IT can be so easy to get consumed by the day to day running of your business, that you put off thinking about the future. ‘I’m too busy’, ‘I’m still young, I’ll deal with it later’, ‘I don’t want to talk about it, it’s too depressing’, ‘It’s too difficult, I wouldn’t know where to start’. But not giving thought to what would happen if a family member becomes ill or dies can cause serious problems.
In most farming businesses you have the complication of running a business with your family members. You may have multiple generations living under the same roof and involved in the business. As land prices have increased there are more and more disputes regarding farming businesses and because of the added family connection those disputes can become particularly unpleasant.
It is important to look at the overall situation considering the different elements of the business such as:
• has there been any diversification?
• who owns what asset?
• how is the business run i.e. a partnership, sole trader, company?
• are there any third parties involved?
The tax implications of all of these issues need to be looked at and consideration given to maximising the available allowances Agricultural Property Relief and Business Property Relief.
Often there are no formal documents, but merely an informal agreement between parties, which could in itself be an issue. It is not only a Will that needs to be prepared but other documents are important such as partnership agreements, shareholder agreements, lasting powers of attorney, formal tenancy agreements or grazing licences.
We recommend you begin this process by introducing succession planning as part of your business plan, involving the whole family. Not only must death and illness be considered but also retirement and how the next generation will step up as leaders and move the business forward.
Discussing these elements lets all voices be heard and hopefully will lead to less disputes. Involving all your professional advisors in your succession planning discussions is also vital to ensure every aspect works together and the process is a smooth one.
For further advice on succession planning call the RDP Agriculture team on 01633 413500.