The importance of Wills for farming families: safeguarding the future of your farm

12 August 2020 Written by Ware & Kay Solicitors Category: Wills and estates

“Keep Safe” is a phrase we have heard frequently in the past few months – whilst we all need to take heed – don’t forget the importance of keeping your farm or property safe too.

It is not unusual to have more than one generation of a family working on a farm and if the owner has not left clear instructions about who is to inherit the estate there is huge potential for dispute.

‘With the increase in land prices over the years, farm assets may be worth literally millions of pounds and the consequences of a family member dying intestate without a Will can be disastrous’ says Laura Carter, Wills & Probate Solicitor.

Making a Will is particularly important in farming families where some members want to farm and others do not or cannot. Achieving equality between children with different levels of involvement in the farm requires careful planning.

Many busy farmers put off planning for the future but having a structured and thoughtfully planned Will is vital to safeguard the future of your enterprise. The recent Covid crisis has given many people an opportunity to reflect on things.

Laura Carter explains why it is so crucial for farm-owners to make a Will.

Avoiding conflict

A Will gives you the opportunity to make considered choices about who should run the farm after your death. If you die intestate, you have no say in what happens to your assets. In this situation the intestacy rules would apply meaning the farm could be divided between a number of close relatives. This can cause disputes within families and threaten the viability of the farm business, particularly if farming children need to borrow money to buy out siblings who have chosen a different career path.

Providing equally for children

Parents usually want to treat their children as equally as they can when it comes to passing on the family business and its assets but there are often different levels of involvement in a farm. There are a wide range of options when it comes to providing for children who do not wish to join the family business:

making gifts of non-farming assets (such as property or investments);
setting up a life insurance policy in trust to provide a cash lump sum;
leaving the farm to your children equally, with each receiving part of the freehold and a rent as income; or
making pension provision.

Tax planning

Unless you plan carefully for the succession of your farm, your family may not benefit fully from available tax reliefs and may have to pay more inheritance tax than necessary. This could ultimately impact on the long-term success of the farm. It is important to take specialist inheritance tax advice to ensure that you pass on the business in the most tax efficient way possible.

Agricultural and Business Property Relief are potentially generous, but the rules are complex (and certain conditions have to be satisfied in order for them to apply). Getting the right legal advice at an early stage and reviewing your situation regularly is essential

Choose executors wisely

It is important that you choose executors with a good knowledge of your farm business because they will be responsible for managing your property while your affairs are dealt with after your death. In some cases it may be wise to have somebody other than the potential beneficiaries as an executor, particularly if you feel there may be potential for conflict between family members.

Keep your Will updated

Common causes of disputes relating to Wills include issues arising from divorce, second marriages, unmarried partners, provision for step-children or children from a previous marriage. You should also have your Will reviewed by your solicitor at least every five years to make sure it still reflects your wishes - or sooner if your personal circumstances change.