fetching an inheritance problem forward

[Y Fan Wen]

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.

That's the route we went down and it did seem to work alright in the end.

 

[farmerm]

You don't say how many siblings but say you have 2 siblings and the land is inherited equally you would have 33% equity and a debt of 66%. say Land at £10,000/ac lands you £6,666/ac in borrowings @5% over 25 years is £333/ac interest and £266/ac in repayments £599/ac per year! This sort of thing needs very expensive professional advice that will make your eyes water, but get it wrong and it will be like someone has ripped off both your legs and most of a lung. When it comes to farms and inheritance what is fair can be far from equal.

 

[Cows 'n grass]

My brother and I both inherited some money in our mid twenties and I used mine to buy him out or any future inheritance of the business. We're tenants though so it's far smaller values than for anyone who owns land.

 

[Banana Bar]

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!

Great suggestion

 

[Donkey Oaty]

You could pay for a Joint life second death life insurance on your parents lives. PM me for a quote if you like. You may be surprised how little it costs.

 

[Nearly]

You could pay for a Joint life second death life insurance on your parents lives. PM me for a quote if you like. You may be surprised how little it costs.

But you're paying this for the rest of their natural life.
Dad proposed this 30 years ago. Mum is still kicking!
Mortgage would have been long paid and the insured amount wouldn't have come close to what a 100 acre farm is worth now.
I'm out!

 

[Nearly]

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.

there would be a potential IHT bill but if parents lived 7 years that would be illiminated, THEN they sold the farm to the neigbour and paid the CGT.
One lot of tax is sort of acceptable, 2 lots becomes punitive.

 

[Donkey Oaty]

The second parent would need to live to well over 100 before total premiums paid would be more than the sum assured. As said, you should look at the numbers.

 

[SilliamWhale]

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?

I'd agree with you there. When I came home I said to my parents if they wanted me to buy the land of other siblings after their days I needed to know straight away as at least I could plan or get it into my head weather to attach myself to land, try and pay it off or just say no thanks. The thought of having to buy siblings out when I'm 55 plus would make me think "f**k it" as I could have done that in my 20's.

 

[Nearly]

The second parent would need to live to well over 100 before total premiums paid would be more than the sum assured. As said, you should look at the numbers.

No thanks. Rather buy another farm and give it to siblings.

 

[chipchap]

There was a little bit of sense in the primogeniture system of old, just a little bit.

 

[Donkey Oaty]

No thanks. Rather buy another farm and give it to siblings.

With what??

 

[T7.wab]

What would be the cost of moving it to a limited company? We are limited and made it alot easier by "gifting" shares to me and buying my brothers shares at share price

 

[jon9000]

the bulk of the farm has been left to me by my parents, however a small farm that i live on as it happens has been left to my sisters. i own the barn conversertion thats on it,

my thought were that if i was to try and buy it in installments now it would save a lot of problems in the future, also it would give my sisters additional money now to help buy houses and fund universities now. i was initally thinking of buying the buildings and the land 60 acres. at 6k ann acres and 50 for the buildings it would work out at 30k a year. which i could afford to pay from the profits from the rest of the farm.

however from reading the thread and your message makes me think twice.... maybe just buy some more land locally on a morgage when it comes up. my main reason for wanting ownership is that i live there currently and would either have to buy them out or move house. i was of the thinking of the later however my wife would like to stay where we live now

 

[som farmer]

my experiences tell me, that anything done, pre death, for siblings, is very quickly forgotten, and demands for 'their' fair share ! The problem is simply, land prices have gone way to high, to make any solution hard, and contentious, and the legal sharks know it, and encourage discontent, after all, that's how they make their living, along with the agricultural accountants and land agents !

 

[linga]

You could pay for a Joint life second death life insurance on your parents lives. PM me for a quote if you like. You may be surprised how little it costs.

We looked at a whole of life policy and whilst the initial premiums were ok we found the indicative increases with time were eyewatering and whats more, one has to remember that if when faced with these increases you cant afford it you lose the lot...unless you escape this life early of course when insurance is cheap
For better or worse we all agreed that the present business would pay into a trust fund for the non farming inheritor..it might not generate as much as the insurance but there will be a pot from which to pay out in the end. As its a trust fund it would not be part of my estate for IHT purposes.
And of course he will end up with a pot so if nothing else he can pee in it !

 

[maen]

In my experience my neighbours inheritance planning is to leave it all to the Son and the girls have to fend for themselves. Causes family problems big time, and unfair as hell.

I do not know of any son that has had to buy out his siblings. The exception is when no family member wishes to farm then a sale is then divided on death of the parents.

 

[linga]

In my experience my neighbours inheritance planning is to leave it all to the Son and the girls have to fend for themselves. Causes family problems big time, and unfair as hell.

I do not know of any son that has had to buy out his siblings. The exception is when no family member wishes to farm then a sale is then divided on death of the parents.

I do but I am not sure I know of one who can afford to

 

[Landrover]

Difficult stuff to sort, I've given up trying to sort stuff out with my parents, whatever the wills say my siblings will challenge it, one I'm in partnership with and the other has had a house out of the business and other things but because of a divorce is not as well off as they once were, me I don't really give a .... anymore when anything happens to them the whole lot will be for sale I would think ! Hopefully a few years away tho ! I can understand my parents unwillingness to sort anything out now because of various reasons including many years ago putting some land in "trust" for a relation and then ending up with a huge tax bill to pay because off the relation's sneaky dealings !

 

[maen]

I do, however, know a family with three daughters and father died. A good Farming friend said one of the daughters would have a son!!!!!! And he could take over the farm when he was old enough. That’s what he has done!

What happened was two daughters wanted their money so most of the land locked land was sold to neighbours. It was always going to be the case.

Another farming neighbour sold up the farm gave money’s to his son, daughter and their grand children. The farm had been in the female family for probably a hundred years. The farm was not paying well, farmer was getting older the cash was more important than the grind. Bought by outside money, land now let on short term arrangements.