Farming family disputes are not just in soap operas

A dispute between members of a farming family is fertile ground for the scriptwriters of popular soap operas, as they draw out the tensions and ramifications to entertain listeners and viewers.  But sadly, our solicitors know from experience that real life disputes among family members who farm together are not uncommon and can have serious repercussions.  In the worst cases, it can even lead to the farm having to be sold or split up.

Robert Bellhouse, Family Law and agricultural law specialist at Ware & Kay in York, Wetherby & Malton outlines some common situations that can give rise to a dispute, and he provides guidance on how to avoid them.

A farming business is unusual in that it serves as both the family home and a source of income, so there an emotional investment in the way it is owned and run which is rarely seen in many other businesses.

The farm may be owned or held in a number of different ways, such as in trust or through a partnership or limited company, and it may have been passed down through the generations informally involving wider family, making it unclear who owns what.

Common causes of farming family disputes include:

Disgruntled beneficiaries

If you decide to leave the farm in your will to a child who has continued to live and work on the farm while his or her siblings have flown the nest, a sibling could make a claim against the validity of the will.

Even if the will is found to be valid, if you fail to provide for a spouse, child or some other dependant, a claim for financial provision could be successful which may mean the farm would need to be sold to make the required lump sum payment.

If there is no will, the assets of the agricultural business would have to be split according to the strict rules of intestacy. Again, this could mean the farm would have to be sold to ensure all those the law states should benefit from the estate can do so.

Remarriage

Remarriage revokes any earlier will.  If you lost your first spouse through death or divorce and then made a will leaving your assets to your children, that will would be invalidated if you later marry again. In that situation the laws of intestacy would apply, and they tend to favour a spouse over children.  A dispute between the step-parent and children might then ensue and the farm would not pass as you had intended.

Co-habitation

The whole farming family can be affected if a couple lives together on the farm without marrying and they later separate. For example, if your son lives and works on the farm and his girlfriend moves in and they have children, many would assume the girlfriend would have no rights to the farm if the relationship breaks down. However, the girlfriend may have acquired an interest in a farm if she has invested money or ‘monies worth’ in the property, and hard decisions may need to be made by the wider family in order for your son to pay the girlfriend her dues.

There are a number of steps you can take to stave off some of these common causes of disputes, including:

• Making a Will and making sure it is reviewed regularly, at least every five years, and updated after any key events such as divorce, death, birth, or remarriage.
• Ensuring there is a written cohabitation agreement if an unmarried partner moves into the farm, or a prenuptial agreement if someone with an interest in the farm is planning to marry.
• Obtaining a professional assessment of the legal ownership of the farm, and ensuring your business arrangements are made clear through a partnership agreement or shareholder agreement, which should be reviewed and updated regularly.
• Drawing up a succession plan and making sure you discuss it with, and get buy-in from, anyone who has or might have an interest in the farm. We can put all the documentation in place to ensure that your wishes are abided by.
• Explaining the plans you have for your farm to all your professional advisers, such as your accountant, lawyer and financial adviser, and encourage them to work together to ensure that your plans can go ahead as seamlessly and as tax efficiently as possible.

For more information on avoiding or settling a family dispute in a farming business, please contact Robert Bellhouse on York 01904 716000, Wetherby 01937 583210 or Malton 01653 692247 or email robert.bellhouse@warekay.co.uk to see how we can assist.