It’s widely acknowledged that there is a growing issue for farmers in particular when it comes to succession planning and trying to treat offspring fairly, particularly where not all siblings may be interested in continuing the family business.
Very often there may be only one sibling who is involved in the family farming business with others having chosen to take completely different career paths in their lives. For the parents, this leaves a difficult issue when considering making their Wills and leaving their assets to their children upon their deaths.
If there is one sibling who is keen to continue the farming business, they often will stand to inherit the farmhouse, land, assets, livestock, and machinery. These may be valued in to millions of pounds. It’s often not possible to allow any other siblings to have any right to the value of these assets upon death of the parents as this then begins to compromise the child who is to carry on the family business – for example it is not feasible to sell a farmhouse which is in the middle of the land being farmed, in order to raise capital to ‘pay out’ other siblings, or because others wanted to sell the property.
For parents the issue arises of how to ‘compensate’ their other children for the fact that one child has inherited all the farming business assets and property. For many families this is an issue which has prevented Mum & Dad from being able to write their Wills, or even begin to consider what may happen in the event of their deaths. Often this can mean they end up taking no action which can of course be just as damaging, if not more so.
A potential solution to this issue can be found in Whole of Life cover. This is a life assurance plan which can be placed upon both parents lives, it could be set up to pay out on second death, or if preferable first death. It can be for an appropriate sum of capital to provide what is deemed to be reasonable legacy for the other child, or children, in order to compensate them for not being allocated any of the farming assets. Care must be taken when considering a Trust arrangement for this type of cover and professional advice should always be sought in such circumstances.
After careful advice and consideration this is something that a number of farming clients have decided is a suitable solution to their succession planning conundrum.
At Armstrong Watson we provide specialist advice in relation to all aspects of financial planning. We provide personalised Independent Financial Advice to help our clients achieve prosperity, a secure future and peace of mind. We can provide a full review of your financial affairs and discuss the options available to you with our compliments in the first instance. We can also now do this remotely by video, telephone as well as face to face.
If you're like to discuss your retirement and succession planning, please contact Kerry Chaloner on 01609 702000 or email kerry.chaloner@armstrongwatson.co.uk.
