Get your wills up to date!
Despite the significant growth in land and property values in recent years, it is always a surprise as to how many farmers don’t have up to date wills or, most alarmingly, how many don't have wills at all.
Andrew Vickery, Head of Rural Services
Almost without exception, the effect of dying ‘intestate’ (i.e. without a valid will) would be hugely damaging for any farming business, making the continuing operation of the farm far more difficult following the deceased’s passing.
The statutory intestacy rules are extremely prescriptive. Who gets what depends on which of the deceased’s family members survive them, as shown in the flow diagram on the opposite page.
As the diagram shows, the rules are complex but even if the deceased dies intestate with a surviving spouse, perhaps thinking in that scenario all assets would pass to them and then be able to make the correct provisions in their own will, that is simply not the case as a proportion of the estate is likely to also pass to the deceased's children or even their parents if still alive.
Under those circumstances it would be fortunate if the deceased’s assets, which could include their interest in the farming business itself as well as land and property, ended up where they would have intended had they prepared a will. There is also a far greater chance of family disputes and forced sales arising from intestacy, which are unwelcome issues following the death of a family member.
Others may simply not have updated wills for some time. This may not be an issue if little has changed, but equally new assets may have been acquired or new family members (such as grandchildren) might now be on the scene who may now need provision within wills. Equally, potential beneficiaries of wills can also pass away making the terms of a will inappropriate in some cases.
I generally recommend to clients that they look at their wills at least every 3-5 years, or at any other event in the meantime which requires a change, which can sometimes be achieved in the form of a simple codicil. It is important to remember that some events, such as marriage, invalidate previous wills so new wills would need updating at that point.
Most farmers are keen to ensure that the farm and business pass smoothly to the next generation. Without a valid up-to-date will in place this is only possible by good fortune and unlikely to happen. Family assets that have been built up after many years of hard work can quickly be eroded.
While looking at wills and succession planning, it often makes sense to consider Inheritance Tax (IHT) matters at the same time. Again, avoiding IHT charges on the death of a family member is critical to ensure the continuing health of a farming business. Unfortunately HMRC are increasingly keen to chip away at some of the generous reliefs which farmers have historically benefitted from meaning that if you have not considered your IHT status recently it is entirely possible the position may have changed and you could be exposed to potential IHT liabilities that you were completely unaware of.
The best results are normally achieved where a solicitor and accountant work together to ensure that both updating wills and IHT planning ties in together in an efficient and cost-effective manner.
The process of drafting wills is generally straightforward and not normally a complicated or expensive process. We have good relationships with a wide number of solicitors who are familiar with drafting farming wills and we would be happy to suggest a suitable person if you are in this position.
Make 2013 the year to get your house in order and don’t put off this vital job. It could be the best investment you ever make.
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