Family partnership - trapped!

[crashbox]

It is concerning that the business aspect is left to the father and son working at home has not been involved in the actual ‘business’ side of things. It’s not unusual though, because my brother and I are totally different in that regard and I’ve been involved, or made myself involved in management since before I left school and with my mother’s encouragement we both became official partners in the business when he was 20 and I 21. He has no interest in the management and financial affairs though and is unmarried. His choices. He has his own house and lives independently in the village.

The farm assets were transferred to the both of us well before father retired so there was no tax on his or my mother’s recent deaths. I have made sure that we have more than adequate pension plans and savings and indeed mortgage free property for our old age and to hand over to my only daughter when the time comes. Indeed we are in discussion currently about transferring a house into her name with the least tax issues.

The point being that the son in this original post really must get a grip of what is going on in the business and gain some security and an understanding of his possible responsibilities and obligations with regard to the business debt and assets. Both father and son should work towards the future security of the business and the handing over of assets to the son, who is the future of the business.

Far too many farmer parents just don’t get it. They have no clear idea of where their business is going and why they are doing it. It can get to the point that the father becomes jealous of the son and wants to retain complete control of it into his dotage with a son or sons at home having to sell assets to pay off sisters established elsewhere, leaving the sons with zero assets and not even their own homes to live in when their parents die. Hopefully, as tenants, they have already secured their own homes, not being tenants there as well, if they do happen to lose the tenancy of the farm at some point. All parties need security.

It can all get very complicated and every family and farm business is different, but able, intelligent sons and daughters should take responsibility for their own interests and welfare, including their wives and children, not leaving it to their parents on trust. That trust is often sadly broken, especially but not exclusively where sons are concerned.

Your situation is a credit to your parents, who clearly trusted your capabilities. A great example for the rest of us!

These days, I understand that if the owner transfers land or assets before they die, there is a big capital gains tax bill.

UK tax law encourages people to hold on til' they die, so their spouse received a tax free transfer then passes it on.

This introduces risk that the surviving spouse has other ideas, and the next generation don't own anything outright til they are old themselves.

(It's complicated so others may be able to add detail on the above).

 

[Cowabunga]

Get professional help from a competent solicitor and accountant that knows how to sort this stuff out. It was my mother that made sure everything was sorted for our business. My father was only interested in cows, at arms length, [they actually drove him mad and he never milked them once from 1982 on, when he was 45 when I came home to work] He was a very jealous man which manifested in him opposing everything we did. Nothing I did was ever right for him. Nothing. Yet he took all the praise and ‘glory’ from others for my brother and my work and investments.

So don’t anyone think that they are alone in a bad situation. I am just sad at what could have been achieved if father had worked with us with an enthusiasm for our collective success and growth of the business instead of being an awkward sod through his life. I’m also rather sad that I have no heir interested in farming to hand it on to, which I would have been happy to do many years ago, partly because, unlike my father, I have other interests in life and love to see others succeed rather than fail.

I hope that helps someone with their own situation. The only problem I have now is how to get out of the business that has served us so well for the more than four decades that I’ve run it. Basically I have to bite the bullet and sell the cows, which will probably be [is] the hardest decision I’ll ever make.

 

[Renaultman]

That’s a well written post and very good advice

Just what I was about to say.

 

[Renaultman]

Get professional help from a competent solicitor and accountant that knows how to sort this stuff out. It was my mother that made sure everything was sorted for our business. My father was only interested in cows, at arms length, [they actually drove him mad and he never milked them once from 1982 on, when he was 45 when I came home to work] He was a very jealous man which manifested in him opposing everything we did. Nothing I did was ever right for him. Nothing. Yet he took all the praise and ‘glory’ from others for my brother and my work and investments.

So don’t anyone think that they are alone in a bad situation. I am just sad at what could have been achieved if father had worked with us with an enthusiasm for our collective success and growth of the business instead of being an awkward sod through his life. I’m also rather sad that I have no heir interested in farming to hand it on to, which I would have been happy to do many years ago, partly because, unlike my father, I have other interests in life and love to see others succeed rather than fail.

