Succession planning for farmers is a hugely valuable exercise that should be undertaken and one that can save significant sums of money.
Many farmers say that they never want to retire and stop farming. Maybe this is just because farming is in their blood but it is also an obvious way to ensure the family benefits from valuable tax reliefs. This is an essential and well used path for succession planning for farmers, with both Agricultural Property Relief and Business Property Relief potentially available against inheritance tax upon death - if the farmer is still farming at the date of death.
Along side this or as an effective alternative, it is vital for famers to put in place plans for succession rather than to do nothing and to leave everything to be sorted out by the family after death.
Key things to consider for succession planning for farmers
Check the farm deeds
Where are the deeds, are they correct, whose name are they in and do they reflect the actual ownership of the farm? Are the deeds registered at HM Land Registry? If not, they should be, as registration of the deeds can prevent boundary disputes later on.
Your Will
Is a will in place? If not, the farmer should make a will to make sure that the farm goes where he wants it to following his death. If there is a will then is it up to date, does it do what the farmer wants, is it tax effective?
Agreements
Review the terms of any partnership agreements and if they are verbal agreements think about having written agreements prepared.
Farm Accounts
Have they been reviewed recently or at all? Do they link in correctly with any partnership agreements and do they deal correctly with the farmland?
Powers of Attorney
Does the farmer have a power of attorney in place and if so is it still appropriate? Is it an Enduring Power of Attorney or a Lasting Power of Attorney for property and finance or a Lasting Power of Attorney for health and welfare. If there is no power of attorney would it be a good idea to put one in place?
Tax planning actions to be taken
Once there has been a fact find then after that there would then be an opportunity to review the extent to which the farm will have a liability to tax on the death of the farmer and possibly to undertake tax planning measures which might very well reduce the amount of tax payable on death by the farmer.
If lifetime tax planning measures are put in place the chances of being able to pass the farm down to the family are very much increased.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
