As a farmer, you have dedicated your life to your land, your crops and your animals. But what will happen in the next generation? Succession planning is a crucial part of farming, and it involves putting in place the necessary measures to protect the future of your farm and ensure that it will continue to thrive and benefit your family for years to come.
Succession planning measures
Below we set out the succession planning measures you need to put in place to protect the future of your farm.
Creating a Partnership Agreement
Where more than one generation is involved a partnership agreement is crucial. This will outline the roles each family member is to play in the operation of the farm, confirm their rights and responsibilities and control the division of profits and assets.
If one of the partners dies, the partnership agreement will ensure that the survivors can continue with the minimum disruption to the farm business. At the same time, it will protect the value of the late partner’s interest in the land and business for their chosen successors, as specified in their Will.
To minimise inheritance tax it is usually best for land farmed by the family to be an asset of the partnership, even though individual family members may have particular ownership rights which are private within the family.
Having consistent Wills
It is equally important that members of farming families have Wills that are consistent with the partnership agreement and with each other.
Sometimes parents have to balance the interests of those of their children who will continue farming with children who are to make their way in the outside world. A critical question here is what is affordable. It may be possible to provide for everyone, but, if not, hard decisions must be made.
Those who farm themselves know how hard they have to work to look after everything and continue to make a profit. This is not always so obvious to family members who see a desirable rural lifestyle and potentially very valuable assets. Properly thought-through Wills, perhaps with trusts for future generations, will help to avoid costly conflicts, while providing flexibility for the future.
Remember that Wills should be reviewed and updated regularly – we recommend at least every five years – as the needs of your farm and family change over time.
In order to ensure that your farm’s future is protected, it’s important to seek the advice of professionals at every step of the way. This includes assistance from solicitors, accountants, and land agents. They can help to ensure that your succession plan is comprehensive and addresses all areas of concern. At least one of them must be expert in all the tax issues involved in business and succession.
By working with professionals, you can make informed decisions about the future of your farm and ensure that it continues to thrive for generations to come. They can help you to create a plan that’s tailored to your unique needs and provide guidance on the best way to achieve your goals.
How we can help
Explore our comprehensive range of services at our Agricultural Land, Farms & Estates web page to discover additional ways we can assist you.