Putting the farm into a trust

[oneson]

Just so everyone knows I am already a member on here but would prefer my anonymity for this matter!!
Does anyone on here have any experience working on their farm where previous generations put the assets in a trust in their will to protect the assets?
A bit about my situation. I am currently a junior partner in the family farm alongside 3 other senior partners, they are all the capital partners, I am just a business partner with no capital in the farm.
The senior partners have decided in their wills to put all of their assets in trust so they stay in this country as I have mentioned I may emigrate along with my with and children in the future. I made my case that I wouldn't expect to take anything with me if that is the case just my retained profits which have built up over the last few years.
The big thing they say is they want to keep the farm in this country and are doing it to protect their wishes which i totally understand and if i do emigrate whether it is in a trust or not will make no difference to me.
However I have some questions about how it will work with me still farming the farm in this country.
I was excluded from the meeting a while back when they were discussing this with the accountant so I was unable to have my questions answered as the answers I got when asking one of the senior partners was very fluffy. I will be speaking to the accountant myself but just after others experiences.
The way the trust would be set up I would never own anything and would just be a tenant of the trust basically. Which creates a problem for me if i wish to buy anything (house or land) for myself as i would have nothing to use as collateral and my ability to save for a deposit would be limited because as everyone knows you take the bare minimum out of the farm and the rest gets retained. The answer I got was you could use the trusts land as collateral providing the trustees agreed to it and then when you pay it off if would then become yours. Is this correct.
Also with regards to what I leave my children in my will,I was told that there would be the ability for them to farm the trusts assets for themselves when asking what about any children that don't want to farm apparently the trust would provide for them. Which begs the question whats the point in me working hard to provide and leave something for my children when the trust will do it anyway!!!!
Partnerships are built on trust and there doesn't seem to be a lot of trust towards me at this point.
Thankyou for reading and sorry for a ramble there are some more questions but I will leave them for next time.

 

[D14]

Trusts are as much a pain as they are a benefit with regards to protection. Surely there would be more trustees than the 3 senior partners and yourself? Because there seems little point in it otherwise.

If there isn’t and you emigrate then assuming the ‘senior partners’ are much older than you then they should continue to farm it until they can no longer, then get a manager and when they’ve passed away it comes to you at which point it’s your decision.

If there are multiple trustees then I can see where they are coming from.

More info needed

 

[chaffcutter]

You need a LOT of clarification of your position, initially from the accountant. Them go and put the whole lot of information in front of a solicitor, try and find one who specialises in agri problems, you need to be able to understand exactly where you stand in this.

It’s too big a subject for discussion on here imo, too much background information needed.

 

[Nearly]

A trust is for people who don't trust their descendants.

Solicitors / accountants like trusts. The not gift that keeps on giving.

Our acc was trying to push Dad to put farm into trust. I found out that if put into a trust, a house can NEVER be classed as anyone in the trust's primary residence, even if trust dissolved before sale.

A parent that puts a farm into trust, it's an admission that they raised their children to be incapable of making sensible decisions.

Can you tell that I don't like them?

 

[chaffcutter]

Our solicitor dislikes them with a passion, but they do have their uses.
The biggest fault with many is that the tax implications are complex in many ways. Capital, and that includes land and houses of course, is taxed at 6% EVERY TEN YEARS, so you can bet on having to sell something to pay that (and the valuation fee ).
Then if capital or whatever is distributed from the trust CGT comes into the picture as well. Be very careful.
The most important thing is that they must include provision for winding it up and when and how this can be done. Otherwise they can run forever.

 

[rob1]

Part of our farm was in a trust for years for various reasons but it ended when my father passed on, I was the only beneficary and I did get primary residence relief when the farmhouse was sold on my divorce, however the rules on trust have changed and as @chaffcutter says there is a nasty tax charge now that there wasnt previously. In the current political climate I think its very difficult to decide on any way forward with property that protects it from the tax man.
Im at an age where I need to make some plans but with two kids of my own and three step kids it becomes very complicated to be fair to them all

 

[milkloss]

I guess trusts have changed but I thought the assets of a trust could be transferred into another similar asset provided the trustees agree.

My experience is that trusts are ok as long as they include a sizeable lump of cash or investments that can be liquidated if necessary. You could end up with something that looks exceedingly valuable on paper but no cash to enable you to do anything with it such as horse trading with other beneficiaries.

At which point do they expect the trust to dissolve?

 

[Treemover]

Most of my tree moving clients have their estates in trusts. I always thought it was a move to protect the unit from tax and divorce primarily.

A friend of mind was discussing putting his family home into a trust to avoid loosing it with tax and nursing home costs.

I will be watching this thread with interest!

 

[Rossymons]

Looked into it...

TRUST me they seem a right pain in the ass if you want to have the element to move around like you might in future.

 

[Still Farming]

Cost money to set up cost money to unravel.

 

[kiwi pom]

None farmer opinion, tell them to shove it and go make your own way (assuming you’re not to old) As someone who is likely to inherit very little I find people that live their lives as others want just to get an inheritance , a bit odd.
If I was a partner in a family business and was excluded from a meeting with the accountant I’d be out smartish.


Sorry not much help.

 

[Rossymons]

None farmer opinion, tell them to shove it and go make your own way (assuming you’re not to old) As someone who is likely to inherit very little I find people that live their lives as others want just to get an inheritance , a bit odd.
If I was a partner in a family business and was excluded from a meeting with the accountant I’d be out smartish.


Sorry not much help.

I'd echo these sentiments.

 

[teslacoils]

Can I ask why your retained profits are still in the business? There is no tax advantage in them being there. If you take the bare minimum you still pay tax on the rest unless you have qualifying expenditure, in which case you have essentially spent any profit.

