Thrings Farms, partnering with Farmers Weekly, answer readers’ questions. Ben Coulson, Partner in the Succession and Tax team, advises on preparing for the future and getting the ball rolling on estate planning.
My 86-year-old father and brother are still farming in a partnership and neither have made a will. Where do we start?
It’s very important to start estate planning now to ensure that the farm passes smoothly to the next generation and avoids either disputes, tax liabilities, or both. This is even more crucial in light of the recent budget announcements relating to agricultural property relief (APR) and business property relief (BPR) which will come into effect from April 2026. From this date, on top of the usual allowances, the first £1m of combined business and agricultural assets will continue to attract no inheritance tax (IHT), with everything over that attracting a relief rate of 50%.
The good news is that you have identified that lack of action could cause issues later down the line and there is still time for your father and brother to put the mechanisms of smooth succession planning in place. They should be considering the following:
1. Put a Will in place
Without a Will, both your father’s and brother’s estates would be distributed under the rules of intestacy, which may not reflect their wishes. It could also complicate the future of the farm as family members with no interest in the farm or farming may acquire an interest. A professionally drafted Will can ensure that your father’s and brother’s estates are left to those that they wish to inherit, maximise the available IHT reliefs and allowances and ensure that that farming business is not put at risk.
2. The farming partnership
You mentioned that your father and brother farm in partnership - is there a formal partnership agreement in place? If not, they should strongly consider putting one in place. Without one, if one of the partners dies, the partnership will come to an end. This will have a detrimental impact on the business’ cash flow, finances and goodwill. The deceased partner’s share of the partnership will pass to his beneficiaries under intestacy if no Will is in place.
If a formal agreement is in place, then it should be reviewed to ensure that it is up to date and relevant. It is important that the agreement clarifies what happens to the partnership share on the death, incapacity or retirement of one of the partners, and whether the surviving partners can continue running the business. A formal partnership agreement will act as the governing document for the partnership.
A formal farming partnership should also be reviewed to ensure that the assets used by the business can be identified and ensure that they held in a way to maximise available IHT reliefs. For example, assets used by a partnership but not owned by the partnership, will only attract a 50% rate of IHT relief, whereas assets identified as a partnership asset would attract a relief of 100%. Part of the planning process your father and brother should be undertaking is ensuring that the business is structured in a way to ensure that the business and its assets qualify for the appropriate reliefs and to ensure that an IHT liability is either mitigated or eliminated completely.
3. Lasting powers of attorney
If not already in place, these documents should be seriously considered. If your father or brother became incapacitated, they will need a trusted person to manage their affairs, which will include the farming business.
Putting these documents in place will ensure that the future of the business is protected and that there is a clear succession plan in place. It is important to make sure these are being reviewed with reasonably regular frequency to ensure that they are still relevant and up to date.