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How to secure your farm business for the next generation
Spring is a busy time for farmers and those who support them. Lambing, calving and the last of the spring drilling means that there is little time to think about the long-term plans for the farm business. 2020 has been no exception to this. With many farmers recovering from the unprecedently wet Autumn and Winter of 2019, the nation was then unexpectedly thrown headfirst into the Coronavirus pandemic in March. Suddenly, the farming community and many businesses supporting the agricultural industry were put under the most pressure to ensure food security since the Second World War, whilst dealing with similar issues as our parents and grandparents did during that time – staff shortages, supply chain issues. Nonetheless, the call to “feed the nation” went out and the farming community answered. We clapped for our NHS every Thursday at 8:00pm – deservedly so, but the author of this article believes that we should clap just as loudly for our farmers who work so hard every day of the year to fill our fridges and manage our landscape, often in difficult conditions.
But even in these unprecedented times, it is important to think about the future, even if it seems more uncertain than ever. Have you given any thought to your farm succession plan lately? Do you even have one?
Farm succession planning is not just as simple as writing a Will and occasionally updating it (although that is part of it). It requires a look at the bigger picture.
In addition to ensuring that they have a Will in place and that it is up to date, farmers should consider their Farm Partnership Agreement alongside the Will to ensure that there is no conflict between the two documents. In the event of a dispute, the Farm Partnership Agreement will take precedence over the Will. It is important to ensure that the two work together so that you can take peace of mind in the fact that your wishes will be respected and that conflict within the family and the business will be avoided. If you don’t have a formal written partnership agreement, then it is time to get one in place so that everyone knows where they stand.
You should make sure that you are clear what is an asset of the Farm Partnership and what belongs to you personally or what is in joint names with a spouse or other family members. Again, this is the best way to avoid conflict in the family. Even the closest family relationships can be put under strain following a bereavement, so don’t just assume that everyone in the family who gets on now will continue to get on after you are gone. The combination of grief, family rivalry and money is an intoxicating one and can lead to unimaginable heartbreak following a death. It pays to be organised so that you can ensure that your family can ride the storm after you are gone.
As part of your farm succession planning, you should also ensure that all of your land is registered with HM Land Registry. Not an easy task, but it is important to be certain what land belongs to the farm business, what belongs to you personally and what belongs to other family members or is leased to another business.
You should also consider getting some tax planning advice from your accountant, especially if you have a diversification business. It is a difficult time, with many diversification businesses struggling with lost bookings or low customer numbers due to the Coronavirus pandemic, but in many ways, this is a good time to consider tax planning for the future alongside other financial matters as you do your best to shore up your diversification business for when things return to normality.
Another matter worth considering as part of your farm succession plan is Lasting Powers of Attorney. These are documents where you appoint a trusted person or people to act as an attorney for you in the event that you were to lose mental capacity and be unable to make decisions for yourself. Attorneys can be appointed to make decisions on your behalf about the kind of medical treatment you might receive or to manage your property and financial affairs on your behalf. This is important to consider both from a personal point of view and also when considering who may be able to make important business related decisions such as how the money you make from your farm business is spent. It is big decision to make and something you should discuss both with a solicitor and members of your family prior to putting anything in place.
It may seem impossible to plan for the future in such uncertain times but doing so will give you peace of mind and feeling of being at least partially in control of matters in the changeable times in which we live.
For more information and advice, please contact a member of our Agricultural team on 01653 600070.