Me? I'd want to see a proper stAtement saying how much dosh was actually mine tomorrow morning. You sound like a fairly junior member of this "partnership" in which case you may find the accountants are actually working for the other partners, not you.

If this is family, and the doors are shut for discussion, then you need your own accountant.

Sounds very much like a potential FFF :

family
farming
f**kabout

 

[PSQ]

"I am currently a junior partner in the family farm alongside 3 other senior partners, they are all the capital partners, I am just a business partner with no capital in the farm."

My answer would depend on who the 3 senior partners are, their ages, their dependents and dependents (expectation) in their wills, and also who is doing the physical day to day running of the farm.

Apologies for making assumptions, but if you are the one partner who will in time be left doing all the work to provide for the senior partners, only to have to watch the farm be sold from under you to pay out absent cousins / siblings, I would probably be asking a lot of polite but awkward questions too. Isn't it just the way in farming, that all the promises in the world mean nothing when a solicitor starts a sentence with "This is the last will and testament..."

Good luck.

Edit: @teslacoils makes a very good point above. Do you have a *written* statement of how much the business owes you? Again, all the verbal promises in the world aren't worth the paper they're (not) written on...

 

[teslacoils]

"one of these days son all this will be yours"

Except we all want to stay in our houses until we die; have you farm the land for X rent; not take any actual cash out.

Get the cash owed, and emigrate.

 

[capfits]

A trust is for people who don't trust their descendants.

Solicitors / accountants like trusts. The not gift that keeps on giving.

Our acc was trying to push Dad to put farm into trust. I found out that if put into a trust, a house can NEVER be classed as anyone in the trust's primary residence, even if trust dissolved before sale.

A parent that puts a farm into trust, it's an admission that they raised their children to be incapable of making sensible decisions.

Can you tell that I don't like them?

Or for folk who have young kids with trustworthy friends...

Cost money to set up cost money to unravel.

Nope it cost peanuts relatively speaking <£500 when I did my mine.
Indeed my review of will was nearly as costly but the trust was still seen best way forward due to level of asset and likely future outcomes(no successor and other partners)
Horses for courses

 

[oneson]

Thankyou for all of your replies.I have to accept that I will never own anything and have very little to pass onto my children of my own whilst being able to farm the trusts assets and be part of an existing business or row my own boat.

Trusts are as much a pain as they are a benefit with regards to protection. Surely there would be more trustees than the 3 senior partners and yourself? Because there seems little point in it otherwise.

If there isn’t and you emigrate then assuming the ‘senior partners’ are much older than you then they should continue to farm it until they can no longer, then get a manager and when they’ve passed away it comes to you at which point it’s your decision.

If there are multiple trustees then I can see where they are coming from.

More info needed

Thankyou for your reply. The senior partners are 2 elderly unwell grandparent generation and 1 parent generation. I am the only one in my generation on the farm however I have a brother who at the present time is on the farm not a partner and doesnt want to be a partner.
The trustees are the people that take care of the trust of which I am not one. I would be classed as beneficiary along with my siblings and all of our children etc, this is one of the things to clarify. They havent set a date of which the trust would be dissolved but from the way they are talking it would be a long time and still be going when I pass on.

A trust is for people who don't trust their descendants.

Solicitors / accountants like trusts. The not gift that keeps on giving.

Our acc was trying to push Dad to put farm into trust. I found out that if put into a trust, a house can NEVER be classed as anyone in the trust's primary residence, even if trust dissolved before sale.

A parent that puts a farm into trust, it's an admission that they raised their children to be incapable of making sensible decisions.

Can you tell that I don't like them?

This is the feeling I am getting probably better to call it a mistrust rather than a trust.

None farmer opinion, tell them to shove it and go make your own way (assuming you’re not to old) As someone who is likely to inherit very little I find people that live their lives as others want just to get an inheritance , a bit odd.
If I was a partner in a family business and was excluded from a meeting with the accountant I’d be out smartish.


Sorry not much help.

This isn't the first time I haven't been at such a meeting usually forget to be told. Nope definitely not too old at this point and the children are still young enough to be able to move and put roots down.
That's it parent partner has said his share may not go into the trust in the end and may get handed on to me. There's a lot of hope to be living your life by there.

 

[Still Farming]

Or for folk who have young kids with trustworthy friends...


Nope it cost peanuts relatively speaking <£500 when I did my mine.
Indeed my review of will was nearly as costly but the trust was still seen best way forward due to level of asset and likely future outcomes(no successor and other partners)
Horses for courses

Taxation schemes change.
What is good today is not necessarily good tommorrow.

 

[multi power]

I'd echo these sentiments.

I'd have already emigrated

 

[essexpete]

Thankyou for all of your replies.I have to accept that I will never own anything and have very little to pass onto my children of my own whilst being able to farm the trusts assets and be part of an existing business or row my own boat.


Thankyou for your reply. The senior partners are 2 elderly unwell grandparent generation and 1 parent generation. I am the only one in my generation on the farm however I have a brother who at the present time is on the farm not a partner and doesnt want to be a partner.
The trustees are the people that take care of the trust of which I am not one. I would be classed as beneficiary along with my siblings and all of our children etc, this is one of the things to clarify. They havent set a date of which the trust would be dissolved but from the way they are talking it would be a long time and still be going when I pass on.



This is the feeling I am getting probably better to call it a mistrust rather than a trust.



This isn't the first time I haven't been at such a meeting usually forget to be told. Nope definitely not too old at this point and the children are still young enough to be able to move and put roots down.
That's it parent partner has said his share may not go into the trust in the end and may get handed on to me. There's a lot of hope to be living your life by there.

Without prying too much are you and brother the only eventual beneficiaries? Presumably the parent generation (father?) must have inherited or bought into to the business?