The consequences of a death in the family is something that many farming families do not consider until it is too late.

Often, the running of the business day to day is the first and only priority.  Thinking about who is to inherit the farm often takes a back seat and it can be a difficult conversation to have.

Yet it’s a discussion that is vitally important to protect the business, one that the family has put its heart and soul into, potentially, for generations.  Making a plan and discussing it with the next generation is the first step in achieving that goal.   

Tax is as relevant to estate planning as making a Will and it is essential that advice is taken on both legal and tax aspects when considering the succession to a farm.

Agricultural Property Relief (APR) from Inheritance Tax is a generally well-known and well understood relief, but it is not without its traps for the unwary.  It is only granted against the “agricultural” value of land and buildings, and this does not always match the open market value, which can often be far greater, especially if any or all of the land is suitable for development.   Similarly mixed estates involved in farming and investment business (such as holiday lets) must be particularly careful to ensure that non-farming activities do not jeopardise the available farming tax reliefs.

The farm may be the most valuable asset in a family and where there are several children are involved, not all of whom are interested continuing the business, there is often a dilemma of how to provide for everyone equally.  While there is no easy answer here, options include the use of life assurance, pensions and the gifting of other assets during lifetime, or in a Will, to try to redress the balance.   Financial advice is essential to identify potential solutions to these problems. 

Wright, Johnston & Mackenzie LLP has a team of legal, financial and tax experts, as well as agricultural specialists, who have the knowledge and experience needed to guide you through these issues.

To find out more about WJM visit www.wjm.co.uk.

Twitter: @WrightJohnston

LinkedIn: https://www.linkedin.com/company/wright-johnston-&-mackenzie/

 

**This article contains sponsored content and does not necessarily represent the views of The Scottish Farmer.​​