Can't Take It With You - Was it the right advice for a family farming business?

I feel I must put pen to paper (fingers to keyboard) and have a little rant about the recent Can't Take It With You episode which touched upon a family farming business.


As a farmers daughter I understand the complexity of family relations within a farming business. Latimer Hinks has many agricultural clients where succession planning advice is critical in retaining the farming business within the family - and good family relationships.


BUT.. I have to say that I didn’t really agree with the solicitor’s approach re the farming family scenario will and the two options she gave to the parents. In fact I felt both were pretty dangerous in the context of securing the main objective.


Objectives - to keep the business intact/protect the farm and the business which the parents had spent years building and to try and treat the children fairly.

Three sons and one daughter-with the three sons working in the business-all three with wives/partners- youngest child the daughter and obviously the apple of Mum and Dad’s eye-and loved by her brothers

Their solution number one-in the will, give the whole shooting match to one son-how was that protecting the asset?-what if he was divorced/became bankrupt/died prematurely wanting his wife and children to take his estate? Did I miss something?

Their solution number two-the family partnership which was the one the parents went for-with a larger % to son 1 and smaller percentages to sons 2 and 3 and then 10% to daughter-how are those boys going to feel as and when daughter gets older moves on, maybe marries and has nothing whatsoever to do with the farm-especially if farming incomes drop and she is well provided for by her own husband/partner/own means? They may feel ok about it now but I suspect won’t do as years pass and they are older, have worked longer and are locked into the situation particularly if they have their own families who could well be working hard in the business.

I think the solution proposed could be dynamite when Mum and Dad have both died.

I would have felt pretty upset if I had been one of the sons-particularly the 2 younger ones with a smaller share than their brother-although of course he may be doing more work-probably not. I feel a fairer solution which everyone could have been 100% happy with could have been designed.


My Solution
To my mind the classic perfect solution would have been a trust for the land separating the business ownership from the land ownership-certainly protect daughter and ensure she has a share of proceeds if and when the land is sold-I wholeheartedly agree-but surely whilst the farm is effectively a tool of the farming business and generating profits from the endeavours of the boys particularly as they are paying (by the sounds of things) bank borrowings then surely they should share the rewards of their hard work? Keep the deceased parent’s share of the business in the trust and share the trust’s share of profits/losses between the boys if they are doing the work-or let the boys have the business assets but protect the land


To leave the land in a discretionary trust for the use of the boys would protect the asset-so no one child could prejudice its retention for the good of the family as a whole –enable it to be made available to any family members wanting to farm-potentially provide an income for daughter if and as necessary –for example the land could be let to the farming partnership by the trustees and the rent paid to the daughter if she wants/needs income

Summary
Watching all of the episodes broadcast to date I am not sure about these family round table meetings-people get upset/start and talk about fairness and unfairness-and in any family the issues are so often FAIRNESS v EQUALITY-what is right for any particular family may not be right for another and farming families are very problematic where some children are working in and some working outside the farm/the business-the parents have got to be strong and dictate what is fair and that may not be equality-though of course they may not agree between themselves!!

Also what if Mum and Dad change their minds for whatever, but specifically for excellent reasons e.g. a regular review throws up the need for a change in the will -yet don’t feel able to communicate the change of mind to the family-what if eg reverting to the farm and Friday’s programme any of the boys are divorced-not only the sons but potentially divorcing wives have a greater degree of expectation if there has been a round table discussion such as we saw? Personally (preferring not to have a meeting) if there is going to be a meeting I suggest having it once the will has been signed and with only the immediate family present ie sons/daughters.

Some bright spark is bound to come up with an argument about proprietary estoppel where there has been such a meeting if ultimately someone is disappointed and does not receive what he/she perceives he/she was promised eg because a will is later changed!

Wills of business men and women -particularly farmers -benefit from and should be subject to regular review.

I could go on and on and on……….but won’t….but I will continue to promote discretionary trusts in the context of their flexibility - particularly in protecting the farmland and the business assets for the families of the vast majority of farmers who see themselves as custodians of the land for the benefit of future generations of the family who want to farm-with the flexibility for all the family to benefit and to varying degrees/extents if the farm is -as it will inevitably be one day – sold.

Similar considerations apply to all family businesses with some family members working in the business and others not-trusts are the perfect solution to protect the family the business and the principal source of perhaps 3 or 4 families’ livelihoods

Here endeth the rant!

Can't Take it With You

We recently ran a press story prior to the airing of the BBC2 programme "Can't Take it with You". The Press release ran with the title "Growth in Contested Wills Could Mean Heartache for Families".

Friday night’s programme “Can’t Take it with You” was great in showing that there is a solution to even difficult issues but it confirmed my suspicions – that many couples (especially those in 2nd/3rd relationships/marriages) who can’t agree about how they want their estates to pass on death feel that they have a problem that cannot be solved. Therefore they don’t go and see a solicitor and take advice and therefore the issue becomes even more divisive which inevitably affects their personal relationship.

I have had a number of Clients who have died without wills and who I felt didn’t make wills because they didn’t know how to divide their estates between families/step families/charities.

The result was that their estates were administered as intestacies and according to the general law - which led to bitterness, recrimination and to a lot of people left feeling “cheated.”

