Business and the Law: Careful succession planning is vital, says Mark Wrinch

SUCCESSION planning is an important consideration for any family and a recent court decision regarding inheritance planning, both on death and in relation to lifetime trusts, has put the cat among the pigeons, confirming that not only farming families but any family considering succession and drafting complex wills should beware.

The recent case of Suggitt -v- Suggitt has just been decided in the Court of Appeal. A farmer’s son, John, was denied the right of inheriting the 400 hectare farm and farmhouse in his father’s will. John had not only failed to graduate from agricultural college but also squandered another inheritance. Therefore the father, presumably knowing John’s nature, left his entire estate to his daughter Caroline. The will contained the following clause:

“I express the wish (without imposing a trust) that if at any time my son John… shall in the absolute opinion of Caroline show himself capable of working on and managing my farmland that she shall transfer my farmland to him”

Caroline presumably decided that John was not capable of doing so and refused to grant him any part of her father’s estate; arguing that her father’s intention was that John should only inherit if he demonstrated his readiness and capability to farm the land.

John disagreed, claiming that the farmland and majority of the farm assets should be transferred into his name. He argued that his late father had promised this during his lifetime although he was unable to provide any clear proof.

Sadly, the sorry tale concluded in court, with many, understandably, thinking that if the father had expressly stated John should receive no part of his estate, then John faced a steep climb to success. The majority, in this case, were proved wrong!

The court decided that although the evidence did not prove the promises allegedly made to John by his late father, the Will remained a fair reflection of his wishes.

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Therefore, on the balance of probabilities, it was likely that the late father had made some kind of repeated promise to John that led him to expect that the farmland would be his after his father’s death.

John showed reliance on these promises by continuing to work on the farm in return for payment at a lower rate than would have been expected, when he could have worked elsewhere at a higher rate. The court was persuaded that John should be granted the farmland and a residential property.

The message is simple: consider succession planning very carefully indeed!

: : Mark Wrinch is a lawyer in the rural business of Essex-based solicitors firm Birkett Long LLP