Farming Estate Succession Planning

Good succession planning is vital for farming families. It allows you to structure your estate in the most efficient way possible and make provision for your loved ones in the future. It will also go a long way to avoiding any misunderstandings or disagreements as time goes by.

The process of handing on a family farm to the next generation can be complex. As well as ensuring a smooth transition to your successor, you may also want to provide for family members who are not involved in the day to day running of the business.

Expert advice from a solicitor with in-depth experience in farm succession planning is important to ensure that you have the right legal foundation in place and that you and your family understand the implications of the plans you are making.

Our expertise with succession planning for farming families

At Tanners, we have extensive knowledge of farming and agricultural businesses and the issues that can arise in passing these on to the next generation. We will work with you to establish exactly what the right framework will be for your estate and put the right documentation in place to ensure a smooth transition.

Our services include everything from advice for farmers on making a will, inheritance tax advice for farmers, estate administration, the creation of trusts, drawing up lasting powers of attorney and resolving succession disputes.

We represent clients across the Cotswolds, Wiltshire and Gloucestershire, as well as London, helping to structure their affairs so that families are protected and tax liabilities minimised.

Protect family relationships with good succession planning for your farming estate

Disagreements regularly arise between farming families where succession planning has not been robustly addressed. As well as destroying relationships, this can seriously damage the profitability of a farm and could mean that substantial estate funds have to be used defending legal action.

We can work on your behalf to ensure that this does not happen to your family by putting the right framework in place for your farm and your beneficiaries.

Speak to our farming estate succession planning experts

To speak to one of our farm succession planning experts in Cirencester, please feel free to contact us in one of the following ways:

How we help with succession planning for farming families

When we work with you and your family to put together a strategy for the future, we will ask you to consider a number of issues before we start putting together a plan and preparing the accompanying legal documents.

Ownership of farm assets

The first step in putting together a robust farming succession plan is to identify all of the farm assets, who owns them, and whether there are any claims over them. This will include occupation of farm buildings and land.

Defining family members’ roles

You will also need to clearly define how the business currently works, to include who has responsibility for different areas and where revenue streams are going.

As well as looking at the current situation, you should speak to your likely successors and find out their aims and ambitions for the future and how much time they plan to put into the business in the short and long term so that a plan can be drawn up that will stand the test of time.

Account for family members not involved in the business

Provision can be made for non-farming family members in a number of ways when a farm is passed on to the next generation. For example, a company could be incorporated, allowing them to hold shares that entitle them to dividend payments. They could receive a property, if one is available, or use of land. If this is not possible, then money and personal possessions could be left to them.

We can discuss with you the various options available for benefitting non-farming children and provide guidance to your executors and will trustees when the time comes.

Continuity planning for agricultural tenancies, contracts and agreements

Where a close family relative of a tenant with an Agricultural Holdings Act (AHA) tenancy already has a commercial holding, they are eligible to succeed to an AHA holding provided they meet all of the eligibility criteria.

We can advise you how to ensure that the next generation qualifies to take on your tenancy and also review other contracts and agreements you have entered into to ensure that they can be carried on when the transition is made.

Tax planning for farming estates

Careful tax planning is crucial for farming estates to ensure that all available reliefs are used and that no more tax is paid than necessary.

We can advise you as to your potential tax liabilities in the future, and where necessary restructure your farming business to make it more tax efficient.

What are the benefits of succession planning for farming families?

Detailed succession planning provides certainty to your loved ones, ensures they are provided for in the future and makes sure your estate is passed on and farmed in the way that you would wish. It can often be beneficial to your business as well, as everyone involved takes a good look at the various parts of the enterprise to see what is working well and what they would like to do more of.

It can help family members to direct their focus and really feel valued in terms of the work they are contributing. For those looking to step back, strong succession planning can give them the opportunity to start handing over control and decision making.

The best succession plans allow the next generation to take on responsibility before they have to, so they can learn the business skills they need while support and guidance is still available.

Does Inheritance Tax apply to family farms?

Some agricultural assets can benefit from relief from Inheritance Tax,. These include the following:

  • Land that is used for growing crops
  • Land used for intensive animal rearing
  • Stud farms
  • Short-rotation coppice land where trees are planted and harvested at least every ten years
  • Land not currently being farmed under the government’s Habitat Scheme
  • Land not currently being farmed under a crop rotation scheme
  • The value of milk quota for a piece of land
  • Some agricultural shares and securities
  • Farm buildings, farm cottages and farmhouses

Agricultural relief does not apply to:

  • Farm equipment and machinery
  • Derelict buildings
  • Crops that have been harvested
  • Livestock
  • Property that is under contract for sale

How can you divide a family farm?

There are a number of options for passing on a family farm so that more than one child can benefit:

  • A partnership agreement can allow children to run the farm together
  • Diversification can add new, sustainable sources of income to a farm and provide another income stream for one beneficiary to manage
  • The farm can be placed into trust, with all of the children as beneficiaries, or adjusted as appropriate to reflect their input into the business
  • A company could be set up, with the capacity to pay different dividends to different family members, in accordance with their contributions
  • Non-farming assets could be given to non-farming offspring to compensate for leaving the farm to those who are involved in the business

These options can be tailored to provide income and stability for all members of the family, including the generation who may be considering retiring. At Tanners, our solicitors can discuss all of the possibilities with you and explain the benefits of each.

What happens when you inherit land?

It is never too soon to put the right legal structure in place for your enterprise. If you have inherited land, you should ensure that you have a valid Will and lasting powers of attorney in place and that you know what you would like to happen in the future.

Speak with our farming estate succession planning solicitors in Cirencester today

To speak to one of our farm succession planning experts in Cirencester, please feel free to contact us in one of the following ways: