Getting your farm in order
Over the past few years there have been a number of cases, the most recent of which is James v James, involving farming children resorting to Court action to try to obtain what they believe is due to them.There are a number of lessons that can be learnt from these cases, both for professional advisors and, more importantly, for the farming family.
To avoid misunderstanding, the more that families openly discuss the current arrangements, and those planed for the future, the better.Such discussions should be properly documented and be on the basis of clear and accurate information.
Of course, this all sound obvious, but it is also in these areas that confusion arises and that has given rise to the recent spate of cases.
Professional advisors can, of course, play their part when asked to do so by the family.When discussions are taking place it is important that the taxation consequences are properly understood, together with the accounts of the farm business clearly showing what has been agreed, and who is receiving the benefit of any transaction or transfer.
A clear farm Partnership Deed, or Shareholder Agreement, can go a long way to setting out the detail of how it is anticipated matters should be dealt with.However, this is a document that is rarely referred back to in practice, unless disputes arise.Clearly the production of an annual set of accounts, and time then being spent by all of those involved going through such accounts, to ensure a clear understanding, is essential.
Minutes of family meetings should also be made so that there is a clear picture agreed between all parties.
Promises made to future generations are the most common cause for litigation, and should not be made unless properly documented.
By following some simple guidelines, discussing matters openly and honestly and involving professional advisors when necessary, it hoped that the stresses and costs of litigation might be avoided.
For further advice on these topics please contact the writer Richard Horwood.
Please note the contents of this blog are given for information only and must not be relied upon. Legal advice should always be sought in relation to specific circumstances.