Succession planning is putting a strategic plan in place for your farming business to help you and your family achieve long term goals. At Morton Fraser, we understand succession to the farming business can be a difficult topic to tackle: trying to be fair to all children and yet keep the business viable can be tricky. We understand that all too often family members can feel they have been treated unfairly, leading to tensions and upset.
Not having a succession plan can lead to more unwelcome outcomes and unnecessary cost. Talking about succession with everyone involved and appropriate advisers can lead to innovative ways of resolving issues. Having experienced advisers can also assist in reducing emotions involved, helping families discuss what they want for the future and putting together a plan to achieve that, so far as is possible.
Taxation, Wills and Partnerships
In farming succession planning the first consideration is tax and in particular Inheritance Tax (IHT) and Capital Gains Tax (GCT). The second strand is making a Will (and having a Power of Attorney). Tax knowledge and strategic planning feeds into the discussion you need to have to ensure your Will is effective. The third part is the partnership agreement. Farming businesses can use different business structures, sometimes a farmer is a sole trader, but often family members become involved and a farming partnership is entered into. There is often a reluctance to enter into a written partnership agreement but if there is a partnership 'at will', the provisions of the Partnership Act 1890 will apply by default.
To save money, avoid unnecessary disputes and ensure the smooth transfer of the farm to the next generation, succession planning is key. It may seem daunting but opening up the discussion can be a relief with the aim of finding solutions and avoiding future difficulties, often with significant financial consequences.
Agricultural and Rural Property Team
Morton Fraser act for farming families and can assist with all that is involved in succession planning. Working with you, your accountant and other advisers, we give clear advice at an agreed cost in a friendly and efficient way.