Farm Succession Planning in NSW: Passing the Family Farm to the Next Generation

For most farming families in North Western NSW, the farm is far more than a business. It is a family legacy built over generations, and often the single most valuable asset the family owns. Yet many farming families put off one of the most important conversations they will ever have: who takes over the farm, and how.

Good farm succession planning is what turns that difficult conversation into a clear, workable plan. Done well, it keeps the farm in the family, treats everyone fairly, and avoids the tax bills and family disputes that can otherwise tear a rural enterprise apart. At Leyden Legal, we have been advising farming families across Tamworth, Manilla, Barraba, Quirindi and the wider North West for over 70 years, and we understand the pressures unique to life on the land.

What is farm succession planning?

Farm succession planning is the process of transferring the ownership, management and control of a family farming business to the next generation. It is sometimes called rural succession planning, family farm succession or intergenerational farm transfer, but the goal is always the same: a smooth handover, at a time of your choosing, on terms the whole family understands.

A complete plan usually deals with three separate questions that families often (mistakenly) treat as one:

• Management — who runs the day-to-day operation, and when does that responsibility shift?
• Ownership — who owns the land, the livestock, the plant and equipment, and the water access licences?
• Control — who makes the big decisions, particularly where the farm is held in a company or trust?

Separating these questions is one of the most useful things a succession planning lawyer can help you do. It is entirely possible, for example, to hand over management to a son or daughter years before ownership actually changes hands.

Why every farming family needs a succession plan

A plan sketched out at the kitchen table, or left until retirement, illness or death forces the issue, rarely ends well. Waiting for a major life event to make the decision for you dramatically narrows your options and increases both the tax cost and the risk of conflict.

Proper succession planning for farmers helps you:

• Keep the farm viable and in the family for the next generation.
• Retire with financial security, knowing your future living arrangements are provided for.
• Manage the expectations of both farming and non-farming children before resentment sets in.
• Minimise capital gains tax, stamp duty and other transfer costs.
• Reduce the risk of a family provision claim against your estate after you are gone.

The hard question: fair versus equal

The single most difficult issue in most family farm succession discussions is how to treat children who work on the farm differently from those who have built lives elsewhere.

An equal split of everything sounds fair, but dividing productive land equally can leave the farm too small to support anyone. Most farming families today have moved well beyond simply leaving the land to the eldest child. Instead, the challenge is to give the on-farm child a realistic path to ownership while still providing meaningfully for non-farming children — often through off-farm assets, life insurance, staged payments, or a combination.

There is no one-size-fits-all answer. The right structure depends on the value of the farm, the family's other assets, and the goals of each generation. What matters is that the decision is made openly, explained clearly, and documented properly so it holds up after you are gone.

Stamp duty and the intergenerational farm transfer exemption

Many NSW farming families do not realise that transferring the family farm to the next generation can often be done free of transfer (stamp) duty.

Section 274 of the *Duties Act 1997* (NSW) provides an exemption from duty on transfers of primary production land between family members, provided certain conditions are met — broadly, that the land was used for a genuine primary production business before the transfer and continues to be used that way afterwards. Since 2022 the exemption has also been extended to certain transfers to a family company or trust, opening up valuable planning opportunities.

The rules are technical, and Revenue NSW applies them strictly, so it is well worth getting advice before any transfer to make sure the exemption is available and correctly claimed.

Capital gains tax and the family farm

Stamp duty is only half the picture. Transferring or restructuring farm ownership can also trigger capital gains tax (CGT). The good news is that the small business CGT concessions can, in the right circumstances, significantly reduce or even eliminate that liability.

Because the interaction between CGT, duty and pension eligibility is complex, farm succession planning works best when your lawyer, accountant and financial adviser work together. We regularly coordinate with a family's existing accountant to make sure the legal structure and the tax strategy pull in the same direction.

The legal documents behind a good plan

A robust farm succession plan is usually supported by a suite of documents, not just a will. Depending on your circumstances, these may include:

• A current will, often incorporating a testamentary trust to protect assets and provide tax-effective flexibility for beneficiaries.
• Enduring powers of attorney and appointments of enduring guardian, so the farm can keep running if you lose capacity.
• Transfer and gifting documentation for land, water access licences, livestock and equipment.
• Company constitutions, trust deeds or partnership agreements that reflect how control will pass.
• Loan or family agreements recording any financial arrangements between the generations.

Getting these documents right — and keeping them up to date as your circumstances change — is where experienced legal advice pays for itself many times over.

Frequently asked questions

When should we start farm succession planning?

As early as possible. Succession is a process, not a single event, and a staged handover often takes years. Starting early gives you the widest range of options and the best chance of minimising tax.

Do I have to pay stamp duty to transfer the farm to my children?

Often, no. The intergenerational exemption under section 274 of the *Duties Act 1997* (NSW) can allow primary production land to be transferred to family members free of duty, provided the conditions are met. Advice beforehand is essential.

How do I provide for children who don't work on the farm?

There are several approaches, from off-farm assets and insurance to staged payments over time. The right mix depends on your family's overall asset position and goals.

Can Leyden Legal work with my accountant?

Yes. We regularly coordinate with a family's accountant and financial adviser so the legal and tax sides of your plan work together seamlessly.

Talk to a rural succession lawyer in Tamworth and Manilla

Farm succession planning is confronting, but avoiding it only makes the eventual outcome harder and more expensive for the family you are trying to protect. As a trusted third-generation firm with deep roots in rural North Western NSW, Leyden Legal understands both the law and the land.

If you are ready to start the conversation about the future of your family farm, contact our rural succession planning team at our Tamworth or Manilla offices today. We offer clear, practical, plain-English advice — no jargon, no unnecessary complexity.

This article provides general information only and is not legal advice. Every farming family's circumstances are different. For advice tailored to your situation, please contact Leyden Legal.