I hope that helps someone with their own situation. The only problem I have now is how to get out of the business that has served us so well for the more than four decades that I’ve run it. Basically I have to bite the bullet and sell the cows, which will probably be [is] the hardest decision I’ll ever make.

Another well written post, I have already sold one business, which I sometimes regret, but enjoy having the life I now have, just doing a bit for others and concentrating more on the farming side.
I have no idea what I would do in your situation, if you feel the time is right, maybe run a few sucklers or stores to keep your hand in.

 

[crashbox]

Get professional help from a competent solicitor and accountant that knows how to sort this stuff out. It was my mother that made sure everything was sorted for our business. My father was only interested in cows, at arms length, [they actually drove him mad and he never milked them once from 1982 on, when he was 45 when I came home to work] He was a very jealous man which manifested in him opposing everything we did. Nothing I did was ever right for him. Nothing. Yet he took all the praise and ‘glory’ from others for my brother and my work and investments.

So don’t anyone think that they are alone in a bad situation. I am just sad at what could have been achieved if father had worked with us with an enthusiasm for our collective success and growth of the business instead of being an awkward sod through his life. I’m also rather sad that I have no heir interested in farming to hand it on to, which I would have been happy to do many years ago, partly because, unlike my father, I have other interests in life and love to see others succeed rather than fail.

I hope that helps someone with their own situation. The only problem I have now is how to get out of the business that has served us so well for the more than four decades that I’ve run it. Basically I have to bite the bullet and sell the cows, which will probably be [is] the hardest decision I’ll ever make.

The fact that you've built the business into what it is, can only make that decision harder.

The very best of luck and thank you for the post.

 

[Cowabunga]

Your situation is a credit to your parents, who clearly trusted your capabilities. A great example for the rest of us!

These days, I understand that if the owner transfers land or assets before they die, there is a big capital gains tax bill.

UK tax law encourages people to hold on til' they die, so their spouse received a tax free transfer then passes it on.

This introduces risk that the surviving spouse has other ideas, and the next generation don't own anything outright til they are old themselves.

(It's complicated so others may be able to add detail on the above).

Not as simple as that by any means. Father was not an easy man. He had a different face to the outside world but was very hard work at home and it got worse as he got older. If the business had not been sorted when he and mum were comparatively young, it never would have been.
It got to the point that his literally constant complaining and belittling all day every day made me secure a flexible job off farm for a decade, because otherwise I think I would have ended up exploding and killing him. In fact it came to the point that at one time I explored the possibility of selling the whole farm and did sell some 50 acres, purely because of his constant belittling. It was absolute hell and he was in his 70’s coming to the farm every day with no other aim than to find something else to complain about or make sly demeaning remarks. Yet to anyone outside the family he was all sweetness and light and liked people to think that he was the decision maker. In fact, like my grandmother, every tiny thing was a major issue for him and he made the wrong decisions more often than not. He just couldn’t handle the business or any stress, hated milking with a passion while claiming he loved the cows, and would have been totally lost without his wife.

He hadn’t a clue how to run the farm, do the paperwork, do rations, milk the cows, or anything else. So I ran the farm after employing a cowman, who still works here 25 years later, taking the time to do the fertiliser, paperwork with my wife, silage, slurry and so on while seeing the countryside and other farmers for a decade.

So it’s not safe to assume that anything is easy anywhere. There are many ways to make it work though but in my case, working WITH my father was never going to work. It wasn’t even what you’d call ‘hard work‘ dealing with him, it was impossible. My brother and I both take after our mother and without her my father would have been home alone with 50 cows driving him mad and 100 sheep that he had no clue how to manage. Having said that, in his younger days, when I was a child in the 1960’s, he did make use of government grants to drain the place and put a shed and small herringbone parlour up. It was just that he wanted to stop right there and missed several opportunities to buy adjacent land at the time which he could have bought for cash in some cases. He didn’t get on with his father, my grandfather, either, who was seldom home anyway, being one of those old boys that spent half the week at the marts and living the relative high life. At least grandfather never bothered father in his farming, because he had other interests including, I believe selling insurance and a lady friend or two. His wife worked extremely hard doing mainly non-productive work through her life but was an absolute witch to mother. I mean ‘evil’, which might explain my father’s behaviour somewhat.

