Succession planning.

kiwi pom · May 28, 2022

The OP's problem seems to be a common one, I'd bet there's a lot of folk on TFF that have been or are the son staying at home. As a non farmer I've never understood why that son is willing to work at home with no official agreement in place, unless they're just willing to be a paid employee
For those of you that are/were in that situation, why didn't it get sorted?
Never got round to it, scared of being told to go off and do your own thing or just hoping if you say nothing you'll end up with everything, and you don't want to force the decision?

I've never been entirely convinced with the argument "I've worked here all my life so I'm entitled to the farm"

JD-Kid · May 28, 2022

kiwi pom said:
The OP's problem seems to be a common one, I'd bet there's a lot of folk on TFF that have been or are the son staying at home. As a non farmer I've never understood why that son is willing to work at home with no official agreement in place, unless they're just willing to be a paid employee
For those of you that are/were in that situation, why didn't it get sorted?
Never got round to it, scared of being told to go off and do your own thing or just hoping if you say nothing you'll end up with everything, and you don't want to force the decision?

I've never been entirely convinced with the argument "I've worked here all my life so I'm entitled to the farm"

I woke up over 6 years ago and thought WTF this is not going to plan I'm still here both on farm and alive. but believe me there has been days that could of gone eather way and its not sorted out
long story so will not bore people to tears

to be fair if not payed or putting money in to the farm it needs to be put against the land and maybe not just as a set amount as it's also a loss of earning that money could of done. so it's more an investment be it a rising shear of the farm or a lone with interest owned
the farm should be paying a fair value for the work based on employing someone with the same skill set sure there are alot of other factors in it like house etc etc that has a value if living on farm but some jobs here do supply house power internet etc with the job as part of whole wage package

its a hard one and leads to alot of problems in some cases family fights etc

yes it's a tough one
dad on one hand not wanting to give up on what he's built up worryed about how they will make ends meet if retire trying to make money by saving on costs
son wants to move ahead improve things but hands are tired gets frustrated and in back of mind maybe knowing it might not ever work out
I thing to toss in to the pot if dad died would it not go to mum

we all hate bandaids but some times should rip them off and maybe I should listen to myself

unlacedgecko · May 28, 2022

Should help bring some reality to the value of the "stay at home" child.

Highland Mule · May 28, 2022

Skitterd said:
All opinios valued.

A couple of contrary ones to spark some thought on a Saturday morning..

Skitterd said:
son not taking any money out the farm, putting all he/they make into paying off the debt,

Doesn’t sound like the work at home son is much of a businessman if he didn’t sort out his own finances at the start.

farmerm said:
Not if older generation is wise enough to recognise there is a 1 in 3 chance an offspring wife (or husband) will bail and take 50% of the offspring's share with them..

Which may well be a fair settlement if she/ he made the same life sacrifices as the the offspring

chipchap · May 28, 2022

Often the interests of “the farm” are considered much more highly than the interests of the individuals involved.

chipchap · May 28, 2022

Why do the assets of the older generation have to be divided equally anyway?

The oldest son traditionally took the lion’s share.

Males traditionally got more than females.

Perhaps farming assets should go to the child that uses them?

Perhaps one child is more capable and would make better advantage of certain assets.

kiwi pom · May 28, 2022

chipchap said:
Why do the assets of the older generation have to be divided equally anyway?

The oldest son traditionally took the lion’s share.

Males traditionally got more than females.

Perhaps farming assets should go to the child that uses them?

Perhaps one child is more capable and would make better advantage of certain assets.

Perhaps the child that moves away would actually be the most capable of taking the business forward and the child that stays does so because they are only really suited to a farm labourers job?
It may also be the case that a daughter would be better than a son but dad's a bit old fashioned and can't see it.
Every situation is different.

Still Farming · May 28, 2022

No ones wants to sell and divide funds up and distribute but is it best in long term for all concerned???

Hampton · May 28, 2022

chipchap said:
Somebody needs to take your father to one side and have a quiet word, maybe accountant, family friend, or auctioneer.

Note to younger readers on here: Get thing sorted early on; unrecorded promises are worthless.

100%
im not far from you, so without naming names, we went through the succession thing about ten years ago when my grandfather died. Dad wasn’t sure what to do and how much to pass on etc etc.
Anyway, one day our insurance man came. I didn’t get on with the bloke that well as he’d been fleecing us for years and I’d had quotes considerably less but “we’d always used him”
anyway, dad must have told him what was going on, and the guy told him the solution.
It turned out the solution was the same one I’d been telling dad for the previous six months!
Suddenly those extra premiums didn’t seem so bad!
It’s surprising who people listen to sometimes, and it’s not always whom you’d expect they would

farmerm · May 29, 2022

Highland Mule said:
A couple of contrary ones to spark some thought on a Saturday morning..

Doesn’t sound like the work at home son is much of a businessman if he didn’t sort out his own finances at the start.

Which may well be a fair settlement if she/ he made the same life sacrifices as the the

Highland Mule said:
A couple of contrary ones to spark some thought on a Saturday morning..

Doesn’t sound like the work at home son is much of a businessman if he didn’t sort out his own finances at the start.

Which may well be a fair settlement if she/ he made the same life sacrifices as the the offspring

Such measures are put in place before an offspring marries... if a new spouse buggers off only weeks into a marriage they almost certainly won’t have made the level of life sacrifices for a business crippling divorce claim to be fair... arrangements can evolve other time as spouses demonstrate the level of sacrifices you refer to, ideally in conjunction with the previous generation becoming less reliant on those protected assets for their income..

