Farming Insight: Taking action over succession
By Graham Page, a partner, Ensors Chartered Accountants
As we approach the Festive Season, and the period between Christmas and New Year in particular, I wonder how many farming businesses will make the resolution that 2013 will be the year that they plan early for succession of the farm to the next generation.
Farming is one of the true succession industries often with businesses that have been passed through many generations of the same family. Compare this to the old adage for many UK family businesses where “first generation starts the business, second generation grows the business and third generation ruin the business!” Notwithstanding this, farming succession is not always straightforward. Farming families of today are not the same as the typical families of yesteryear. Nowadays it is not just about passing onto the eldest son anymore, other children may want to take on the farming enterprise or alternatively financial provision is needed for lifestyles away from farming.
Generally this can all be achieved but all require careful planning to ensure minimum pain to those concerned. Whether this means minimising the spread of financial resources away from the core farming business, minimising the additional borrowings or financial commitments of the farm or minimising tax liabilities on any transfers.
All too often I have taken on new clients that have left their succession considerations too late and are now faced with children that are feuding between themselves over financial issues or are faced with having to sell property that they had wanted to retain. Planning needs to start as early as possible and should ideally involve an advisory team comprised of accountants, solicitors and land agents. Where properties are to be either sold or ownership changed, thought needs to be given to minimising tax liabilities through the use of the Capital Gains Tax reliefs which remain very beneficial under the current taxation climate. Should land be passed to non-farming children subject to a tenancy back to those that are to take the farm on? Can off-lying properties be passed to non-farming children? Or can provision be made for them out of non-farming wealth? Wills should be reviewed and amended where necessary and the use of Trusts should be considered where additional protection is required.
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Generally, most family disputes arise where there is either inequality or where surprises arise on the death of the older generation, so if you want 2013 not to be an unlucky year make it your New Year’s resolution to take action over succession.
For further information or advice on succession issues please contact Graham Page on 01284 722331 or email firstname.lastname@example.org
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