Family Farms
Owning a family farm or business can be a legal minefield. Recent changes in the law have made matters more complicated than before. Anyone who passes their family farm (or indeed house) to their children but remains living there with the aim of reducing inheritance tax may now have to be charged a market rent. Sadly this cannot always be afforded. There are ways the transfer can be undone or extra tax can be paid instead. It is wise to take legal advice however as the rules are complicated.
Charles Abbott, a solicitor in our Wills, Trusts and Probate Department, says: “In one recent case a father allowed his daughter to use his farm property to fund her farming business as long as the farm remained the family farm. She was told she could use it as long as possible. Later, to fund his divorce settlement, her father had to sell the farm. At first the court said the father would have to pay the daughter £50,000 compensation for the loss of the farm but on appeal the court said nothing need be paid. The court said the arrangement was that she could only use the farm as long as it remained the family farm. If it was sold it was implied she would lose the right to farm there, and without compensation. This illustrates the importance of putting all family business arrangements in writing. Even partnerships between friends can go wrong so having a written partnership or shareholders’ agreement can ensure rights are protected if things do go wrong.”
We can advise you on all these areas. Call Charles Abbott on (0117) 929 0451 or e-mail
cabbott@metcalfes.co.uk for further information.
This press release summarises the law on issues which we believe may be of interest to your business. It is not a comprehensive review of the subjects and accordingly is published without responsibility for loss occasioned to any person(s) acting or refraining from action as a result of information published