Highland Mule · May 29, 2022

farmerm said:
Such measures are put in place before an offspring marries... if a new spouse buggers off only weeks into a marriage they almost certainly won’t have made the level of life sacrifices for a business crippling divorce claim to be fair... arrangements can evolve other time as spouses demonstrate the level of sacrifices you refer to, ideally in conjunction with the previous generation becoming less reliant on those protected assets for their income..

I agree, and am reminded of the concept of “marital property” - is that a thing in England/ Wales? It would certainly make a good case for Ltd Co and share transfer as a way to measure commitment (to both farm and marriage).

farmerm · May 29, 2022

chipchap said:
Why do the assets of the older generation have to be divided equally anyway?

The oldest son traditionally took the lion’s share.

Males traditionally got more than females.

Perhaps farming assets should go to the child that uses them?

Perhaps one child is more capable and would make better advantage of certain assets.

They don’t have to be divided equally, indeed they rarely are. As it stands here I stand to inherit 10x more in asset value than my sister but I bear any IHT due, any care fees would comes from farm asserts

and her share will be liquid. She has also received additional money early to facilitate buying and later extending a home. When you are not planning to sell inherited land it is not worth its market value, only a figure proportion to the revenue it can generate. It’s not equal but all parties are happy that it is fair.

Still Farming · May 29, 2022

farmerm said:
They don’t have to be divided equally, indeed they rarely are. As it stands here I stand to inherit 10x more in asset value than my sister but I bear any IHT due, any care fees would comes from farm asserts and her share will be liquid. She has also received additional money early to facilitate buying and later extending a home. When you are not planning to sell inherited land it is not worth its market value, only a figure proportion to the revenue it can generate. It’s not equal but all parties are happy that it is fair.

They all only see open market and vacant pocession possibly?

Drillman · May 29, 2022

Many sides to succession

1- Older generation won’t give up the reins

2- younger generation not going to lead the business into a stable future

3- older generation wants out for whatever reason

4- older generation see that the young one will take things forwards and step back and enjoy seeing the business develop.

Im lucky, when the older generation turned 65 the tenancy was put into my name, from there on it was an evolution rather than a revolution and had been for some time prior to the change of name on tenancy. By time the older generation was 75 they didn’t want the hassle of trying to run a business and health was failing so told me and wifey to get on with it and retired from the partnership. A bit of wise investment on the older generations part has made them largely financially independent so we weren’t pushed back into the dark ages financially and been able to push on while young enough to do so.

curlietailz · May 29, 2022

Perhaps this will not be a popular opinion
But the money and assets belong to the parents
It’s entirely their decision what to do with the money
It’s not unheard of for the oldies to leave their money to the Church or to the Cats Home !
don’t expect and you won’t be disappointed

toquark · May 29, 2022

This is a very very good video. One which should be shown to every child set to inherit anything in the land.

farmerm · May 29, 2022

curlietailz said:
Perhaps this will not be a popular opinion
But the money and assets belong to the parents
It’s entirely their decision what to do with the money
It’s not unheard of for the oldies to leave their money to the Church or to the Cats Home !
don’t expect and you won’t be disappointed

This is true but parents should have the decency to be honest with their offspring. Its one thing for parents to be open about their intention for the Cats home and set a child off free to make their own way in life. It is a very different to disingenuously use "one day this will be yours" as a tool to impose control and enforce a lifetime of near servitude from a chosen child....

Sadly there is a small proportion of folk who really are such sadistic c nts, often descendants in a line of similar creatures.

Many problems would be solved if it was made illegal to work full time for/with your parents for more than half of the years between leaving education and the age of 30.. and this should apply to every industry not just farming.

Landrover · May 29, 2022

curlietailz said:
Perhaps this will not be a popular opinion
But the money and assets belong to the parents
It’s entirely their decision what to do with the money
It’s not unheard of for the oldies to leave their money to the Church or to the Cats Home !
don’t expect and you won’t be disappointed

This is exactly right, just because you expect something doesn't mean you'll get it ! My parents wills are their affairs and there wishes in them have sweet fa to do with me ! I may have worked since I left school for the business and because of that have very little in my own right( my house belongs to the business not me so in reality i own a quarter of it ! ) I have a rough outline of what the wills contain but they have both recently been changed and I have no idea of the changes made ! I am one of those "one day it will all be yours" people but as time goes on in beginning to realise lifes maybe too short to wait that long !

Thick Farmer · May 29, 2022

Skitterd said:
I'm after some advice re succession planning, which is a minefield at the best of times.

'Theoretical' situation. Son works at home all life with father (not much input, treated as worker), other sibling has no interest and never worked on farm.

By 50 the essentially takes over the business, with father's blessing (father remains partner, but backseat) Lots of historic debt been built up (due to father;s dogmatic approach) and tough times ahead.

Son manages to turn things round and begins paying off debt.

At point of son taking over there are no 'assets' to speak of as debt wipes them all out, talk of succession / wills etc is essentially moot. However, as things improve, son not taking any money out the farm, putting all he/they make into paying off the debt, father says he's going to now give half the worth of 'his' share of the assets (land that son has worked to pay off) to his other child.

Hard question, as nobody wants to be selfish, but without the son changing things (with very ltd input from father) and paying off the debts there were no assets. Once mortgage / loans paid off, with son having used all the money he's generated, the none farming sibling suddenly gets handed their share...despite putting nothing in.

How do you sort that out?

There's many sides to this argument and many ways of looking very selfish or stupid.

All opinios valued.

Proprietary estoppel. Look it up.
Davies v Davies and Habberfield v Habberfield are good examples.

Still Farming · May 29, 2022

Thick Farmer said:
Proprietary estoppel. Look it up.
Davies v Davies and Habberfield v Habberfield are good examples.

Also Cinderella case .

Succession planning.

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