Friday’s programme showed that a good solicitor can provide a good solution – whether I would, in every case recommend a family “conference” such as was shown on the programme was debateable – after all, circumstances can change after a will is made leading to the need to change a will. Once you have a family “pow-wow” such as we saw there is inevitably an expectation which may not be fulfilled if a will is changed.

A will isn’t usually for life – it may need to be reviewed/changed as circumstances change.

Finance for Farmers - follow up

If you really wanted to attend the Latimer Hinks/Barclays presentation on Finance for Farmers but were unable to make it - here is a brief outline of what was discussed

FINANCIAL SEMINAR FOR FARMERS

Latimer Hinks Solicitors have recently co-hosted with Barclays Bank a breakfast presentation on the theme “Finance for Farmers 2010.”

Issues explored included lending in the current financial climate, the legal issues surrounding providing security for borrowing and the importance of planning for the future and how to achieve it.

Presentations were given by Anne Elliott and Rosanne Green, Agricultural Specialists at Latimer Hinks Solicitors and Martin Redfearn, National Agricultural Specialist with Barclays Bank.

Rosanne Green outlined the legal formalities relevant to providing Banks with security for lending.

One of the important factors highlighted was that the borrowers and the owner occupiers may need to seek separate legal advice.

Rosanne used the example parents owning a farm, but the borrowing being taken by the farming partnership, perhaps including not only the parents but sons/daughters/daughters-in-law etc. Each would need to be advised in their different capacities.

Anne Elliott explained that at the point in time where borrowing is being taken/considered it is very important to look at the structure of the business and the aspirations/intentions of the various parties.

She stressed it was important for farmers to talk to all their advisers - the bank, the accountant, property or personal lawyer and financial adviser in terms of analysing where a business is going and, importantly, succession planning for older generations.

Anne Elliott said: “The event provided a range of practical advice and information which those attending could take on board and which I hope will prove useful in their farming businesses.

It was good to provide the opportunity for people to hear what is involved in relation to setting up and finalising borrowing arrangements and also to talk informally to professional advisers.”

The event was of course followed by a breakfast of bacon and sausage sarnies!

"Would I Be An Executor?"

Nick Parmee's Times Online humorous article last week made me smile. He answered his own question "Yes, but it can be quite a burden."

An old friend (referred to as "Fred") had invited him to act as his executor and, flattered by the implied compliment to his "personal integrity and organisational powers", he accepted.

The will was up-to-date so no problem he thought - probate simply a couple of agreeable lunches spent reminiscing, signing a few papers provided by "old-fashioned lawyers with dandruffy cardigans"!!!

In his terms "nonchalance turned out to be far from reality"!!

Problem No 1- organising the funeral - it took nearly 2 weeks - no one knew what Fred wanted - cremation/burial, wake/no wake etc etc.

Problem No 2 - Fred's current account (from which household accounts were paid) was frozen and his widow had no account of her own.

Problem No 3 - myriad of finance houses all issuing letters from "Deep Sympathy" computer refusing to communicate without death certificates and he'd only bought one!

Problem No 4 - he needed a lawyer/accountant/estate agent/personal effects valuer and wished they'd all been lined up by Fred in advance rather than it being left to him to choose "with less time to assess the choies than you'd spend in the supermarket wine section on Friday evening."

Problem No 5 - tracking down ALL insurance companies, building societies, credit card companies, shop accounts etc etc...

Nick then refered to Fred using the website Lasting Post The service aimed at helping you plan for your own demise - Have a look at it!

Not too happy about his view of probate lawyers as being old fashioned "with dandruffy cardigans" - in my experience in 2010 they are mainly young, female, pretty, "sassy" (me excluded)!! Check out our website - and our people

Sticky Situations with Wills

I was up at 6.30 today watering the garden-yes I was-lately we in the NE haven’t had that much rain .

Coffee in hand feeling more alert than usual I went in to watch the news and glance at the paper-both had features on the myth of the Common Law Spouse-or should it be Common Law Spouse or Civil Partner? Or is CP a contradiction in terms?-all very confusing…

Anyway I got to reminiscing about 1 or 2 of the really sticky situations that I’ve had to deal with -the separated husband who never divorced his wife living in 20 year relationship with his partner dying without a will-children from the marriage and from the relationship.

Then there was the couple who lived together for 40 years but never married-they had no children/no will but ”droves “of cousins surfaced when the “husband” died –the “wife” had taken her partner’s name and even I thought they were married-he had an enormous suspicion that making a will would make him die sooner-I couldn’t persuade him otherwise!!

It is a “no brainer”-although I hate that expression-everyone should make a will- particularly today when we have such complex family situations!!

My first will was signed as I left on honeymoon-the witnesses thought me very macabre-perhaps I should offer a new service for newly weds/new civil partners- I’ll be there to see you sign your will as you skip off on honeymoon as the disco plays “Oh, I’m going to Barbados”..

So…..DIY Tesco or Solicitor- made Wills ?

Are you tidying up the garden or is it a landscaping/re-design job?

Wills can be minefields-and usually are where there are living together situations/ 2nd/3rd marriages and/or relationships.

Oh and then there are tax issues!

What you really need is a good friendly lawyer well qualified AND a specialist in this field-and the first thing he/she should do is sit down and talk to you about you/your family/your hopes for them-you don’t want a “stuffed shirt” who talks jargon at you.