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‘Partnership agreements are one side of the coin, and wills are the other’

And farmers at the very least should be putting a will in place to understand what assets can and will be handed over.

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‘Partnership agreements are one side of the coin, and wills are the other’

A partnership agreement from a succession planning point of view is one side of the coin and wills are the other.

 

And farmers at the very least should be putting a will in place to understand what assets can and will be handed over.

 

“The two have to very much sit together and be considered in the round,” said Michael Westbrook, private client partner of Thrings.

 

“It is really important to set out exactly who owns what, both within and without of the partnership.”


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When it comes to ownership of land, understanding exactly who owns what – and documenting it – is critical.

 

And it is not enough to simply rely on the accounts.

 

Mr Westbrook said: “That is what I see a lot of, that people think they can get by on what is shown on the accounts. But often that does not show the full picture.

 

Flexibility

“It becomes particularly important when a partner is leaving – either acrimoniously or not – or if a partner dies, and particularly if things have been promised.”

 

Often the right sort of planning includes a form of flexibility. “So you might include trusts for example to receive the farming assets,” he said.

 

“There might be specific reasons for that, for inheritance tax planning, but also it allows for flexibility and to change with the circumstances over time.

 

“When someone dies it also means there is a flexible structure that can adapt to the situation at the time.”

Thrings associate Robert James added he advised farmers to review the partnership deed as soon as the next generation is welcome into the business, to ensure the business model is fit for purpose.

 

Mr James said: “Farms are family businesses at the end of the day.”

 

“It is not unheard of that we are looking at third or fourth generation farmers.

 

“They have been taught from day one that this was granddad’s farm and you will get it one day. An awful lot can happen since someone drafted the partnership deed back in 1960 and we often find it is totally irrelevant for today’s purposes.”

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