fetching an inheritance problem forward

[flowerpot]

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, next door neighbour. His father died unexpectedly, and the son had to sell a farm and other property to pay out his sisters. Luckily for him, they had the money and property to do it in the first place.

For the farming son (or daughter in one case) the land is a means of making a living. For the other siblings it is an awful lot of money so why should he get it all.

 

[yellow belly]

Let the land to the farming kids on a long term fbt to retirement or longer with a rental formular based on farm income (aha Type or based on national yield x grain price or milk price )

then the land is separated from the ownership Rent pays pension no nic
the disadvantage is farmhouse May be taxable
when land was cheaper doing nothing was ok
but now with land out of reach for farming to pay out siblings
but in 10 or 20 years time the siblings may have a much lower land price
this was the case in the 1925 to 1965 period
inheritance of land is iht free and capital gains eliminated on death which is a big incentive to wait for siblings

 

[farmerm]

Buy an equivalent block of land elsewhere and let it out if need be... Build up equity in this until your parents demise then use this property to provide funds to buy out the siblings share? Your bought block will track any changes in land values be that up or down. If the economics of this don't stack up now they probably still wont at the time of your parents passing.

If your parents could be reasonably expected to live more than 7 years, your parents could remortgage the land, give the siblings a cash gift amount which could be a fair amount but noticeably less than an equal share of the land value. You would spend the next 25 years working to pay off the mortgage but inherit all of what is left of the farm assets. The danger is your parents could end up in care at £50K/year each for their last few years and you end up with chuff all at the end of it.

 

[Still Farming]

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.

Or just give it to you now?

 

[farmerm]

Or just give it to you now?

Can they afford to... cant give the land away and still benefit from it, they may have insufficient pensions. Would they want to, In my experience most family farms in the UK are held tightly by the previous generation until death, reasons can be financial, tax avoidance, emotional, trust in offspring's partner....

 

[Netherfield]

It'll end in tears

 

[kiwi pom]

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

Sounds like you've already done very well if the bulk is left to you and the small farm is split between your sisters.
If the sisters are ok with this (maybe they'd actually like to be left a bit of the family property) then sort yourself out another house and look at buying land elsewhere, that has no connection to family so you can be sure its yours if everything goes sideways in the future.
Perhaps you could sell them the barn conversion you own to fund it?

Looking to gain total control over everything your parents own seems a bit selfish to me. I'm sure others will disagree.

 

[farmerm]

Sounds like you've already done very well if the bulk is left to you and the small farm is split between your sisters.
If the sisters are ok with this (maybe they'd actually like to be left a bit of the family property) then sort yourself out another house and look at buying land elsewhere, that has no connection to family so you can be sure its yours if everything goes sideways in the future.
Perhaps you could sell them the barn conversion you own to fund it?

Looking to gain total control over everything your parents own seems a bit selfish to me. I'm sure others will disagree.

Many UK farmers reach an age that they start to loose bladder control before they get full total control of anything!

 

[som farmer]

Many UK farmers reach an age that they start to loose bladder control before they get full total control of anything!

its a very sad fact, that you are right, why, I have no idea, perhaps its because they cannot decide how to leave it. My old man assured me, he'd sorted it out, 26 years after he went, still not sorted out, I can honestly say, looking back, if he had been honest, 40 years ago, the best solution would have been to move on, not working at home, for a pittance, and little thanks. However, if I had done that, i'd probably be thinking, how to leave mine ! Mine, is sorted, they both know, and both are happy, I had no intention of leaving my 2, a mess like I had, and still not sorted !

 

[stewart]

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.

If you buy the land today at todays value and this is done with the agreement of the siblings, why would they feel cheated 20 years down the track?

 

[stewart]

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

Only if you are the oldest!

 

[tepapa]

If you buy the land today at todays value and this is done with the agreement of the siblings, why would they feel cheated 20 years down the track?

Greed

 

[stewart]

Greed

If you have to account for greed in inheritance planning the simplest solution could be to sell everything and split the cash between siblings, you are then working with a known amount, without worrying about hypothetical values, all the siblings can then row their own boat.

 

[ploughman1963]

How would it work if parents gifted the whole of their estate to their children equally now but continued to rent the farm back off them? If parents survive 7 years then taxes avoided and care home cost liabilities diminish year on year. Put in place that inheriting children cannot force sale of the estate for ‘x’ number of years after second parent’s death to allow the farming sibling to have a chance of taking on a mortgage to pay out non-farming siblings after ‘x’ years - in the intervening period non-farming siblings receive annual rental income.
?

 

[chipchap]

Only if you are the oldest!

I’m not!
Everybody grew up knowing exactly what was coming to them. Very unfair, but prevented any arguments.

 

[Hilly]

Professional advice , mine field as you have to watch the professionals as well they will advise a cock eye d way so they get lots of work one day , this is frought with danger procede with caution .

 

[farmerm]

How would it work if parents gifted the whole of their estate to their children equally now but continued to rent the farm back off them? If parents survive 7 years then taxes avoided and care home cost liabilities diminish year on year. Put in place that inheriting children cannot force sale of the estate for ‘x’ number of years after second parent’s death to allow the farming sibling to have a chance of taking on a mortgage to pay out non-farming siblings after ‘x’ years - in the intervening period non-farming siblings receive annual rental income.
?

That pretty tough on the parents... give away their assets to their children and then pay their children rent every year whilst they work themselves to death for little income.. and then one of the children get divorced and takes a chunk...

 

[ploughman1963]

That pretty tough on the parents... give away their assets to their children and then pay their children rent every year whilst they work themselves to death for little income.. and then one of the children get divorced and takes a chunk...

Sorry, I should have said, the inheriting children would pay back roughly the same amount to parents in form of advisory fees or something - so effectively neutral.
My thinking was to allow parents to continue farming it to be active rather than drop off the perch early. Actually, easier way would be for farm accounts to be done through the children and just pay parents as a farm manager?

 

[som farmer]

If you buy the land today at todays value and this is done with the agreement of the siblings, why would they feel cheated 20 years down the track?

your siblings, or, perhaps more importantly, their spouses, would look at the farms value, forget they had already had their 'share', and cry foul. And, in many ways, they are right, if you are looking from the outside in, and, if the matter gets, as far as court, you are subject to the views of a judge, looking from the outside, in to the value.
Of course, if you do the correct paperwork, and state your wishes clearly, you can let everybody, moan and bitch, as much as they like, tough ! Sadly though, in many cases, the paperwork is not clear, and precise, and we all know what follows.

 

[two-cylinder]

It's not always better to cross bridges before you get to them