10th June 2015
Your WIll - 6 key questions
Farmers can waste thousands on Wills, because it’s easy to overlook non-tax questions crucial to the Wills’ effectiveness. Kipling’s “six honest serving men” questions can assist you.
For farmers the question Who (should inherit) is the wrong place to start!
Instead ask: What. What do you really own? You farm land and provided funds to buy it, but tax planning done years ago gets forgotten. You gifted land, and leased it back, to start the seven year gift clock ticking, or put it into a partnership/company, to improve Business Property Relief. Through a Will, you try to leave land to someone, but don’t own it anymore so that person loses out.
Ask: Where? Any description must be accurate. “Whiteacre Farm” can lead to expensive litigation later, arguing over exactly what was included.
Once What and Where are crystal clear, look at Who. Don’t just focus on the tax-efficient heir. Remember the loving son to whom you leave your farm (and main source of income) might die before your widow(er). Would your daughter-in-law, after remarriage, make suitable provision?
Who leads to Why. To keep the farm undivided? If your son might sell land, consider an overage provision in your Will, to ensure some of the bounty goes to your non-farming child. If leaving assets to the non-farming child, consider the impact of taxation or gifts. Recently a non-farming son, “left” £1.6m, received only £400,000, because of tax, lifetime gifts and care costs, left insufficient to fund the legacy.
Another Why. Is there a moral (legal?) obligation to someone to repay them for help? Litigation involving farms and broken promises is expensive.
How? Call your solicitor (who should be fully STEP qualified, working closely with Rural Property specialists). Then be ready for all the right questions!
When? The sooner the better – don’t tempt fate.
This article also appeared in the June edition of the NFU British Farmer and Grower magazine.