Women in farming – succession planning

With increasing changes in the way family farms organise themselves and with pressures to diversify, more and more women today are actively involved in farming. Whether as the daughter of farming parents or otherwise as the partner of a farmer, women bring with them a varied range of business skills which enhance the farming business operation.

The provision of farming is becoming increasingly technical, and the machinery more sophisticated. Where previously physical strength was essential, new machinery makes this less so. Farmers now spend more time on planning and in the office, perhaps opening up opportunities for women ever more.

The traditional model of leaving the entire family farm to the eldest son of the family is changing and with this comes new opportunities. Very often, sons inherit the family farm and daughters consequently inherit less of their parents’ estates than their male siblings. This unequal treatment of children within farming families can lead to resentment or otherwise outright dispute. In particular, claims by disgruntled children under the Inheritance (Provision for Family and Dependants) Act 1975, who feel they have not been reasonably provided for, are increasing.

With more women actively involved in the family farming operation, equality amongst the next generation is an important opportunity not to be missed, which could lead to greater family unity and reduce the risk of family dispute. What therefore are the options available for parents who want to try to achieve parity amongst their offspring and how can they plan for this?

Getting the right business structure in place is crucial. The structure should, not only allow for fairness amongst the family, but should also help with claims for business property relief as well as agricultural property relief from inheritance tax (IHT).

Farms are usually run as partnerships, allowing all children involved in the farming operation to be included as partners. As with any partnership it is important to ensure that the right legal paperwork is in place such as partnership agreements, declarations of trust setting out the ownership of land and property, contract farming agreements and grazing agreements.

Formal partnership agreements are often overlooked but a well prepared partnership agreement could help document the appointment of new partners, the role and responsibilities of partners, what they each own and how the business will continue after one of the partners dies.

It is also essential to have up-to-date to accounts setting out what share of capital each partner owns. The other option is for the business to be incorporated either as a limited liability partnership or otherwise as a company with family members as shareholders. An incorporated business may allow for a more corporate structure and may have tax advantages in certain circumstances.

Whilst lifetime planning is important, this may be adversely affected by a poorly prepared will, or worse still, no will at all. As such, it is absolutely essential to have up-to-date wills in place which specify exactly who gets what in the most IHT efficient and flexible way. Farming wills should be reviewed to explore the possibility of passing agricultural and/or business assets down to the next generation using BPR or APR on the first death of a husband or wife.

Farming wills should be regularly reviewed in light of changes to family circumstances and changes to tax legislation. It is essential to begin planning at an early stage by ensuring that specialist advisers such as land agents, accountants and solicitors all work together to help achieve what is needed.

If planning is undertaken early, the opportunities to benefit from all that women can bring to business as well as the opportunity to benefit from family equality and unity can be achieved.

This content is correct at time of publication