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The importance of having adequate partnership agreements

View profile for Caroline Dowding
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The recent case of Sergeant V Sergeant highlights the importance of having adequate partnership agreements in place for farming families.

The widow of a farmer, Mary Sergeant, made a claim against her late husband’s estate under the Inheritance (Provisions of Family and Dependants) Act 1975 on the basis that reasonable provisions had not been made for her under her late husband's will.

Mary is a beneficiary under her husband's will, and the full value of the estate, which totalled £3.2M at his death in May 2005, went into a discretionary trust, of which she is a potential beneficiary, along with her daughter, Jane.

The value of the assets in the trust are now valued at £8M on the basis that a considerable amount of the farmland in the trust has been granted planning permission for housing developments.

Mary’s claim has come some 10 years out of time, and the courts have therefore not granted her permission to claim against the estate on the basis that no facts were ever hidden from her, and she was fully aware of the way in which the trust has operated over this period of time.

The crux of the matter seems to be that Mary and her daughter, Jane, have fallen out over a discrepancy over who owns the land. Jane contends that the land is owned as part of the farming partnership, and would, therefore, pass to her as the successor, outside of her father's will. However, Mary claims that the land forms part of her husband’s personal estate and therefore falls within the trust. This matter in itself has been heavily litigated over a number of years.

This case highlights the importance of having partnership agreements that are both up to date, and that clearly identify the land that is held within it. In addition to this, it also highlights how closely wills and partnership agreements work together, and the importance of ensuring that they firstly do not contradict each other, but also that the assets will pass as you intend.

With land values rocketing with development potential, it is important to ensure that your loved ones are provided for in the way you intend, and also to try and avoid potentially costly and protracted litigation proceedings.

Our dedicated Agriculture & Estates team can help with an array of issues. If you have any queries regarding your partnership agreements or would like to put one in place, please do contact the team. I am based at our Colchester office and can be reached on 01206 217394 or caroline.dowding@birkettlong.co.uk.

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