Protecting your legacy: Avoid family disputes by getting a plan in place early

Protecting your legacy: Avoid family disputes by getting a plan in place early

It has been a principle of English law for some time now, that where someone has reasonably relied on an assurance or promise to their detriment, the law can step in to prevent an unconscionable outcome if that “promise” is, for whatever reason, not then kept.

No two cases are ever the same and as a result, it is notoriously difficult to predict the outcome if they are not resolved, and they do end up before the courts. Two 2016 farming cases last year illustrate the point well.

Mr and Mrs Davies had farmed a 547 acre dairy farm in Wales since the early 1960’s. They had three daughters, one of whom (Eirian) worked on the farm, on and off, most of her life, but finally gave up outside work to work the farm full-time in 2008. The following year she was promised the farm by her parents and even shown a draft Will giving effect to that promise. Naturally, Eirian had a high level of expectation that she would inherit the farm ahead of her sisters. In 2012 however, she and her parents fell out, and Eirian ended up in litigation about the promise made to her, in which she asked the court to award her £3million plus (the farm having been valued at £3.15million, after Capital Gains tax). Eirian argued that she had reasonably relied on her parents promise to her detriment. The first Judge who heard the case, awarded Eirian £1.3million, commenting that that was “a fair reflection of [her] expectation and detriment”. The Court of Appeal disagreed, slicing the award to £500,000 and valuing Eirian’s ‘expectation’ element at only £150,000 of that £500,000 sum, whilst making the point that when it comes to expectation, judges will ‘do the best that we can’ to put a value on something which is not capable of precise valuation, namely… ‘expectation’.

Hot on the heels of Davies v Davies, came Moore v Moore where a son (Stephen) who had been promised the family farm by his father fared much better than Eirian; he was awarded the entirety of his father’s share in the family farm. The court considered that his fathers’ change of heart in redrafting his Will so as to share the farm between Stephen and his sisters, would have produced an unconscionable outcome for Stephen, who had devoted his entire life working the farm in the expectation that he would inherit it, and in so doing, had given up the chance to do something else with his life.

The question of how the family farm is passed to the next generation puts the farming community in something of a unique position when it comes to estate planning matters, and clients should therefore consider carefully the impact of any promises made and expectations created.

Brachers specialise in estate and rural business planning, helping farming families and land based businesses plan carefully for the future. Should any issues arise from Will, inheritance and estate disputes, please contact Deborah Cain, Partner at Brachers via email or call on 01622 655297.