In the recent contentious probate case of Clitheroe v Bond, the court overturned the validity of...
Succession planning for farming families
Succession planning is an essential part of running the farming family business and is an effective tool to help protect your business and the future viability of the farm for the next generation.
What is succession planning?
Succession planning is about having discussions about the long-term plans for the farm, and how this is achievable within the family structure.
It is important to remember that succession is not about retirement, but a useful way for the older and more experienced generation to impart knowledge and skills to the younger generation so that they are then equipped to move the business forward.
We all know that farmers are notorious for never retiring, so it is important to identify when the right time to involve others in driving the business forward.
How should farming families be succession planning?
Firstly, it is important to have open discussions with all family members, and all professionals. This includes your solicitor, land agent and accountant so that the advice is appropriately tailored to achieve your future goals.
Granted, these are not always easy discussions to have, but it is important that everyone knows what the plans are moving forward, which should absolve any disagreements or potential disputes at a later date.
It is important to ensure that wills, powers of attorney, partnership agreements or other types of agreements are all in place to ensure that the business ends up in the right hands at the right time.
Often, while land passes down through the generations, it is often found to not be owned in the way it was thought to be, which can cause some unhappy consequences on death.
For example, it may be believed that land is owned as a partnership asset, only to turn out it is owned by an individual outside of the partnership, which has different consequences for the owner and the partners. It is therefore vital, as part of succession planning, to check the true ownership, and consolidate everyone’s understanding so that there are no surprises later.
What are the steps I should take?
1. Start the discussion early with your family – don’t leave it until it is too late to alter the outcome.
2. Have a meeting with your advisors to establish the true position, as if this is different to what is believed then it can often be rectified before any issues arise.
3. Consider the future of the farm:
- What are your wishes?
- What are your family’s wishes?
- How do you want to provide for your family and distribute between those that work on the farm and those that don’t?
- What if the farmland becomes subject to hope value for development?
- Is there a need/desire for diversification?
4. Remember that there are always possible tax traps for any decisions being made, so again it is important to seek the relevant advice to avoid any unexpected consequences.
If you would like to discuss your next steps for succession planning, then please contact our specialist Agriculture and Estates team.
I am based in our Chelmsford office and can be contacted on 01245 453830 or firstname.lastname@example.org.