Landed Estates and Rural Affairs
There are unique issues faced by farming families and rural landowners when it comes to succession, estate planning and divorce.
Our Landed Estates and Rural Affairs Group is experienced in navigating the complexities of land ownership, estate management, farming and farming families, advising on succession planning issues and supporting those going through a divorce.
Farming, and landed estates divorce
We have a strong reputation across the country for our experience in representing agricultural, equine business and rural clients successfully when relationships breakdown. We work with you to find the right solution with our experts who will offer out of court options such as family mediation and Separating Together: One Couple One Lawyer as well as robust, strategic representation when it is necessary to use the courts to resolve matters.
Using the utmost discretion, you can be assured that your case will be dealt with confidentially and robustly by trusted advisors, who will work with you to identify priorities, strategies and the best possible outcomes for you and your family.
As an all service firm, our farming divorce solicitors call upon assistance from our corporate, tax, wealth protection and property law teams, amongst others, to provide you with rounded and holistic advice about your finances which may involve complex and substantial assets, which may include issues of liquidity to resolve.
Farm and landed estate succession planning
With high land values and increasingly difficult farming conditions and costs associated with running the estate, it is unsurprising that around 60% of families in rural settings have not made sufficient estate planning provision. In many cases, planning is put on the back burner because the day-to-day farming and land management activity is all-consuming.
In many cases lack of planning leads to family disputes and considerable legal expense; perhaps more so than we find in other sectors. For farming families, this can be because some children are choosing to work the farm whilst others have a chosen a different career path away from agriculture. It may be because there is a change in circumstances within the family such as a divorce or the death of a business partner. Naturally, families want to make sure all children are treated fairly whilst ensuring the farm is kept together.
Where families have inherited property and land through generations, disruption can come through disputes between trustees, spouses of family members and difficulties over maintenance of large buildings.
We are experienced in working with our clients and their other professional advisors to advise on farm business tenancies, land diversification, heritage assets,regulatory issues and employment disputes.
For agricultural and landed estates, no two sets of circumstances are the same, and so no planning strategy is the same. The landed and agricultural estates planning team will help you find a bespoke solution suited to your needs, planning for the succession of the land and farm whilst mitigating the impact of inheritance tax, capital gains tax, stamp duty land tax and income tax.
Pre and post nuptial agreements for landed estates and farming families
Pre and post nuptial agreements are an often overlooked planning and protection planning tool in landed estates where lack of liquidity and the requirement to retain inherited wealth in the family through the generations are particularly acute. A thoughtful and well crafted pre or post nuptial agreement can support estate planning succession goals to avoid the fragmentation of the family farm or estate on divorce and limit extended and expensive disputes.
Farming, and landed estates divorce
We have a strong reputation across the country for our experience in representing agricultural, equine business and rural clients successfully when relationships breakdown. We work with you to find the right solution with our experts who will offer out of court options such as family mediation and Separating Together: One Couple One Lawyer as well as robust, strategic representation when it is necessary to use the courts to resolve matters.
Using the utmost discretion, you can be assured that your case will be dealt with confidentially and robustly by trusted advisors, who will work with you to identify priorities, strategies and the best possible outcomes for you and your family.
As an all service firm, our farming divorce solicitors call upon assistance from our corporate, tax, wealth protection and property law teams, amongst others, to provide you with rounded and holistic advice about your finances which may involve complex and substantial assets, which may include issues of liquidity to resolve.
How do I deal with the estate of a landowner who has died?
The probate process for agricultural estates can be complicated given the nature of the assets that need to be valued, but they are also an opportunity to carry out some estate planning for the next generation. We can be on hand to guide you through the complex probate procedure, working with land agents to carry out the process as swiftly as possible, whilst taking advantage of the opportunities from a tax planning point of view.
Can you assist with the sale or purchase of agricultural land?
We have a dedicated property team who have experience in selling and purchasing agricultural land, whether it be selling the entirety of the property or selling parcels of land. We can provide associated tax advice relating to capital gains tax and stamp duty land tax during the transaction as well to ensure you get the most out of the sale/purchase.
Can you help if there is a dispute relating to the estate?
Litigation can be a particularly stressful challenge that can result in considerable legal expense. We advise landowners, executors, beneficiaries and trustees on a multitude of disputes, whether they are related to land or succession.
How do I ensure that my property qualifies for the maximum available Inheritance Tax reliefs?