 

[Cowabunga]

Another well written post, I have already sold one business, which I sometimes regret, but enjoy having the life I now have, just doing a bit for others and concentrating more on the farming side.
I have no idea what I would do in your situation, if you feel the time is right, maybe run a few sucklers or stores to keep your hand in.

I have 60+ freisian/holstein heifer calves less than three months old that will all be bulled to sexed freisian/holstein again, which will take up a couple of years. I’ve decided to inseminate all milking cows to British Blue from January, but maiden heifers to sexed holstein. Because I have no intension of selling milk when I’m 70. My wife has also had enough of inspections and regulations that my parents would never have dreampt possible.

 

[Nearly]

There are a few different ways to transfer assets. The broad approach could be to use a number of tactics rather than rely on one.

A few years ago one accountant tried to persuade my parents to put my brother's inheritance into a trust.
At the time he was at the vulnerable age of 40 odd and obviously unable to be responsible with money despite earning well away from the farm and running his own investments.
I found that any residential property put into a trust can NEVER be classed as the primary residence of a beneficiary of that trust. As the smallholding involved was to be my brother's home a trust was completely the wrong thing.
Beware of professionals.

 

[Tubbylew]

 

[serf]

Brilliant watching him in interviews and the reporters try getting one over on him and he makes them dig a big hole for them selves and makes them put their selves in it

 

[Fogg]

I found myself in a remarkably similar position, but am guessing I'm further down the line than you.

I joined the business in my late 20s as a partner, along with my parents, and took a share of the profit. I also struggled to grow capital as I had a young family and pretty much all of my share of the profits was needed as a wage. Meanwhile my parents barely dipped into their share as, aside from getting twice as much, they simply didn't need it.

It's tough, that phase, in many respects I consider I might have been better off if I'd never joined the business. At least in terms of things like annual leave and company pension schemes.

Still, I think you need to be pragmatic and take stock. We've also expanded and borrowed quite a lot of money, though that's largely paid off now. I realise that we'd never have been able to borrow that money if my dad hadn't started rolling his snowball of wealth when he was a young man. Twenty five years or so in and I think it's safe to say that I'm better off than I would have been left to my own devices. I might have had more holidays, but all told I think I need to consider myself fairly privileged and quit whining about having spent limited time in Torremolinos.

Look at it from your dad's perspective. Would he have been better off selling up and denying you the opportunity he's given you? If that's the case I'd stop feeling so hard done by, he's just trying to set you up like I have been.

If you enjoy the life I'd just stick with it and keep pushing that snowball. If you'd be happier driving a forklift somewhere for £14 an hour, or feel the need to start something from scratch you always can. Me, I've come to realise that being trapped isn't as bad as it's cracked up to be.

 

[som farmer]

I found myself in a remarkably similar position, but am guessing I'm further down the line than you.

I joined the business in my late 20s as a partner, along with my parents, and took a share of the profit. I also struggled to grow capital as I had a young family and pretty much all of my share of the profits was needed as a wage. Meanwhile my parents barely dipped into their share as, aside from getting twice as much, they simply didn't need it.

It's tough, that phase, in many respects I consider I might have been better off if I'd never joined the business. At least in terms of things like annual leave and company pension schemes.

Still, I think you need to be pragmatic and take stock. We've also expanded and borrowed quite a lot of money, though that's largely paid off now. I realise that we'd never have been able to borrow that money if my dad hadn't started rolling his snowball of wealth when he was a young man. Twenty five years or so in and I think it's safe to say that I'm better off than I would have been left to my own devices. I might have had more holidays, but all told I think I need to consider myself fairly privileged and quit whining about having spent limited time in Torremolinos.

