Farming Ahead: Case Study

Next Rural - Farming Ahead

Type: Case Study
Knowledge level: Intermediate

Farm Table says:

Walk through a family's transition journey that involves 2 on-farm children and 1 off-farm child.

This article presents a case study from Next Rural.

A summary of the article is as follows:


  • Bill and Julie run a mixed farming business with an estimated land value of $2.3m
  • Plant and equipment worth $300,000
  • Stock valued at $300,000
  • $320,000 in their self-managed superannuation fund and $100,000 in a Business Cash Management account
  • Business has debts of approximately $140,000.
  • Own a house and land in the local town valued at $350,000
  • A son and a daughter who work the farm (James and Claire) and one son who works off- farm (Joseph).

Bill and Julie have indicated they wish to exit the business as soon as practicable and they are willing to transfer management of the business, ownership of the farming properties and all other business assets to James and Claire. They wish to ensure they have established a sound retirement or semi-retirement income for themselves. They also want the plan to be fair to Joseph, James and Claire seek certainty and security and recognize the contribution of their parents.

Questions to be addressed:

  • How will the business be transferred and over what timeframe?
  • How is equity to be paid for?
  • How should ownership be transferred to James and Claire and under what terms and conditions?
  • What should financial and legal structures be utilized to transfer the business/ownership and how should these structures be documented?
  • How will current and future banking arrangements be managed?
  • How will equity issues be dealt with, in the unfortunate event of sickness or death of any of the parties?

Purchase Price and Terms:


  • Business & Land value- $2.3 m. The agreed transfer price to James and Claire is set @50% – $1.150 m
  • Plant & equipment – $300,000
  • Stock – $300,000
  • Less debt position ($140,000)
  • Total transfer price – $1,610,000

The parents are prepared to vendor finance the transaction with an initial down-payment of 10% and balance of $75,000/year for 20 years.


  • Land help by family trust
  • Operations through separate entity

Off-farm children:

  • Joseph to become beneficiary and member of a self-managed fund
  • Parents to make non-deductible contributions of $10,000 for 15 years
  • Nominated for binding death benefit of $150,000
  •  $5,000/year into education bond for 2 children for 10 years
2012 - Australia - Next Rural - Farming Ahead
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