Whilst most cases turn on the facts, when it comes to farm property and the type of farming activity undertaken it is worth bearing in mind a few golden rules. In estates we have to demonstrate that the deceased was engaged in the farming activity, even if this was latterly in relation to paperwork.
If the farming business holds large reserves of cash (particularly for a long period of time) it is essential to have valid reasons for this as otherwise it can result in a loss of tax relief with HMRC arguing that it is more asset holding than asset farmed.
Ensure you have advice on grazing licences and tenancies on the land as this can affect the likelihood of tax relief available on the land.
Likewise be careful with how farm buildings are let (to farm workers is ideal) and bear in mind the character appropriate test if your farmhouse is large in comparison to the farmland.
Engage a good land agent to prepare valuations. If there is any argument with HMRC they will help in fighting your corner.
For large landed estates that contain valuable heritage items, buildings or land that have the potential to be of national interest; you should consider whether to claim conditional exemption. This defers inheritance tax on valuable assets where it would otherwise be difficult to raise funds to pay the tax on them. Certain items can also be used to settle inheritance tax via the Acceptance in Lieu regime, which provides a bonus tax credit.
All of this can be achieved with careful estate planning, having robust wills in place and taking advantage of any other structures, be they trusts, partnerships or companies, to ensure that inheritance tax is kept to a minimum. We are able to assist with all of these, tailoring the advice to the circumstances of the client.
What happens if I become mentally or physically incapable of running the farm? Can a Lasting Power of Attorney help?
A lasting power of attorney (LPA) gives someone you trust the legal authority to manage your finances and property and/or make health and welfare decisions for you if you develop a physical or mental condition that prevents you from doing this for yourself[EC1] . It is possible to make a specific LPA to appoint the person(s) who you want to make business decisions about the farm and to give them guidance as attorneys in the document.
Can I protect the farm as an entity in case of disputes between my children or other family members?
Estate planning by will often includes the use of trusts to protect against disputes or the potential for the farm and land to be split up. It is essential here to give thought to who should act as executors and trustees and if they should be independent of the beneficiaries; such a position requires a great deal of trust, and we can advise on who may be suitable and the possibilities of appointing a professional executor/trustee.
Is our partnership deed is still fit for purpose?
Many farms and landowning businesses don’t have partnership deeds in place or have deeds that are out of date and no longer relevant. We can advise on appropriate partnership arrangements or other business structures and review existing documentation to ensure it meets the needs of the current business.
We help business owners navigate this and determine the best options through careful planning.
Can I protect my farm during divorce?
Often the central and most valuable asset, the farm is unlikely to be excluded from your divorce settlement. But that doesn’t mean that it has to be sold. It will be important for your farming divorce lawyer to understand the family history of the farm, and the contributions made towards it by you and your spouse.
Taking early advice will be crucial and our lawyers are experienced and looking at tailored and unique outcomes to maintain the farm wherever possible. Partnership agreements, family trusts and postnuptial agreements can be absolutely vitalcritcal.
How is the farm valued for divorce?
There will likely be many components to your farm and so it may be necessary to look at appointing more than one valuation expert. The experts will value the land and buildings, the livestock plant and machinery, as well as considering the different income streams. It is important that appointed the valuers are be market-aware and that can vary geographically and according to the economics of the day. We will work with you to ensure appropriate rural experts and agents are appointed and that any valuations are undertaken fairly.
Farmers and landowners are increasingly diversifying and it may be appropriate to look at opportunities on the land to add value, or perhaps (if liquidity is an issue) to transfer or lease part of the land to your spouse as part of the settlement so that they can run their own business.
Can I protect the family farm by using a Pre Nuptial Agreement?
Yes, we can help you plan strategically for the future, whether that is alongside our private wealth team to mitigate tax on succession planning, or by using a pre or post nuptial agreement.
A pre or post nuptial agreement will be given considerable weight by the court if it meets the appropriate criteria and has been kept under review. They can play an important role in protecting family assets and preventing the fragmentation of the family business or estate, if they are done properly.
If you divorce, will the farm, or part of the farm, be sold?
It is not a given and is often a last resort option. We will work with you to look at other options to prevent a sale of the farm where possible. Ultimately it will depend on your specific circumstances, but our team will work with you to look at strategic solutions to what can feel like an impossible situation.
How does the court deal with farming divorces?
A fair division of the assets does not necessarily mean an equal division; often a divorce involving a farm leads to an unequal financial settlement. That can be due to a number of factors, such as inheritance, succession planning, liquidity and also the length of the marriage and the role each spouse has played.