Look at it from your dad's perspective. Would he have been better off selling up and denying you the opportunity he's given you? If that's the case I'd stop feeling so hard done by, he's just trying to set you up like I have been.

If you enjoy the life I'd just stick with it and keep pushing that snowball. If you'd be happier driving a forklift somewhere for £14 an hour, or feel the need to start something from scratch you always can. Me, I've come to realise that being trapped isn't as bad as it's cracked up to be.

that would have been the ideal, for me, but someone didn't want to give up anything, and dying young, left me high and dry.

its all well, being told it will be all yours one day, if the things work out as planned, they seldom do. Really it needs to be recorded in some form, so things actually happen, as planned, in the event of death/accident etc.

huge sums of money are involved in farms today, and big sums of money, attract vultures, who smell money.

 

[serf]

that would have been the ideal, for me, but someone didn't want to give up anything, and dying young, left me high and dry.

its all well, being told it will be all yours one day, if the things work out as planned, they seldom do. Really it needs to be recorded in some form, so things actually happen, as planned, in the event of death/accident etc.

huge sums of money are involved in farms today, and big sums of money, attract vultures, who smell money.

You end up going round in circles till the cows come home thinking of scenarios if you do this or do that and end up talking your self out of all of them cos every route you go down there's a hurdle .

Basic problem is the tax system for farmers is geared towards dieing with Ur boots on and it's just a pyramid of hurdles and hoops going outside of that start point !

Then you end up with 90 yr olds "at the reins " still on paper at least ,
And when the next generation take it on after death they are about scrap anyway .....

 

[Cowabunga]

You end up going round in circles till the cows come home thinking of scenarios if you do this or do that and end up talking your self out of all of them cos every route you go down there's a hurdle .

Basic problem is the tax system for farmers is geared towards dieing with Ur boots on and it's just a pyramid of hurdles and hoops going outside of that start point !

Then you end up with 90 yr olds "at the reins " still on paper at least ,
And when the next generation take it on after death they are about scrap anyway .....

That’s just an excuse. There is no reason whosoever for the ‘old man’ to be at the reins from any particular age of their choice whatsoever and no reason why any of this stuff can’t be sorted in a timely fashion. My father couldn’t handle management at all but he was excellent at interfering in and criticising it, which made it rather easy for mum to persuade him to give up the reins at around 50 years of age. It made absolutely no difference to any of our lifestyles.

Often the patriarchs, if they are spurred on to do anything, make an absolute rubbish of their wills which ruins and splits family relations for ever more. I see it on so many farms where brothers don’t speak to each other and sisters want an equal slice or are even given it, even though they are themselves married and established and even retired independently. This due to very poorly formulated wills. In fact I know of one family currently where there are two sisters and a brother, but this time the brother gets the farm but there is another house and for some reason the house is also split three ways rather than for the two sisters. So the daughters effectively get next to f-all when their parents die. Why do they do that? Lord knows but they are adamant that is what they want to happen. They are not very sophisticated people but still, you would think that they could see this being inequitable. He’ll be left with about £40k, as will his sisters, from the sale of the house but he will also inherit a million Pound asset on top. It surely would be fairer if the girls got the house which should give them £60k each, which would be a massive difference to them but not effect the brother hardly at all. It takes all sorts and it is their business and a situation replicated in one form or another by the hundreds weekly.

My family are all currently updating our wills as it happens and if not for my streaming cold [not covid] we would have sorted in last Wednesday. Our solicitor mentioned during banter that when he started practice he believed that 90% of wills would be straightforward with 10% complications including disagreements and nastiness. He was surprised to learn that 90% had complications with the majority of those having some bad arguments even during formulating the wills and guaranteed when this wills were enacted after death. He said this because ours were/are so very straightforward and we are all in complete agreement including on the equally important issue of power of attorneys.

