The Rural Agriculture Group (RAG), an association of specialist agricultural accountants, due to release the results of its Farming Survey in the next few weeks, but initial findings appear to show some alarming figures.
The Survey covers all manner of issues, including matters which farmers consider to be their greatest challenges, but I was interested in was the responses about succession and surrounding issues.
I know that he is ‘marmite’ but Jeremy Clarkson is doing a great job of showing how complex farming is and that it isn’t something you can just take on overnight. ‘Clarkson’s Farm’ highlights the economics of farming, the regulations which need to be adhere to and the sheer hard work and long hours involved.
Jeremy took on farming his land when the farmer who worked the holding on a contract basis decided to retire, so he will have had some notice of the decision. What if you don’t have notice?
Agriculture is not a ‘young’ profession. By that I mean, the average age of farmers in the UK has hovered around the late 50s to early 60s for the last 20 years. Many farmers work well beyond normal retirement age.
So, what happens if an older farmer suddenly falls ill, becomes incapacitated or dies? Well, there will likely be younger family members involved in the business who can just ‘carry on’. Or could they? Would they know everything that needed to be done? Have they been fully involved in running the business or have they been kept out of that by the older generation? Are they a partner or a named signatory on the bank accounts? What if the land is tenanted? Will the younger generation be in a position to apply for a succession tenancy?
You can see that there are lots of issues which may present themselves in the wake of a sudden life event, and these things tend to come without notice, so the farming family may not have the luxury of the notice afforded to Mr Clarkson.
The results of the RAG Farming Survey reportedly reveal some concerning statistics:
- 68% of respondents said they did not have a succession plan
- 53% either don’t have a Will or said they need to update the one that they do have
- 63% do not have an up-to-date shareholder agreement or partnership agreement
- 55% said they don’t have a power of attorney in place
Anecdotally, any professional who deals with farming families on a regular basis will tell you that the families often don’t have the necessary documents in place to deal with the consequences of illness, incapacity or death of a family member. However, even I was shocked by these statistics. The figures were much higher than I had anticipated.
So many times, we hear that the family all get on and they don’t need to worry about any of these things. Hopefully, that will ring true and families won’t be affected by a sudden change of circumstances, but generally speaking that will only be the case if they have made plans and have the right documents in place.
Good planning can be the difference between being able to carry on running the farm as before or suddenly finding that you can’t get access to the bank accounts to pay for fertiliser or, worse still, realising that you weren’t aware of regulations and procedures and being on the wrong end of a prosecution.
What if one of the family passes away and you then find out that the farm is actually a personal asset and not a partnership asset? What does the Will say? Does it leave the assets to all children? What if some of those aren’t farming and want to realise their share? What if there isn’t a Will? In that case, there are rules about how the assets will be distributed and those rules may well not be the same as the family had intended.
I could go on and on about problems which can be encountered when farming families don’t have the right documents in place, but I hope the points I have raised will go some way to highlight the difficulties which can be encountered without proper planning.
Here at Jacksons, we want our farming clients (and all farmers, for that matter) to consider their position. Are they protected in the event of a sudden change of circumstances?
We want to work with our clients on the Farm Resilience Plan. This is an initial review of the family’s documents which is free of charge. All that we ask is that the family takes a few minutes to complete a simple questionnaire to confirm what documents they do and do not have. We will then review the replies and will provide a report to the family with recommendations as to what they can do to better protect themselves and their business. There is no charge for the review or the report. That’s right – no charge!
The family can then decide which of the recommendations they wish to follow up with – perhaps updating Wills or getting a partnership agreement in place. We are happy to quote for any additional work and NFU members who subscribe to the Legal Assistance Scheme can also get a contribution towards the cost of some of that work.
If you would like to know more about the Farm Resilience Plan, get in touch. Succession planning is never wasted and can be done in stages. Let’s work together to change the statistics.
Nicola Neilson, Partner and Head of Agricultural Property
Email – nneilson@jacksons-law.com
T: 01642 356500
