Farms put at risk by lack of thought over succession

Farmers still tend to shy away from discussing the handing over of the farm to the next generation, despite it being a major issue - with a great deal of capital tied up in the business and where a wrong decision can cause a lot of grief.

Robert Scott-Dempster, head of land and rural business at Gillespie Macandrew, yesterday said the issues surrounding farm succession was an increasing problem. "Often there is not too much thought goes into it and, as a result, a number of people are in a tangle."

Because those involved in farming are allowed agricultural and business property relief for inheritance tax purposes, the taxman is keeping a close eye on such situations. This is also because of the influx of lifestyle farmers, who may see owning agricultural land as a tax avoidance opportunity.

However, even a seemingly innocuous move by the older generation out of the farmhouse to a cottage on the farm to allow the next generation to take over could have serious tax consequences, he said. In previous generations, it was often assumed the oldest son would take over the farm when the father died, but today's thinking often sees an equal division of assets. Even this can lead to major problems, he said, as it could lead to a break up of the farm, the main asset.

Scott-Dempster added that he was still surprised by the large number of farmers who had died without leaving a will. Again, it could mean the break-up of the farm, despite that possibly being against the unwritten wishes of the deceased.

There were also multiple complications arising nowadays from single farm payments and the significant numbers of farm partnerships and again his advice was to go to a professional adviser before the problem arises, rather than deal with the pieces afterwards.

While everyone seemed to quietly accept that "something should be done" to avoid problems with succession, there was still a reluctance to do anything.

"There is no immediate added value from planning ahead, but it could mean the difference between continuing to operate the farm and losing it. Do not allow yourself to sleepwalk into a problem. The tax concessions for farmers put them in an immensely privileged position, they should use it," he stated