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Generations on the farm

Given that the farm is often woven in to the fabric of your family, the most frequent conversation we have with farmers is that of succession and how to fairly pass on the often substantial wealth to the next generation.

 

A non farming child

Typically there is a farmer in the family amongst the children or grandchildren and you want to reward that commitment to the farm by passing the farm on to that person.

The problem comes now where land prices are sky high and show no signs of stopping, making the decision even more polarised than it ever was, as then what do you do for the non farming parts of the family, that often didn't farm because someone else in the family took it up more readily and there's only so much to go around.

We try hard to help you determine a fair outcome, and this can take many forms including but not limited to:

  • Leaving land to the non farming child, but being careful to ensure that the farming operation is protected and can cope with any rental burden that would arise.

  • Take out some life insurance policies to leave a cash sum to the non farming child.

  • If you have cash assets, load up on leaving those assets to the non farming child, but be careful to make sure you also give something a bit more liquid than farmland to the farmer, as they need room to invest and innovate.

  • Sometimes, if your children are very reasonable, they fix it for you and come to arrangements that you never imagined they would consider fair.  While the farmland does have a huge value now, it's really not accessible wealth and all that matters is how much money the farmer of that land can make off it.  It helps when the non farming family member understands this, and accepts, for example an overage clause on any development value in the future.

Farming cousins

One thing is for sure, if you can get cousins to farm well together you are an exception to the rule.  This often results in splitting up of farming operations in to smaller parts, each viable on their own.

This of course arises after a farm has gone through multiple succession cycles and can be one of the most complex asset management exercises you will ever be involved in.  We have been through the process quite a few times and know what to look out for.  Depending on how your farm is structured you may be dealing with a corporate demerger in the case of a company, or a partition in the case of a partnership.

Typical issues in generations

Grandparents

Children

Grandchildren

You probably won't be surprised to learn that the average age of UK farmers is 59.  Most farming setups operate with the oldest family member at the top and still very much making big decisions.  We will advocate effective ways of passing control on as this is one of the keys to surviving as a family farm.

'Children' are often far from being children, this is normally the 45 - 65 age group.  There are a mixed bag of farms, mostly the older generation have given up the control of the farming operation to this age group but very often they have not given up the capital for a variety of reasons.  We explore the reasons and make sure that they are in the best interests of the farms survival.

Full of energy and ambition if you are lucky enough to have this person (or people) in your family.  A balancing act between handing out risk and control versus maintaining oversight while they learn the ropes.  Tap in to this energy as much as you can.

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