Changes on the farm – is it time to update your Will?

It is recommended that you review your Will every 3 to 5 years, but if your farm has expanded, downsized, or diversified, then you should also look at your Will to ensure it reflects your wishes.

Laura Carter, Associate and agricultural specialist at Ware & Kay and Pearsons & Ward Solicitors in Malton (part of Ware & Kay in York and Wetherby), highlights the key changes that should prompt a farmer to review and update their Will.

Has the value of your farm increased substantially?

If your farm has grown substantially then it is important to have the ownership of the farm’s assets checked and for them to be valued.

Based on the valuations received, you can then consider making a new Will to help decrease any liability for inheritance tax, particularly to take advantage of all available business or agricultural tax reliefs.

Have you downsized?

Maybe you have sold assets or passed some on to the next generation as you move into retirement.

If so, capital gains tax and stamp duty land tax liabilities will need to be considered. You should also check whether inheritance tax would be payable on gifts that you have made.

Have you diversified?

Farms have been diversifying into all manner of activities, sometimes with the help of loans. You should consider how you would expect any such loans to be repaid on your death.

If land is to be developed or used for non-agricultural purposes this can have an effect on the tax reliefs that can be claimed on your death.

Have you changed the ownership structure?

Are you a sole trader, a partnership, or a limited company?

If, for example, your business runs as a partnership (as many are), you should ensure that a written partnership agreement is in place which makes it clear how all the farm’s assets are owned and that the partnership agreement matches the terms of your Will. This is because if no written partnership agreement exists the terms of the Partnership Act 1890 will apply, which gives the partners equal ownership of partnership assets, no matter what a Will stipulates. You should review the terms of your partnership agreement and Will when there are changes in the business.

Similarly, if the farm is part of a limited company, you should review the terms of any shareholder agreement you may have to ensure that its terms do not contradict the terms of your Will.

Changes to the family?

Marriage, re-marriage, a civil partnership, or a birth will introduce new people to the farming family. Each of these events should prompt you to update your Will.

If you have left all the farming assets to your spouse in your Will but you would like your children to eventually inherit the farm you may wish to consider leaving your spouse a life interest while stipulating that your children will inherit the farm after your spouse passes away. Otherwise if your spouse re-marries they could leave everything to their new spouse in their Will and your children may not get anything.

Separation, divorce, or dissolution of a civil partnership can be devastating to any business and these should also prompt you to review your Will.

Succession planning

It may be that some of your relatives are involved in the farming business, whilst others are not. In that case, your Will can leave your farming assets and non-farming assets according to your children’s needs/interests.

If you have made a promise to someone that they will receive certain assets in your Will and your Will does not honour this promise then they may be able to make a claim against your estate for proprietary estoppel. This would require them to show that the promise was made, that they relied on that promise, and that they suffered a detriment as a result.

If you are having difficulties in deciding who gets what in your Will, one solution is to include a trust within it. The Will would list all the possible beneficiaries and can be accompanied by a letter of wishes telling your executors or trustees who should receive what. This letter can then be updated at any time as circumstances change (your actual Will, however, would still need to be updated if there is a life-changing event such as death, divorce, marriage etc).

How we can help

Our team of Wills and Trusts Solicitors have vast experience of helping farmers with their estates and succession planning. They can draft your Will according to your wishes and make sure it as tax efficient as possible.

For more information please contact Laura Carter on Malton 01653 692247 (Malton) or email laura.carter@warekay.co.uk to see how we can assist.