 

[Landrover]

You end up going round in circles till the cows come home thinking of scenarios if you do this or do that and end up talking your self out of all of them cos every route you go down there's a hurdle .

Basic problem is the tax system for farmers is geared towards dieing with Ur boots on and it's just a pyramid of hurdles and hoops going outside of that start point !

Then you end up with 90 yr olds "at the reins " still on paper at least ,
And when the next generation take it on after death they are about scrap anyway .....

Got that problem here, how do you get 2 of the partners who are in their 80s to retire from the partnership without financial issues ? That's before we get to our other relation who is in their 90s never married and very wealthy plus owns lots of property and we are their only family! Huge iht bill looming with that !

 

[Cowabunga]

Got that problem here, how do you get 2 of the partners who are in their 80s to retire from the partnership without financial issues ? That's before we get to our other relation who is in their 90s never married and very wealthy plus owns lots of property and we are their only family! Huge iht bill looming with that !

Why should there be any issues here? Retiring from the farming business partnership is surely a simple paper exercise. If you mean from the land ownership, then they simply need to ‘sell’ [give?] it to the next generation or whoever they please. That they haven’t done this yet probably means they might never do. Has the subject come up? It should have done long ago if there are, as you seem to imply, generations involved below them. Trouble is that the next generation themselves are probably around their mid 50’s and should themselves be thinking of handing over the reins if not the business totally to their next generation. It does get rather complex if there are large families with wives that don’t get along involved, certainly, but time and tide wait for no man and circumstances will force issues along one day not so far away and unless it is sorted, that could be when the sh!t hits the fan.

 

[SilliamWhale]

I hope that helps someone with their own situation. The only problem I have now is how to get out of the business that has served us so well for the more than four decades that I’ve run it. Basically I have to bite the bullet and sell the cows, which will probably be [is] the hardest decision I’ll ever make.

I get that its a hard decision but is it because mentally you have attached your own existence and habits to cows?

I mean you've done your time, milked a lot of cows, don't have a successor who wants to milk etc. It shouldn't feel sad it should be a good thing, you can check out on your own terms which is the healthiest thing of all.

I don't think I will encourage my kids into farming. I think better to keep the farm, rent it out and use it as a springboard for other businesses. Best of both worlds then.

 

[Landrover]

Why should there be any issues here? Retiring from the farming business partnership is surely a simple paper exercise. If you mean from the land ownership, then they simply need to ‘sell’ [give?] it to the next generation or whoever they please. That they haven’t done this yet probably means they might never do. Has the subject come up? It should have done long ago if there are, as you seem to imply, generations involved below them. Trouble is that the next generation themselves are probably around their mid 50’s and should themselves be thinking of handing over the reins if not the business totally to their next generation. It does get rather complex if there are large families with wives that don’t get along involved, certainly, but time and tide wait for no man and circumstances will force issues along one day not so far away and unless it is sorted, that could be when the sh!t hits the fan.

A stubbornness and point blank refusal to even discuss it is an issue ! On the other relation when their accountant suggested a number of years ago it would be a good idea to start distributing their assets, they walked out of the office and went to a different firm where an understanding is that issue is never discussed

 

[serf]

Why should there be any issues here

You make these issues of sorting out assets sound like a walk in the park when it totally isn't,
families are complicated animals and all very well saying things should be sorted when you have a 2.4 children vanilla family that all get along all die in the correct order don't get divorced don't go off the rails don't go into a nursing home don't get dementia ect ect ect ....

With tax system as it is dieing with ur boots on is probably the lesser of evils and most tax efficient way of handing it over in a farming situation !

As the rules stand at the minute ....
(LABOUR GOV) !!

 

[goodevans]

Got that problem here, how do you get 2 of the partners who are in their 80s to retire from the partnership without financial issues ? That's before we get to our other relation who is in their 90s never married and very wealthy plus owns lots of property and we are their only family! Huge iht bill looming with that !

I don't think you should complain about IHT from a relative that isn't mother or father or gm or gd to be fair