Farmers Guradian
Topics
Nine ways to keep your farm vehicles safe

Nine ways to keep your farm vehicles safe

DataHub

DataHub

Dairy Farmer Magazine

Dairy Farmer Magazine

Auction Finder

Auction Finder

British Farming Awards

British Farming Awards

CropTec

CropTec

LAMMA 2019

LAMMA 2019

You are viewing your 1 free article

Register now to receive 2 free articles every 7 days or subscribe for unlimited access.

Subscribe | Register

Keeping the farm in the family – what are your options?

A recent High Court ruling has shed light on an issue which is a constant challenge for many in the agricultural community – ensuring that the farm is preserved intact for future generations.

TwitterFacebook
TwitterFacebook
Share This

Keeping the farm in the family – what are your options?

In the case, Joe Sargeant, a farmer from Northampton who died in 2005, left the majority of his £3.2 million estate in a discretionary trust to his widow Mary, daughter Jane and her three children.

 

More than 10 years later, Mary issued a claim against the estate, complaining that the will made by her late husband hadn’t made adequate financial provisions for her and that she was now experiencing financial hardship.

 

Mary’s claim against the estate was rejected, but the case highlights the importance of not only planning thoroughly, but also acting quickly if it’s felt that a will wasn’t fairly drafted.

 

Farming estates present a number of practical difficulties. Estates can be asset-rich, cash-poor – particularly where the farm owns land with planning potential.

 

Because of this, in many cases there is no readily accessible pot of cash which can be used to buy off potential claims - this can sometimes prove to be a breeding ground for expensive and unpleasant family disputes.


Read More

Farmers worried about succession but still have no plans in place Farmers worried about succession but still have no plans in place
New entrant or retiring? Share farming could hold the key to succession... New entrant or retiring? Share farming could hold the key to succession...
Talking about succession: How one young farmer took the plunge Talking about succession: How one young farmer took the plunge

Dividing up land can be difficult and balancing the need to provide adequate provision for family members, whilst ensuring the continued operation of the farm is often tricky.

 

Working in an agricultural setting can be extremely demanding, both on time and money and focusing on running a tight business can come at the detriment of thorough succession planning.

 

Complicated family and business structures and the lack of a single ‘one size fits all’ solution only compounds this and all too often, situations arise out of the blue and provisions haven’t been put in place.

 

The changing nature of farming in the UK also means that estate planning is less straightforward than previously.

 

Diversification into other business activities can on the one hand make it easier to distinguish between, and potentially separate off, various parts of the business.

 

However, with that comes increased levels of complexity and portioning up assets in addition to the main farm can become difficult.

The most common option chosen by farmers is still a straightforward division of assets through a will between family members, inevitably with preference being given to those family members still working in the business.

 

This can cause tension further down the line, especially in situations where there may be other family members who feel, rightly or wrongly, that they are entitled to their share.

 

Where there is a proposed division between those in the farming business and those outside of it, buyout options can be given.

 

These allow family members in the business to purchase the share of the farm which had been allocated to other parties who are not involved.

 

If families are sure that there are children or other family members who are keen to continue working on the farm in the future, setting up a life interest trust can be an option.

 

This gives the farm to a particular beneficiary for their lifetime, and then upon their death, the farm is divided up amongst all the family.

Andrew Wilkinson, Shakespeare Martineau
Andrew Wilkinson, Shakespeare Martineau

Whilst there is still the danger of excluding other family members in the short term, this option can allow the farm to continue operating as a business.

 

It does however rely on people being prepared to wait for their share – perhaps easier said than done!

 

The tight-knit nature of many farming families can often be the source of disputes around wills and estates.

 

The case of Joe and Mary Sargeant highlights how this closeness can be extremely detrimental if wishes and will provisions are not made clear and agreed by all parties in good time.

 

The value of talking to family about what plans are and the reasoning behind them cannot be underestimated.

 

One of the major aspects of the case, and one which will be familiar to many farming families, is the designation of ‘partnership assets’.

 

Joe’s estate contained a parcel of valuable land and it was disputed about whether or not this was such an asset. If it was, it would be passed straight through to the other members of the farming partnership, effectively bypassing the will.

 

Whilst there is no issue with designating assets in this way, making it extremely clear what is a partnership asset and what is not is important.

 

This is something which particularly needs to be considered when, as is often the case, a farming family runs all of its expenses - both business and personal - through the partnership.

 

There is no magic solution to the issue of agricultural estate planning and unfortunately, the tale of warring families is all too common in this sector.

 

However, by recognising the importance of succession planning early on and not waiting until it’s too late, farming families can map out a solution which has everyone’s best interests at heart.

 

Andrew Wilkinson, partner and will disputes specialist at law firm, Shakespeare Martineau

Legal Helpdesk

TwitterFacebook
Post a Comment
To see comments and join in the conversation please log in.

Most Recent

Facebook
Twitter
RSS
Facebook
Twitter
RSS