Succession planning is one of the most important problems to tackle when any business wants to continue in to the future, but for farmers in particular it can be a very thorny problem because it is not only a business it is also the family home which has often been farmed for generations.
In this context one of the biggest worries is divorce and the effect this may have on the ongoing viability of the family farm. There have been many cases where the cost of a divorce has resulted in part or all the farm having to be sold which not only impacts the husband and wife involved in the dispute but also the rest of the family who may have lived and worked on the farm all their life.
Consequently there has often been reluctance for mum or dad to pass the reigns down to the younger generations until very late in the day which can leave the recipients unprepared to take on the responsibility of running the business or in certain instances result in inheritance tax charges which could have been avoided.
Obviously if the older generation like and trust their daughter or son in law, passing the farming assets to the next generation may not be a problem but where this trust does not exist, concerns still remain. However, increasingly farming families are turning to prenuptial agreements which can be entered in to by the husband and wife prior to marriage which define how assets will be split in the event of a divorce thereby safeguarding the farming business going on in to the future.
It is only relatively recently that the courts have confirmed that such agreements are very likely to be taken in to account if the divorce becomes contentious provided they have been entered in to properly. In general this means the agreement must be in writing, both parties must have taken independent legal advice, both parties must have fully disclosed their assets, the agreement must not have been rushed nor should one or other party have acted under duress.
Ideally a Will for the husband and wife should also be written after the marriage to ensure it does not conflict with the prenuptial agreement in the event of death rather than divorce and also the issue as to how children of any previous marriage or children of the new marriage should be treated needs to be addressed.
In addition postnuptial agreements, which need to comply with the same principles as prenuptial agreements, can be used to unlock inter-generational “log jams” after the younger generation have married, thereby solving the problem of family succession.
Unromantic as such agreements are, they are undoubtedly becoming more important in the world of farming, where divorce has the potential to destroy everything a family may have worked for over several generations but it is clearly important that professional advice must be sought before entering in to such an agreement.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
In this context one of the biggest worries is divorce and the effect this may have on the ongoing viability of the family farm. There have been many cases where the cost of a divorce has resulted in part or all the farm having to be sold which not only impacts the husband and wife involved in the dispute but also the rest of the family who may have lived and worked on the farm all their life.
Consequently there has often been reluctance for mum or dad to pass the reigns down to the younger generations until very late in the day which can leave the recipients unprepared to take on the responsibility of running the business or in certain instances result in inheritance tax charges which could have been avoided.
Obviously if the older generation like and trust their daughter or son in law, passing the farming assets to the next generation may not be a problem but where this trust does not exist, concerns still remain. However, increasingly farming families are turning to prenuptial agreements which can be entered in to by the husband and wife prior to marriage which define how assets will be split in the event of a divorce thereby safeguarding the farming business going on in to the future.
It is only relatively recently that the courts have confirmed that such agreements are very likely to be taken in to account if the divorce becomes contentious provided they have been entered in to properly. In general this means the agreement must be in writing, both parties must have taken independent legal advice, both parties must have fully disclosed their assets, the agreement must not have been rushed nor should one or other party have acted under duress.
Ideally a Will for the husband and wife should also be written after the marriage to ensure it does not conflict with the prenuptial agreement in the event of death rather than divorce and also the issue as to how children of any previous marriage or children of the new marriage should be treated needs to be addressed.
In addition postnuptial agreements, which need to comply with the same principles as prenuptial agreements, can be used to unlock inter-generational “log jams” after the younger generation have married, thereby solving the problem of family succession.
Unromantic as such agreements are, they are undoubtedly becoming more important in the world of farming, where divorce has the potential to destroy everything a family may have worked for over several generations but it is clearly important that professional advice must be sought before entering in to such an agreement.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
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