Protecting the Family Farm24th May 2017
Everyone needs to protect their family’s future in the event of death. Those who run businesses also need to consider the future of their business. Farming businesses have particular issues to consider, so Will making becomes part of a bigger process. For example, a tenant farmer will need to ensure that the tenancy can pass to the next generation. Not all farm tenancies give such succession rights, so that a new tenancy might be needed.
Farmers who own their farmland will pass the land to their chosen successors under their Will. However, they still need to ensure that the business passes to the right people and this may require a change of the business structure. Many farms are run as business partnerships and unless there is a written Partnership Agreement that arrangement will terminate on the death of any partner.
There is an assumption that Agricultural Property Relief exempts all farms from Inheritance Tax. Unfortunately, it is not that simple. The exemption for farmhouses is limited so there can be tax to pay on the farmhouse. There can be a loss of tax relief in consequence of diversification and the narrow definition of “agriculture” used for tax legislation can take parts of a farm business outside the relief.
Richard Walford, Partner at Gilbert Stephens says “These considerations all sit on top of the normal family and tax considerations that everyone has to grapple with when making a Will. The simple message is that professional advice should be always be sought when you make or revise your Will.”
For more information on this subject, please contact Richard Walford on 01392 42 42 42.