Our farming clients often come to us at Thompson Smith & Puxon Solicitors to make Wills and tell us one of their several children is heavily involved in the farming business, with their other children only playing a minor role, or living far away and having nothing to do with the farming business at all. All the same, the parents want to be fair to all their children.
Where there are other assets outside the business, there may be no difficulty in providing for the children who are not involved. But often most of the family’s assets are wrapped up in the business. What then?
Things worth thinking about may be giving the child who is involved a chance in the Will to buy the business at a price below its real value. The sale money can then be given to the children who are not involved.
Another method may be to give the children not involved a small share in the farming partnership or company (which may need to be created if they do not already exist).
So far so good. We then need to consider with the clients how Inheritance Tax will operate on their death. They will want to claim tax relief on their agricultural (or business) property. Care will need to be taken to make sure that these valuable reliefs are not lost. The trouble is that the situation at the date of making the Will may not be the same as at the date of death (and that is the important date for tax purposes).
For one thing, businesses, even farming businesses, change. This can result in the tax relief being reduced, or even lost. For another, in the case of agricultural property the market value of a farmhouse may far exceed its agricultural value, and one can only get relief on agricultural value.
With all these uncertainties, and there are several others we can think of too, one solution we may suggest is the use of what is called a discretionary trust in the Will.
We agree that the problems can appear difficult, but there are solutions out there!
To find out more about the solutions available contact either