child has worked unpaid on the farm. Both have strict eligibility tests and need to be documented properly with advice from the accountant and lawyer.
Retirement has to be funded off the farm
The most common failure we see has nothing to do with tax. It’s parents who hand over the land and then find they still need the farm’s income to live on. That keeps the next generation tied to Mum and Dad’s retirement, rather than letting them reinvest in the farm and build their own off-farm assets.
This is the thing that decides whether a succession plan works, and it gets a fraction of the attention that tax does. The next generation has to be able to make the same living off the place that you made, and to do that they need the run of the whole property. If your living costs are still coming out of the farm, you haven’t really handed it over.
So the real work starts years before any title changes hands, and it happens away from the farm. Superannuation, investments held well clear of the land, and surplus cash put away in the good years instead of spent on more country all have a role. By the time a transfer starts, Mum and Dad need enough outside the farm to fund retirement without relying on the land or the next generation’s trading results. Everything else in the plan depends on that.
Farm Management Deposits may cover part of the first few years, but the bulk of the retirement funding should come from superannuation and investment assets built up outside the land over a long period. None of it should depend on rainfall, commodity prices, or whether the next generation has had a good year.
The leasing sits alongside that. Paying a lease is respecting whose name is on the title. Somebody owns that land, they are entitled to be paid for the use of it, and whoever is farming it should be costing that in the same as fertiliser or fuel. As each parcel moves to the farming child, the rent on that parcel stops. Any land retained by the non-farming child can keep producing lease income for them while the farming child continues to operate the whole farm.
That also shows why lease income should not be treated as Mum and Dad’s retirement plan. As titles move, the lease income moves with them. The off-farm assets are what carry retirement; the lease is just what is owed to whoever holds the title at the time.
Looking after the child who isn’t coming home
The non-farming child may never want to run the farm, and may not want to own a passive share of it either. That does not mean they should be an afterthought. Often the better answer is to bring part of their inheritance forward in a form that suits their own life, such as an investment portfolio, a property connected with their work, or a structure that can compound away from the farm.
The point is not to make every line item equal. It is to make sure the non-farming child receives something real, useful and understandable, rather than being left with a promise that everything will somehow work out later.
The conversations families skip
Three things come up in nearly every farm succession, and all three get put off because none of them are pleasant to raise.
The first is relationship breakdown. A Binding Financial Agreement lets a couple agree in advance how gifted or inherited farmland gets treated if they separate. Without one, a property settlement can force the sale of land or stock the family has held for generations. Both parties need their own lawyer for it to be binding under the Family Law Act, and it’s far better done before a major transfer than after. In many cases, the same protection should be considered for both children, not just the one on the farm. Asking only one partner to sign is how a sensible protection turns into an insult.
Then there’s what happens if somebody dies part way through. A plan running to 2029 has to survive several years of wills keeping up with it. Every time a title moves or a large gift is made, the estate plan needs rewriting to match, or an unexpected death leaves the family relying on documents that describe a farm which no longer exists.
Then there is the question nobody likes to dwell on. What happens if the person everyone relies on is suddenly not there? Who has authority to sign? Who makes the day-to-day calls? Where does the cash come from while the family works out what has happened? Those answers need to be clear from the start, not worked out in the middle of a crisis.
Write it down, then keep reviewing it
Most farming families are running on a handshake and a shared understanding of what was meant. That works until somebody dies, somebody separates, or two siblings remember the same conversation differently.
Get the lawyer to put it in writing. The lease, the rent, when it gets reviewed, which titles are meant to move and in what order. Everyone might think they know the answer today, but memories change. In five years’ time, when land values are different and one child remembers the conversation one way and another remembers it differently, the written plan is what keeps everyone anchored.
Then look at it every year. Land values move, tax rules change, and children change their minds about what they want. A plan nobody has opened in five years is usually out of date in at least one way that matters.
Then get someone to pull it apart
Having the plan written up isn’t the end of the job. The next step is to stress-test it with somebody whose job it is to pull it apart, because there are a handful of things that can undo a good plan years after everyone shook hands on it, and every one of them is cheaper to deal with now than later.
Start with what’s been promised. If a son has worked for fifteen years on wages well under what he’d have earned anywhere else, because he was told the place would be his, that promise can be enforceable whether or not it ever made it into a will. The High Court dealt with this in Kramer v Stone in December 2024, where a man who had worked a farm for 23 years on the strength of a promise, for very little money, was found to have a claim. Two things that used to protect landholders went with that decision. The promise does not have to have been repeated over the years, and the person who made it does not have to have known the other party was relying on it. Saying it once, twenty years ago, and never mentioning it again is not a defence.
None of that is an argument for saying nothing to your kids. It’s an argument for being deliberate about it. Work out what’s actually been said over the years and to whom, pay market wages or write down why you aren’t, and where a promise was made that isn’t going to be honoured, have that conversation now rather than leaving it to a court and a barrister after you’re gone.
