Accountancy | Tax Planning | Business Support

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.

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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.

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

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• 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.

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

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• 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.

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• 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.

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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.

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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.

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