What can happen when one working partner wants to retire…
The Smith family (names changed) have lived on their property for all of their lives. Each of the three sons were born in the town just 20 kilometres away. Jack was born in 1950 and married Diane in 1977, Joe was born in 1953 and married Mary in 1979 and Colin was born in 1955 and married Susan in 1984.
The three brothers all returned to the family farm when they finished school and all worked well together under their management of their father Jack Senior and their Mother Elizabeth. Sadly Jack Senior died in a farming accident in 1987 at the age of 72 and Elizabeth passed away in 1993 at the age of 70.
Successful family teamwork
The three sons and their wives all worked on the farm together and each of them managed a growing family. The farm was left to the 3 sons as a whole property and they operated the farm as tenants in common with Jack Junior focused on managing the cattle herd while Joe and Colin focused on increasing the cropping program and they managed a very successful hay production business supplying nearby hay export operations producing top quality hay for the Japanese horse feed market.
The three sons all got on well, they all had their moments of frustration but for 20 years following the death of their father they worked the farm and shared in the farms growing income and the ups and downs of farming in WA.
In 2015 Jack reached his 65th birthday and advised his family that he wanted to scale back his work life and enjoy a sort of semi-retirement. Jack and Diane’s 2 daughters had grown up and married and both lived in town where Diane spent a lot of time with her new grandchildren and Jack was wanting to have more time with his family and was feeling that cattle work was just getting a bit too hard following a fall from a rail fence and a couple of days in hospital Jack had decided it was time to slow down.
Jack and Diane decided that it was time to apply for the aged pension, they had sunk most of their income back into the farm and they had very little savings and no superannuation, they always said that the farm was their superannuation. Jack and Diane had worked for nearly 50 years had paid taxes and felt that they had always done the right thing!
Jack and Diane were horrified when they received a letter from Centrelink to say that they failed to qualify for the aged pension even though they were both over 65 and had very little savings. They were very upset and disappointed.
Being tenants in common on the property meant that Jack and Diane had an asset that exceeded the value of the means test applied to the aged pension, the property included 8 titles and this further complicated their ability to claim. The structure of land ownership meant that all members of the family would have difficulty in applying for any social services for them and even their children as the asset was treated as a whole asset and not a shared asset.
As the oldest of the three brothers Jack realized that his younger brothers were also going to be impacted by this and there was also that long held thought in the back of his mind that he didn’t really know how Dianne would be looked after if something happened to him and how would his daughters fare if both he and Diane passed away? Would his girls get a share of the farm and how could this be done?
Jack and Diane had a few sleepless nights. How could they scale back their workload yet still have a reasonable lifestyle? How could they draw income from the farm when they weren’t doing the work? What would the other 2 families think? How could they cope without an income from the farm? Could they sell their share to the brothers, but they still wanted to live in their home, they could never live in town!
A ray of hope
A few days later Diane was listening to the radio and heard someone talking about the Rural Financial Counselling Service of Western Australia, Diane heard them talking about assisting family farmers to make change, about finding solutions to complex problems! Diane dialed the number and spoke to a young lady who listened to her issues and arranged for a Rural Financial Counsellor to call her.
Three days later a Rural Financial Counsellor visited Jack and Diane at their house on the farm, she listened to their issues, she took a lot of notes and she read back to them what they were saying to make sure she had a good understanding. She asked them what was important to them, she encouraged them to talk about what they wanted out of the next 5, 10 and 20 years of their lives. At the end of that first meeting Jack and Diane felt that they had made a positive step forward, they now had someone who understood what they wanted but even more importantly they had been given the framework to discuss what each of them wanted as individuals and as a couple, for now and for the future, they both felt a lot calmer and in control of their future.
Within the next few weeks the Rural Financial Counsellor did some research on possible options for Jack and Diane, she then presented these to the couple and gave them time to think about the options and to weigh up the choices they could make. She encouraged them to seek professional advice from people they trusted.
Two weeks later Jack and Diane with their Rural Financial Counsellor called in their family partners to arrange a family meeting. The Rural Financial Counsellor was able to chair the meeting and to give some perspective to the family on the issues not only facing Jack and Dianne but also facing the other 2 couples in the not too distant future.
The Rural Financial Counsellor was skillful in guiding the meeting but not directing the meeting, the counsellor was able to ensure that everyone was involved and everyone had a voice in the meeting. Following the meeting the Counsellor met with each of the couples to discuss their issues and goals for the future, this opened the door for future meetings with the broader family and the Counsellor who was able to act independently.
Property division keeps family together
Six months later and after much discussion the family made the decision to subdivide the property into 3 individual portions allocating the 8 titles across each of the families in as equal a portion as possible. The families were then able to consult with their solicitor and a licensed land valuer to resolve the final cash values to ensure that each couple was treated fairly.
Today the 3 couples are still in their own homes on their own farms and they still work as a team sharing machinery and labour when needed, Jack and Diane were able to lease most of their block to Jacks brothers and they still live in their own house on the farm but can enjoy themselves in retirement with a guaranteed income partly from the aged pension and partly from their lease income, Jack and Diane have comfort in knowing that their daughters will be well looked after and receive their part of the farm when they pass away.
Joe and Mary, Colin and Susan were all now enjoying their financial independence with their separate ownership but were still able to work together as a family and preserve the farming heritage that their parents had founded all those years ago.
It all started with that first big step………………..that call to the Rural Financial Counselling Service.