21 Aug 2018
Succession planning and a will must work together
There is no better time to write a will, which has long been a taboo topic for many families, says Rachael Madeley Davies, consultant at Kite Consulting.
Writing a will and succession planning are separate things which should complement each other.
We have all heard farmers say, ‘one day, this will all be yours’.
But, actually, dad or grandad might go on farming until they are in their 90s and son or daughter could be into their 70s and still not have their hands on the cheque book.
Succession planning is a very different thing.
It is more about the here and now and the structure of the business today, rather than what happens when you die.
Wills can often be used as an excuse by some to avoid the difficult conversations associated with succession planning.
But as we know, it is one of those nettles which needs to be grasped by all businesses.
The two elements are not an alternative but need to work together.
Why you should have a will
Whether you are a business owner, farm labourer or contractor, everyone should have a will.
Even if you do not own any land or property, it is a way you can still have some control over what happens when you die.
That includes things like funeral arrangements, who receives your personal effects or what happens to your business.
There is no minimum or maximum age but people should not leave it until they are too old.
There is a big misconception that wills are for elderly people.
The last thing you want to be doing is writing a will on your death bed.
Writing a will is a really good way to communicate your wishes and your choices to your whole family.
What a good will should include The best wills are extremely explicit.
In the example of a farmowner dying, the will should clearly state what is going to happen to the land, livestock, machinery, entitlements and who it is going to apply to.
The document should also be very clear on who will administrate the will, who is the executor and who are the beneficiaries.
Providing you have discussed the contents with your family, this will eradicate any unnecessary uncertainty, fall-out or angst, so business can continue.
Top tips
- You cannot write a will too early. Many people start as young as 18
- Discuss contents with family long before you are ill or elderly
- Be explicit and clearly define who you want to have what
- Update it regularly when major things change in your life
- Speak to a solicitor if you have questions or concerns
What happens when there is no will?
Dying without a will is called intestacy.
Dying intestate means your effects are divided by a default amount between your spouse, civil partner or children.
You essentially surrender all control to an external body and the executor of your will is chosen for you.
This neglects offspring who may have played a prominent role in the farm and is where disputes regularly arise from.
Businesses can also lose a lot of money and split up as a result.
If this happens, families have to apply for a grant of representation to allow them to carry on running the business.
These can take months to get, paralysing businesses from carrying out day-to-day operations and often means they have to cease trading.
You would not let an external party have a say in running your business when you are alive, so why would you after you have died? Common pitfalls with will writing The most common pitfall for farmers is not talking.
You still hear of cases of children not knowing what is in their parents’ will purely because there has been a breakdown in communication in that area.
Death is still a taboo subject in this country, but once someone has died it is extremely difficult to have a will changed.
Quite often the value of an estate can disappear on legal fees if you are trying to dispute a will.
It is so important to the whole process to make sure your family is aware of what your desires and wishes are.
However, the most common side effect of poor communication is family breakups.
With such large sums being disputed, it is critical families have time to discuss what will happen after a death.
How often to update your will
It is very important that wills are both valid and regularly updated.
When reviewing your will you should question if it is up-to-date, which effectively means have there been any significant changes since it was last updated? This includes any family marriages, deaths, divorces, changes to business structure or if children are now grown up.
A good rule of thumb is to check it every 10 years, or when something major changes in your life, that of family members, or the business.
Get your will done and dusted In the UK and, in particular, farming communities, we have a stiff upper lip.
Two of the biggest taboos in agriculture are talking about money and talking about death.
So we are combining both of those when talking about writing wills.
Time is another common excuse.
They are just not prioritised with everything else going on around the running of farm businesses.
They are actually bread and butter for solicitors, who offer fixed rates on wills and can prepare them in a matter of hours.
Prices can vary greatly from solicitor to solicitor and business to business but an average price would be about £500 and could be sorted in one meeting.
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