Family partnership - trapped!

[serf]

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

It's just the thought of the gov wasting it though that's the trouble when it would be a lot better being spent closer to home ...

 

[goodevans]

It's just the thought of the gov wasting it though that's the trouble when it would be a lot better being spent closer to home ...

Better the government have it off a dead person who has no direct next of kin and no longer a need for it than off my earnings while I'm alive if it helps balance the books

 

[serf]

Better the government have it off a dead person who has no direct next of kin and no longer a need for it than off my earnings while I'm alive if it helps balance the books

And you think because they get it off Billie no relative's they will take less off you

They got big pensions and peerages to fund you know ....

 

[Landrover]

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

That's true ! But (and I don't like saying this but it's true) I don't like paying tax when it can easily be avoided/minimised ! I pay my fair share already ! Also when you have worked most of your adult life to keep others whilst scraping by yourself because "it's the right thing to do" and they are not thankful it does cloud ones judgment somewhat!

 

[Cowabunga]

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

It is a common problem. One of my relations was under his father’s thumb, making no decisions of his own until his father died. He was 65 himself at that point and was totally overwhelmed by the prospect of making any decision of his own about the running of the farm and paperwork etc. To top it all his wife died within the year.
Total shambles. The farm is now sold and he lives like a hermit in his own dotage with no interest in anything whatsoever.

 

[Cowabunga]

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) !!

I think you must have skimmed over or completely missed some of what I’ve written. However if you have decided that the second highlighted paragraph is as you wrote, then yes, that is what’s likely to happen. There are countless other options though, depending entirely on the people and business situation involved. As you imply, it can get very complex and the more complex it gets the least likely it is that everyone will be happy and indeed that there will be splits and strife between family members in future.

There’s no real excuse for avoiding the issue and sorting it out plainly and clearly with no chance of opposing the decisions taken if those decisions are equitable, at whatever stage of life or at death. There is nothing worse than leaving the mess for the next generation to fight over. Families can and do commonly split with an amazing amount of venom if it isn’t sorted equitably and bomb-proof beforehand.

 

[RichardSou]

I think I’ve got myself into a pickle mainly down to my own naivety.

I’m a partner in the family business - my father and myself.
we’re a tenanted farm with a reasonably sizeable livestock enterprise.
In terms of profit, we are split 51% to my father and 49% to me. Total profits on the accounts would be around 100k per year but I draw £24000 per year and leave the rest of my share of profit in the business - same for father.

the issue is as I’ve been looking more into the accounts, I actually have virtually no capital in the business (20k ish). We’ve expanded a lot over the last 4/5 years so we’ve got a big overdraft which me and my father both signed for as partners. So I think I’m response for about 150k of overdraft but have hardly any capital.
i think basically without personally growing capital in the business then I’m no more than an employee, or more accurately - an employee with a load of debt.
me and my wife are at the stage we think we’d be much better going on our own but surely I’d have to pay my share of debt to leave the partnership? So we’d be in a massive hole straight away.
Got a meeting with the accountant in 10 days so will get some clarity.
basically I’d be doing all the physical work and putting in a lot of hours so never get chance to look at the inner runnings of the business which gets left to father.
another key point is - we don’t have a partnership agreement
Anybody have an opinion on my situation?

Just seen your post so a bit late in the day commenting. I am surprised the bank hasn't insisted on a partnership agreement as our bank, Barclays, insisted on it, and also made us draw up a new one when a partner died. If the overdraft is in both names, check which assets are secured on it and that you have access to them. When my father died, the overdraft was secured on a field which was in his name, which was fortunately left to me, but even then the bank made us re-do the security document, which they charged for, but it could have been awkward if I didn't own the assets which the overdraft was secured on. Family partnerships can be difficult. When my father retired from working on the farm, he still continued to take all his living expenses out of the farm despite having several good pensions! Also make sure that you both have a will and that you put enough into your pension. A lot also depends on how old you are as it takes time to build up capital.

 

[Enry]

Not really. We pay professionals to help us understand all parts of our businesses. Vets, Agronomists, Solicitors and accountants.
It's no shame not to understand accounts, as long as professional advice is taken as and when needed. As it sounds like the OP is doing.

Understanding the finances is critical for business security and success. I would say that time spent with accountant, asking questions and discussing "what if" is some of the most valuable time spent in the year!

 

[Enry]

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.

Would you be a potential opportunity for a joint venture? Link up with some keep young farmer to run the business, retaining farmer status and having an interest and an income, whilst retaining the asset base for your daughter?

 

[steveR]

It is a common problem. One of my relations was under his father’s thumb, making no decisions of his own until his father died. He was 65 himself at that point and was totally overwhelmed by the prospect of making any decision of his own about the running of the farm and paperwork etc. To top it all his wife died within the year.
Total shambles. The farm is now sold and he lives like a hermit in his own dotage with no interest in anything whatsoever.

That is extremely sad, but.... I knew of someone in very similar circumstances.

 

[Enry]

if there was a lesson to be learnt it's this one...get it on paper, professionally and legally binding!

 

[ollie989898]

Better the government have it off a dead person who has no direct next of kin and no longer a need for it than off my earnings while I'm alive if it helps balance the books

I disagree. That kind of attitude only fosters people spending money like no tomorrow when in fact saving some of it for their children would be useful. They've been taxed their entire lives, they are taxed on every pound they spend. Leave them and their children alone after they die.

If you inherited 2 million in assets does this somehow make you a bad person? No, in reality you will still go to work, still have your own children and still pay tax on earnings. The exchequer gets a suck either way.

Inheritance tax is a joke tax that the very wealthy all avoid anyway, some of them do it by investing hordes of money in fudging farming of all things, which borks the actual industry interested in making profits even harder.

Cripes knows I am all in favour of taxing folk but do away with inheritance taxes, they are manifestly unjust.

 

[glasshouse]

Overdraft could be short term, ie- part of the year when they buy cattle or something . A big overdraft doesn’t necessarily mean they still can’t be making decent profit. Money is just another tool like a tractor .

Till the bank wants it back