One day all this will be yours.
Or will it? Handing a farm on to the next generation can be fraught with difficulties. But that is no excuse for burying your head in the sand (or soil)
Farming’s not easy, we know that. Alongside the perennial worries of weather, prices and managing a family business, the rural sector in 2019 faces additional uncertainty around Brexit, tariffs and the continued existence of subsidies.
In this climate, it’s not surprising that some families are adopting a ‘wait and see’ approach to long-term decisions such as inheritance tax planning.
However, one of the common causes of problems with rural succession is people’s reluctance to take action. The older generation may hesitate to hand over the reins, or the younger generation may hesitate to take hold of them. As a result, critical planning may not be done at the most advantageous time. This could be very unfortunate for the family.
For example, one possible consequence of bad advice or delayed decision-making may be a legal rights claim or the break up or sale of the farm.
That’s a good illustration of the truism that succession planning does not become easier if you defer it. In reality, you leave your family and your business vulnerable to bigger problems.
Another truism of succession is that there’s usually a solution available if you get (and act on) good advice early on. This usually requires a holistic look at the situation, thinking not just about who will inherit but how else to ensure the farm is financially viable in future. For example, a law firm with rural and private client expertise working with your accountant should be able to:
- help you balance short-term decisions (for example, about the structure of the farm or agricultural support payments) against longer-term succession planning. It’s important to avoid short-term gains that jeopardise the latter – a problem that some families discover too late
- discuss opportunities for diversification with you, and the legal benefits or pitfalls that come with them
- alert you to the possible impact of regulation on your proposed course of action.
In summary, we know these are difficult times for farmers and rural businesses, but a ‘wait and see’ approach could make them harder still. There are solutions available to protect your future, and it’s worth taking advice on how they could be implemented.
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