 Robert Black – Specialist rural accountant and tax professional
The succession of the farm is often on the minds of those of whose farm has been in the family for many generations. Not only is it a wish that they would like the farm to continue within the family but also to provide an inheritance to any of their non farming children. The equitable split of an inheritance is regularly the cause of disputes within the family and can be a difficult subject to raise. Often disputes arise between siblings regarding the capital value of an inheritance. This commonly arises where a non-farming sibling is left for example a residential property or non-farming enterprise and the farming sibling is left with the remaining farm.
From an outside perspective the farming sibling may have been left with a significantly more valuable asset. However, in reality they have been left with an asset which requires significant time and financial risk to make a living whilst the non-farming sibling may enjoy a consistent rental income from their inherited assets in addition to their current salary. In reality there is no easy way to create an equitable split between farming and non-farming siblings, many farms simply cannot fund multiple families and creating a structure which requires this could be its end.
Approaching the subject early, maximising tax reliefs and identifying an appropriate structure allows a greater pot to be provided for the next generation. Utilise year end accounts meetings to gain a greater understanding of cashflows, cost of production and areas to maximise efficiency to create a more robust business. Ensure that you plan ahead and take sufficient time to obtain professional advice regarding your succession as creating the appropriate structure in a tax efficient manner should not be rushed.
If you require assistance with your succession planning, please get in touch.
