Farming - Protecting a Lifestyle
Farmers plan the annual cycle of production in the expectation of a harvest later. As a farmer you regularly invest time and money today for a reward in many months’ time. Yet the irony is that you may not devote much time and thought to protecting the farming lifestyle well into the future and perhaps for generations to come.
In common with other businesses, farming faces risks. There are the obvious ones which you deal with from year to year : weather, poor harvests, pressure on cash flow, changes in regulation. There are also the less obvious ones such as :
Disability and illness
Retirement and Succession
If asked, you probably have assumptions about what would happen but have you done anything to ensure that your expectations are not frustrated by events outside your control?
Disability and illness : the assumption may be that other members of the family will be able to keep things going if you are unable to work in your usual way – but has this been discussed?
Who would manage your business if you were unable to? Have you made a Lasting Power of Attorney?
Do your children want to follow you into farming? What if the accident or illness is suffered by one of the younger generation?
How many families can the farm really provide for ?
Succession : whether succession is planned or unexpected (eg following a death or disability or. perhaps, a dispute between the business owners) arrangements will need to have been put in place.
What has been agreed?
What does your partnership agreement (or shareholder agreement) say – assuming you have one?
What farm land and other assets are held by, or on behalf of, the business? And is that clear from the Title and from the Accounts?
What retirement provision has been set aside for you?
Will you remain dependent on the farm during your retirement?
Will the farm pass to all your children ? Or will it pass to some but not others?
What provision do you want to make for any children not following you into farming ?
Have you made a Will?
Tax – you may be working on the assumption that the farm land and buildings, plus the live and dead stock, will all pass on free of Inheritance Tax but there are a number of pitfalls.
Have you taken advice on the availability of Agricultural Property Relief and Business Property Relief and the steps you should take to preserve those reliefs ? Speak to us at SWLaw for help in securing your lifestyle for yourself and for future generations.