Planning ahead for a farm family or agribusiness' next generation succession strategy doesn't necessarily mean the kids get the lot.
Now may be the right time to do something else useful - like setting up a charitable fund.
While mum and dad might still want to see the family enterprise continue with their offspring at the helm, in many cases business succession also brings opportunities to set aside funds to make a difference to the local community, or non-profit organisations.
"Many family business patriarchs feel success is about more than just the assets and wealth they have accumulated, or what they can pass on to their children," said family business advisor, Stuart Cain.
Mr Cain is a specialist in family succession and philanthropic advice with the 180-year-old wealth management and investment firm, JBWere.
"It's not uncommon to set up a charity fund which the family can continue maintaining control of, directing investments towards a legacy vision," he said.
This was particularly the case if parents were in a position to kick-start a fund at the same time as they might cash in some of their assets to pay for eventual retirement plans.
A family's charity trust, or private ancillary fund, would subsequently distribute a minimum of five per cent of its capital value every year.
Any ongoing contributions to the pool from the family's future business earnings also qualified for full tax deduction status.
While there was no minimum sum required, Mr Cain said establishment costs and ongoing fund management meant an initial deposit of $1 million-plus could be considered a self-sustaining starting point for such a fund.
Beneficiaries typically included education and medical institutions and scholarship trusts, or more modest recipients such as a local library, disability services or community pre-school.
He noted regional family donors were often keen to commit funds to bolster the capabilities of rural health infrastructure and community health services, or support local groups promoting skills advancement or welfare help in their district.
"Sometimes there's a family connection to a charitable cause like medical research, possibly prompted by personal health circumstances," he said.
"In fact, a family decision to start a charitable trust might actually be triggered by some sort of personal experience."
Importantly, Mr Cain said those community-good goals also provided a catalyst to get family members working together on a legacy project which continued down the generations.
"For the parents, there's a lot of comfort in knowing their money will be used for purposes they all value."
Starting a charitable trust also enjoyed some tax deduction advantages, in particular if property assets were being carved off the family business and sold to establish the initial funding pool.
Typically, money owed in capital gains tax after an asset sale could be transferred to create, or top up, the private ancillary fund, instead of going to the tax office.
It gets everybody talking before mum and dad get too old, thinking about legacy values ...- Stuart Cain, JBWere
Mr Cain, a financial planning executive who has spent 20-plus years with JBWere's private wealth advisory division, said parents weighing up all succession options often saw a private ancillary fund as a great opportunity to engage with their children and grandchildren about goals and priorities outside their immediate family business unit.
"It gets everybody talking before mum and dad get too old, thinking about legacy values and working together on what is important," he said.
"You might look at distributing money to a practical local charity project, or an environmental cause or a community pre-school - the list of potential registered deductible gift recipients is very broad."
Among those establishing private ancillary funds who sought Mr Cain's guidance this year were rural families who set aside the not inconsiderable sums of $5m and $10m each after recent property sales.
One family had been several generations on the farm and was winding up ties with that property.
The other was staying in agriculture, but sold one farm and other investment assets, including commercial properties, as part of the succession strategy.
Property price windfall
Surging property prices and improved seasonal conditions had prompted some well established rural families to take advantage of the upbeat market and scale back, subdivide, or sell their farming interests entirely.
Australia's double digit farmland price growth in the past two years alone meant subsequent sale windfalls had prompted some vendors to direct a solid portion of their reward to charitable goals.
Mr Cain said while farming dynasties and long-running family agribusinesses were not unusual, in reality just 12pc of all family enterprises in Australia remained viable in their third generation and just 3pc in their fourth generation or beyond.
The statistics were good incentives for families to start business succession plans and legacy discussions early.
Good succession goals provided incentives to pull the family together to talk collectively and learn to plan about how the cake might be managed and divided up.
Don't wait too long
If left too long older generations became too old or suddenly unwell and reluctant to make well considered decisions, or their children were reluctant to have them make big decisions.
"I find we're often asked for our input as second and third generation businesses start trying to work out what steps to take next," Mr Cain said.
In some cases families employed external directors to help manage family assets and distribution commitments on a seriously long term scale.
"One family I know of has land investments bought as part of a 200-year family succession strategy."
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