Retirement homes are not a topic regularly discussed by farm families, but where older farmers will live once they hand over their property should be considered well before it becomes reality.
Planning the transfer of assets comes in three parts says National Australia Bank agribusiness general manager, Khan Horne.
“The first is thinking about the business itself – whether management and ownership are being handed to the next generation or sold out of the family,” Mr Horne said.
“Then there’s the retirement plan for parents.
“Where they’ll live and what income they’ll have to support themselves.
“Then of course, estate planning, or writing a will.”
Statistical reality bites
Agricultural Census figures released by the Australian Bureau of Statistics this year show the average farmer is 56 years old – up from 54 years old a decade ago.
General manager of succession planning specialists Next Rural, Bill Adams, said that statistic meant plenty of farmers really should be having conversations around succession planning.
It’s also important to appreciate the financial and geographical implications for mum and dad, and the rest of the family.”
“There are rules around how quickly you can transfer assets when approaching retirement age, so the earlier you start having the conversation, the better,” Mr Adams said.
“Legislation has changed in recent years, making it easier to stay on the family property and still receive the pension and necessary assistance.
“The challenge, of course, is finding in-home services in rural and remote areas, if they’re needed.”
Extended Land Use
The Extended Land Use Test was designed so people of pension age with a long-term attachment to their land and principal home can stay in their home into their retirement.
However, they must make effective use of the productive land to generate an income.
“These days, there are also many ways to stay on the farm even if it’s not being passed on to family, such as becoming a caretaker, leasing the homes from new owners, or entering into a share farming agreement,” Mr Adams said.
“A lifetime tenancy, for instance, is an agreement that allows individuals to stay in an agreed residential property for life, even if ownership of the property has already transferred to someone else.
“If staying is not an option, it’s important to understand the different types of aged care facilities available.
“It’s also important to appreciate the financial and geographical implications of each one for mum and dad, and the rest of the family.”
What are your choices?
Generally, people had three choices:
- Stay at home, with assistance if necessary. This may be support from family, via government subsidised home care packages, or the use of private carers.
- Move to a retirement village where some limited assistance may be provided.
- Enter an Aged Care Facility where the care provided is based on individual needs.
NAB has a partnership with Next Rural which has been running for more than five years as part of the bank’s commitment to helping clients plan for a timely and seamless transition of ownership.
It has involved running seminars and organising one-on-one sessions with customers who are interested in learning more about the options available to them.
The bank’s agribusiness staff have also received training to ensure they understand the options for initial conversations with clients before handing over to the experts.
“Time is your friend, so we encourage all our customers to at least start the conversation with their families now,” Mr Horne said.
“A managed and successful transition doesn’t start with a will.”