Farming families: preparation is key to avoiding probate problems
Jun 2022
Agriculture & Rural

Farming families: preparation is key to avoiding probate problems

Rosie Lovett
Solicitor, Commercial Litigation & Dispute Resolution

While no-one likes to think about a time when they’re no longer going to be around, the truth is that one day this situation will inevitably apply to all of us.

Confronting your mortality by planning for what happens to your assets after you die can naturally be uncomfortable and upsetting, but in my experience of working on contentious probate cases, it is far less so than the situations that commonly occur when adequate arrangements haven’t been made in advance for the distribution of assets.

Estate disputes can be especially challenging in farming families, where there is a balance to strike between ensuring, on one hand, that the often longstanding farming business is able to continue, and on the other, that the different branches of a family (especially those family members that may have chosen a career path away from the family business), are also provided for. On top of those considerations, the very nature of agricultural assets can lead to additional complexities.

In such situations, it is essential that the relevant documentation (such as wills, powers of attorney and documents dealing with ownership of land and farming partnership agreements), make clear:

  1. the intentions of the person in question
  2. the nature and scope of the assets that are covered
  3. perhaps most importantly, what isn’t to be included within the farming business

Where this important work has not been done pre-death (or prior to a loss of capacity), the death or serious illness of a parent can be the catalyst for disputes which can exacerbate what is often an already very emotional situation and cause long-term damage to familial relationships.

For example, there may be a situation where one child of a farming family is continuing to work in the business and expecting to take it on after their parents’ passing, while other children of the family have chosen to step away from the industry but still naturally expect some sort of inheritance to come their way.

If the farming partnership agreement and/or will are not clear enough on which assets belong to the partnership as a business and which belong to the parents as individuals, then there is a great deal of potential for dispute.

Where settlement between parties isn’t achievable, these disputes are likely to be decided upon by a judge, whose knowledge of the family relationships in question is based upon whatever evidence is available and/or documentation that’s been left behind.

Even where settlement is achievable, the time needed and the potential costs involved may have a significant adverse effect on the family and on the farm business’s finances and prospects.

What can be done to avoid a potentially costly and damaging dispute? Start by checking how your farm business operates and how the assets are owned – is it a partnership, a limited company or a sole trader business?

Once that is clear, make sure that your governing documents (often a farming partnership agreement) are up to date and fit for purpose. Ensure they remain live and accurate documents, which are regularly reviewed to take into account any change in circumstances and involve professional advisors to make sure they are correctly formed in language, structure and content.

Put in place a clear will and, if appropriate, power(s) of attorney to make sure the business can continue to function after death of a key party or any loss of capacity to make decisions.

Perhaps even more importantly, begin the discussion with all those that may benefit from your will to ensure that they understand what is and isn’t being left to them and can seek clarification about any matters arising while you’re still here and able to answer their questions.

It may not be a conversation that you want to have, but it will hopefully give you peace of mind that you have all your affairs in order and, one day, hopefully long into the future, your personal representatives and beneficiaries will doubtless be thankful that they are.

For further information on potential disputes, wills, partnership agreements or any other aspects of farming and rural business operations, please contact Rosie.

Leave Rosie a message

Send Rosie your query by clicking below and she will be back in touch as soon as possible

‘Hay & Kilner’ and ‘Hay & Kilner Law Firm’ are both trading names of Hay & Kilner LLP, a limited liability partnership registered in England & Wales with registered number OC418767. Our registered office is at The Lumen, St James' Boulevard, Newcastle Helix, Newcastle upon Tyne NE4 5BZ and we are authorised and regulated by the Solicitors Regulation Authority (Authorisation number 643191). We use the word ‘partner’ to refer to a member of Hay & Kilner LLP. A list of the members is available at our registered office.