It is that time of year again when most of us start thinking about what to put on our Christmas lists. A new tractor perhaps or that fancy silage bailer and wrapper or perhaps a new cow or tup; Santa does come to good farmers too you know! Mind you if you have been bad and not filled in your RLE1 form in correctly you might find Michael Gove in your stocking!
I love the festive season. It is a time for celebrating with family and loved ones with grandparents, parents, children young and old and if you are lucky grandchildren all sat around the Christmas table eating too much turkey and far too much chocolate.
Now, not wishing to be a Grinch, but before you can say Rudolf you will have eaten one too many cold turkey sandwiches, the needles will have fallen off the tree sticking through your socks and the tinsel will have lost is sparkle. An unknown but exciting New Year is coming!
When I was a young dairy farmer I never gave any thought to the coming year or the future in general. As far as I was concerned the cows needed milking twice a day today and everyday even Christmas and New Year. The daily routine of milking, feeding, mucking out, looking after young stock was relentless. I was so preoccupied with the here and now I took my eye off the future. I had two young boys a very active father and mother and two brothers (not interested in farming). The farm and my life were ticking along nicely and then it happened; my father suddenly dropped dead from a heart attack! It was a terrible time but, unlike me my dad was smart, he had a will, the farming business had been put into a partnership and he had spoken to my mum, my brothers and me making provision for us all in the event of his death. The farming business survived, my non-farming relatives were supported and life went on but sadly without our lovely father.
I shudder when I think things could have been so different. The family could have split we could have had huge tax liabilities we could have even lost the farm. All my grandfather and my parents hard work would have been in vain. You might think that sounds over dramatic but in my role as an agricultural solicitor I have seen just such a scenario happen and sadly on far too many occasions.
If I would ask you to do one thing in 2018 it is to consider how you want all your hard work to continue after you have gone. The subject of succession is not a jolly one and no one wants to contemplate their mortality but it is too important a subject to brush under the carpet.
It does not matter whether you are an owner occupier or a tenant farmer to get the ball rolling you do not need lawyers or other professionals; just sit down with the family and have an open discussion about each family members needs and wants for his or her future. Once that discussion has been made then it is the role of the professionals, acting with your information, to put in place such legal documents that will make the transition from one generation to the next as seamless as possible. It all sounds very simple which it is compared to what might happen if the unexpected happened and no contingency plan has been made.
Below are a few bullet points to consider before you have your family gathering. Some items may not be applicable to your situation and the list is not exhaustive but it is a start;
- Do I have a will and is it up to date?
- Do we have a Partnership Agreement? If not do we need one? If yes does it cover the situation now and going forward?
- Do I need to form a limited company or other form of business structure?
- How do we hold our tenancy? Is it an Agricultural Holdings Act or Farm Business Tenancy?
- Am I as tax efficient as possible regarding Inheritance Tax, Capital Gains Tax and Inheritance Tax?
- Have my potential predecessors taken formal education in farming?
- What if my son or daughter get married or have a civil partnership do they have a prenuptial agreement?
- What is the situation re diversification on the farm?
- What provision will the farming business make me for my retirement?
As I said the list above is far from exhaustive but it is a start and one question will lead to ten more once you all start taking. Now I was fortunate; as a family, we could talk freely and openly but I appreciate not all families are like this. If you feel you need help to get the family together to talk we can help. There are so many ways for individual family members to make their feelings heard.
No one farming business is the same therefore there is no one solution. The Agricultural Team at Bendles have the expertise to work with you to help make the right decisions, tailor made to suit your unique situation.
If you would like to discuss the issues surrounding succession or any other matter relating to your farming business or a countryside matter then please do not hesitate to contact us.
May the team and I take this opportunity to wish you and your family a very happy Christmas and a prosperous New Year for 2018 and for decades to come!