fetching an inheritance problem forward

[jon9000]

to cut a long story short, when my parents die some of our land will pass to my siblings. this ofcourse will involve a problem in years to come hope fully a long time away, potentially me buying the land back.

one idea ive had today was offer to start to buy the land today and then pay for it over twenty years. it seams like a good idea my siblings get money unfront plus i get to start planning for the future without the major problem coming down the road my my parents go.

has anyone else done this, or has any one any knowledge of the pit falls of the above idea. many thanks advance

 

[Frank-the-Wool]

to cut a long story short, when my parents die some of our land will pass to my siblings. this ofcourse will involve a problem in years to come hope fully a long time away, potentially me buying the land back.

one idea ive had today was offer to start to buy the land today and then pay for it over twenty years. it seams like a good idea my siblings get money unfront plus i get to start planning for the future without the major problem coming down the road my my parents go.

has anyone else done this, or has any one any knowledge of the pit falls of the above idea. many thanks advance

You need some professional advice here. Firstly talk to the parents and make sure the Will is changed so you have use of the land in your lifetime or all the time you continue to farm it.
Best way is probably to set up FBT's on the land and pay a rent to the siblings, however there are a number of tax pitfalls here which is why a discussion with accountants and solicitors is essential. You have to be very careful not to lose APR.

 

[Daddy Pig]

Possibly better just to put money aside, a lot can change in 20 years

 

[tepapa]

What I would forsee is you made a deal at today's value. Let's say £10k/acre.
Spend 20 years paying it off. Your parents pass away in 20years and you come to sort the estate. Land is now worth £20k and your siblings feel cheated and hard done by. They only received half of the value of the land. They have spent the original £10k/a and would like another payday.
You spend another 20 years paying off the second £10k/acre wishing you'd never bothered.

 

[farmerdan7618]

Have a look at a life insurance policy on your parents to pay out to your siblings. But as said get professional advice to ensure it works out how you all expect.

 

[flowerpot]

Or the value of the land might have dropped! Definitely something to chew over with a solicitor, to protect all parties.

 

[multi power]

You would be better to buy it from your parents now than pay siblings for something that isn't even theirs

 

[Sharpy]

A friend of mine was in a similar situation over 25 years ago. The family being very level headed organised that he was given the business and its assets by his parents, but he signed away any future claim of inheritance on their remaining estate. Seemed very fair.

 

[midlandslad]

This gets complicating from a tax perspective.

a sale now will create a CGT liability, and a gift to your siblings will create a IHT liability.

would it be easier for your parents to include in their will that your siblings will receive £x from the farm business

 

[essexpete]

A friend of mine was in a similar situation over 25 years ago. The family being very level headed organised that he was given the business and its assets by his parents, but he signed away any future claim of inheritance on their remaining estate. Seemed very fair.

That is OK when perhaps there are considerable assets outside of the business. In the event of the parents death the private assets may attract IHT. Who is going to pay that bill?

 

[Sharpy]

That is OK when perhaps there are considerable assets outside of the business. In the event of the parents death the private assets may attract IHT. Who is going to pay that bill?

I don't know, suspect things would be set up sensibly though, one of the parents still hale and hearty today. I just thought it was a neat way of handing over a viable business while being fair with the other siblings.

 

[idgni]

Go and buy another farm locally, you can sell it in the future to pay off the siblings. everyone will be happy and noone can gripe about it, you never know you might then but fit to keep both!

 

[HolzKopf]

I agree with you that if you have the opportunity to deal with it now with everyone's willing agreement then that's the better route and useful for all family-wise.

I'm always amazed how many families fall out over inheritance. I had a similar issue with my father leaving shares in our business to siblings that had never crossed the threshold let alone worked on it. When my mother died, I was at risk from being booted out of an enterprise that then I alone worked on - carrying all the employment and day to day risks. I sat down with a good accountant and we dealt with it. We had, in the nicest way, to make sure the others understood that if I ran it into the ground or something happened to me then their stake - of the land and assets only in a 'fire sale' would probably be less that I was offering.

Being able to do that deal was a mental millstone removed from around my neck. However twenty years on, I still get the occasional 'well, it's alright for you' etc and 'mum this, dad that'. They don't see that we risk on a daily basis, whether it's staff related, weather related or pandemic related - and also the money I gave for the shares has been spent by them on things that I would never have wasted capital on - weddings, holidays, cars and gifts to their children. You have to look after no1 first and what was in a way well meaning by my parents could have bitten me.

HK

 

[chipchap]

You would be better to buy it from your parents now than pay siblings for something that isn't even theirs

That would incur a capital gains tax liability.

 

[chipchap]

If you can’t work out something sensible with your parents now, with the help of family solicitor and accountant, it’s time to walk away and paddle your own canoe.

 

[Nearly]

You would be better to buy it from your parents now than pay siblings for something that isn't even theirs

That would incur a capital gains tax liability.

Local large farm was sold to a neighbour 7 years after the (retired) owners had gifted it to non-farming kids, who fbt'd it to neighbour. There are ways to reduce tax.

 

[chipchap]

Local large farm was sold to a neighbour 7 years after the (retired) owners had gifted it to non-farming kids, who fbt'd it to neighbour. There are ways to reduce tax.

Good advice is needed.
in the case you state there would have been potential for a capital gains liability twice, both when the parents gave it to the non farming kids, and when the kids subsequently sold it.

 

[little_p]

I went on a very interesting succession planning talk by Sian Bushell a while back.
Her main thread was that it is better to think about and try to deal with these things sooner rather than later (which it seems that you are doing).

She did say that in a lot of cases, provided that 'non-farm children' have a wad out at some point - which is usually in their late twenties / early thirties when they are looking to buy their first home - they are usually happy for the 'farming children' to have the farm house and land at the time of probate (although you might have to pick up the care of dad and mum).
Almost 'some now' was more acceptable to them than 'a lot later'.

Maybe their is a chance here that dad and mum can be the ones giving them their 'entitlement' rather yourself?

 

[7610 super q]

Oh lawdy.

 

[som farmer]

very delicate subject, and no easy answers. The big problem with siblings, they usually have partners, and, unless knowledgeable about farming, have different views, like equal shares. Wills these days, have to be exact, or some shitty solicitor will pick holes in it. If one were to 'settle' siblings now, again, you would need very carefully worded documentation, as, same shitty solicitor, would argue, value paid then, is not value today. And to be reasonable, from the outside, looking in, those claims would look reasonable ! Taking the 'subject' to court, is very, very expensive, and the outcome, is never guaranteed, you rely on one judges, interpretation of the documents, and he might even be anti farming ! The easiest solution, is to write a hand written letter, stating your wishes, very clearly, that, is very difficult, for anyone to argue with, they may try, but if done correctly, witnessed, and not before imminent expiry, is a good way, to leave things. However, the op, is looking to the future, with his parents still alive, and I can imagine, some very awkward conversations, to get it sorted ! Its a subject many people keep putting off, and all that happens, is a lot of money paid to solicitors ! My honest answer, is take the bull, by the horns, and try and sort it out, and, if parents will not, its highly likely they never will, so you have a good idea, of the mess, that is on its way. That, is the time, to make some very hard choices, none of which, are easy.