Then work out who could make a claim once you’re not here. A current, properly drafted will is exactly the document that gets challenged. In Victoria a child who believes they haven’t been adequately provided for can apply to the court for further provision out of the estate, and a farm estate where one child holds the land and another holds a good deal less is the obvious shape for that argument. Worth knowing is that the claim generally reaches what’s in the estate at the date of death. Assets that genuinely moved out years earlier, during your lifetime, usually sit outside it. That’s one more reason to transfer steadily over several years rather than leaving the whole thing to the will, though how it applies to your own structure is a question for your lawyer rather than a rule of thumb.
Then ask whether the farm is actually big enough to hand on. GRDC modelling puts a viable single-family operation at roughly $2.8 million of land and $500,000 of machinery, producing about $500,000 of farm income. That is one family. If two families are meant to live from the same country, the numbers get much harder. Sometimes the honest answer is that the farm is not big enough for the plan people want. In that case, selling well and passing on the proceeds may be a better outcome than handing over a business that is going to struggle from day one.
Also check the bank position. The farm may have been handed over in everyone’s mind, but Dad might still be on the guarantees and the bank may still hold security over the land. That risk can sit there for years after the family thinks the handover is finished. It is much better to have the bank involved while the plan is being built, rather than trying to tidy it up afterwards.
Finally, test it against a bad year. Not the average year in the spreadsheet, but the year with no break, lower prices and too much stock on hand. Can the lease still be paid? Can the trust still distribute? Can Mum and Dad still take their income without the farm being squeezed? If the answer is yes, the plan has some strength in it. If it only works in an average year, it needs more work.
Someone has to hold the conversation together
In the better plans, the tax strategy is only one part of it. The harder part is getting the right people in the same room early enough, and keeping the discussion on the real issue when it drifts.
Often, what is missing is someone independent enough to sit between the family, accountant, lawyer and bank, and turn the technical pieces into decisions the family can actually make. That means asking the uncomfortable questions before a lawyer has to draft around them. Who is really coming home? Can the farm carry the next generation? What has been promised over the years? What will the non-farming child actually receive, and when? Can Mum and Dad afford to step back without leaning on the farm for the next thirty years?
That outside voice can make a big difference. Inside the family, the same question can sound like criticism, greed or taking sides. From outside the family, it can be put more plainly: this is not personal, it is a planning issue. Sometimes the most useful thing an adviser does is say the hard thing clearly enough that people can deal with it, without the whole conversation becoming a fight.
Once the family agrees on the broad answer, the lawyer needs to turn it into something real. Wills, powers of attorney, trust deeds, leases, transfer documents, binding financial agreements, loan documents and, where needed, a written family agreement. Otherwise all you really have is people leaving the room with slightly different memories of what was agreed.
The sequence matters. Agree on the family outcome first. Then test the farm, the tax and the cash flow against it. Then get the documents done properly. That is what gives the plan a chance of surviving death, disagreement, relationship breakdown and time.
Start before you have to
The example makes the point. The tax concessions, trusts, leases, transfers, investment portfolios and legal documents all matter, but the technical work only makes sense once the family has agreed on the outcome. The farming child needs enough of the farm to run a real business, the non-farming child needs something meaningful outside the operating farm, and Mum and Dad need enough financial independence to step back without undermining either child.
Timing matters. Families who do this well start before there is a deadline. They build the off-farm assets that make retirement possible. They work out which child needs control, which child needs liquidity, and what the farm can actually support. They stage the transfer around tax, cash flow and family reality, rather than pretending it can all be solved in a will.
If the next generation is home, or even thinking about coming home, that is usually the time to start the conversation. Not because every answer has to be known now, but because the answers take time to build.
Done properly, farm succession is not just about keeping the land. It is about giving the next generation a business they can run, giving the non-farming children something real, and allowing Mum and Dad to step back without putting the farm or the family under pressure.
This is where Independent Wealth Partners can help: getting the right people around the table, working through the financial trade-offs, and shaping the plan before decisions are locked in.
This article is general information only and does not take into account your objectives, financial situation or needs. The scenario described is a composite example drawn from common succession issues seen in farming families. It does not describe any one client family. Figures, roles, timing, locations and identifying details are illustrative only, and the example is included to explain the planning issues rather than recommend a particular structure. References to case law, tax, stamp duty, superannuation and Centrelink treatment are general in nature and current as at September 2026. They depend on individual circumstances and on current law, and specific advice should be obtained from your accountant and your lawyer before acting. Consider whether this information is appropriate for you and seek personal advice before acting. Source references include the High Court of Australia decision in Kramer v Stone and GRDC material on transitioning a viable farm to the next generation.
Independent Wealth Partners Pty Ltd (ASIC# 1286417) is a Corporate Authorised Representative of Independent Wealth Services Pty Ltd (AFSL# 512433).