Making way for the next generation
According to DEFRA the average age of the UK farmer is now over 65 years old, and whilst a farmer will never truly ‘retire’, very few have succession plans in place.
Clearly drawn up plans should be made in good time, even if you are planning for 20 plus years ahead. Every farming family will vary in size and complexity, and defining who will inherit which assets is not always straightforward. Succession planning should involve everyone with an interest in the farm to avoid misunderstandings and potential disputes.
Wills need to be kept up to date and properly drafted; an old or ambiguous Will can be as problematic as leaving no Will, and remember that marriage nullifies previous Wills. There will also be important tax considerations, such as Capital Gains Tax and Inheritance Tax. It is common for assets to be spread across different family members and this should be done in the most tax efficient manner. If the older generation wish to take a step back and transfer farmland to other family members but not the farmhouse, the landmark case last year (HMRC v JN Hanson) enabled Agricultural Property Relief from Inheritance Tax on farmhouses even if the house and the farmland are not in common ownership, but are in common occupation.