The start of a new year is a period when many people make the time to take a careful look at their business – both reviewing what has gone before and looking ahead to make plans for the future. One vitally important question for farming businesses to consider is this:
Do you have a succession plan in place?
Although this may seem like a simple question, the answer can be anything but! For many, facing up to the complex issues surrounding succession can be a daunting prospect.
Every farming business (and every farming family) is unique and will need a succession plan tailored to their specific circumstances. Putting such a plan in place can involve asking some difficult questions. For example:
• When do you want succession to take place?
• How will you pass on the running of the business to the next generation?
• If you own your farm, how and when will you pass on that ownership – and to who?
• If you are a tenant, how and when will you pass on your tenancy – and to who?
• What can you do to make sure any children you have are treated fairly, whether they work with you on the farm or not?
• What are the legal implications of your succession plan and what paperwork do you need to put that plan in place – for example, updated Wills, Powers of Attorney, an amended Partnership Agreement, transfers of land ownership/leases, etc?
• How can your succession plan help you to minimise any potential tax charges, both during your lifetime and for your estate?
• Crucially: what are the legal, financial and tax implications if you don’t put a suitable succession plan in place?
Answering these questions will usually require specialist professional advice, including legal and accountancy advice. The cost of this advice can be a barrier that prevents some families from taking the steps needed to secure the future of their business.
The Scottish Government’s Farm Advisory Service (FAS) now provides funding of up to £1,000 for farm businesses to access specialist professional advice on succession issues. Our Director, Craig Harvie, is a verified specialist registered with the FAS and approved to give succession planning advice through the funded scheme.
At Eden Legal, we regularly deal with complex succession planning matters for our farming clients. We understand that these questions are often difficult to discuss and to resolve. However, it is important to remember that succession will inevitably come to us all and it is always better to have a suitable strategy in place, rather than to leave the next generation to deal with the unintended (and often expensive) consequences that can occur if appropriate succession planning has not been done.
For further information and advice on succession planning and the FAS funding available, please contact us.