Australian farm succession planning: The costs of litigation

NSW farmer and specialised lawyer Claire Booth shares her insights into succession planning, including the average costs.

Having a few awkward yet fruitful conversations about the future of the family farm pays off in the long run, Claire Booth says.

And she should know – the specialised lawyer in estate and succession planning has first-hand farming experience.

The director of CO Booth Law and Advisory owns and operates a farm in the Dubbo region with her husband.

She told The Weekly Times that the financial gap between planning for succession and leaving it to chance can run into the hundreds of thousands.

“The average cost of farm litigation – where there’s the estate and adult children – is about $1.2 million over three or four years,” Ms Booth said.

“That includes the accountants, the valuers; it’s not just the lawyers.

“Whereas, if people sit down with a succession planner and their accountant and then they get a lawyer to draft everything, the average cost can be $57,000.

“(That $57,000 figure) includes the accountant, the valuer, the succession planner and the lawyer. So it’s a dramatically different cost scenario.”

Claire Booth and her family. Picture: Supplied

Ms Booth outlined the importance of farm succession planning at the 2023 Australian Dairy Conference in Hobart last month

While the financial hit of litigation is enough to make a farmer’s eyes water, Ms Booth said non-monetary costs also need to be factored in.

“The non-monetary costs are obviously stress but also isolation from social groups,” she said.

“Because once there’s litigation in small country towns people stop getting invited to community functions. Grandparents may stop having access to grandchildren.

“Often there’s an impact on marriage: there’s a higher risk of divorce. There’s often a high risk of on-farm staff taking sides, or leaving because they don’t want to deal with the drama. And ultimately it compromises the resilience of the business for future generations.”

Ms Booth said the awkwardness of succession planning was due in part to farming parents facing their mortality as well the natural divisions between on-farm and off-farm offspring.

“Of course you’re going to feel awkward and thinking about the future can be confronting,” she said.

“Yes, you may be spending more time away from your dairy, spending time with the succession planners, lawyers and accountants.

“For on-farm children, there’s that sobering reality of taking on a lot of debt. For off-farm children, they also have to realise that equal versus fair are not the same thing. There’s a difference between an equal share (of an estate) and a fair share.”