Children of farming families could be left high and dry despite their parents’ promises, with half of those making business inheritance assurances to their offspring also admitting they could still change their mind, research from Sussex law firm Mayo Wynne Baxter has found.
The research shows that despite 82% of agricultural business owners having discussions with their children and 67% making promises, only 50% of all farm owners have committed their intentions to paper.
With no will in place, families left behind could see their livelihoods taken away or could be forced into inheritance disputes, racking up thousands of pounds in legal fees.
Caroline Flint, partner specialising in dispute resolution and contentious probate at Mayo Wynne Baxter, said: “Promises and assumptions are futile without a will, and misunderstandings can often lead to lengthy and emotional disputes.
“When a family is in mourning, dealing with legal disputes is the last thing anyone wants to go through, so even though conversations about inheritance can be tricky, transparent communication early on can help ensure expectations match up to the reality of children’s inheritance.”
Agriculture business owners said that the main reasons they would exclude a relative from inheriting the family business were worries that they would sell the farm to a member outside the family and concerns that they were not skilled enough to effectively manage the business (both 32%).
A further 46% of respondents believed the concern should only be inherited by people who have worked in the business.
The unexpectedly severe changes to agricultural property relief and business property relief made by the Chancellor of the Exchequer in the autumn mudget could also influence farmers’ decisions about the future.
The announcements may force agricultural business owners to sell off some of their assets during their lifetime to stay under the £1million threshold and not pass on the tax implications to future generations or sell their land and business altogether, impacting the inheritance of those left behind.
Mayo Wynne Baxter is urging families and loved ones to have open and honest discussions early on to avoid any shock or disappointment that could lead to family disputes after a loved one has passed away.
The firm is encouraging families to seek appropriate professional advice to prevent distressing legal battles. This is particularly crucial ahead of inherited pensions being brought into the inheritance tax threshold.
Caroline said: “Agricultural businesses are unique as they not only provide careers and income for multiple generations, but they are usually where the ancestral home is and contain many treasured memories, making inheritance discussions emotionally sensitive.
“However, this research highlights how important it is for every agricultural business-owning parent to sit down with their children and make clear what the future looks like, especially in light of upcoming tax changes.”
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