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The Importance of Succession Planning
The recent High Court decision of Thompson v Thompson  EWHC 1338 (Ch) (1 June 2018) once again shows the importance of making a Will and, above all, taking professional advice on succession planning, especially where a business is involved.
In this case, the estranged son of two farmers successfully proved that he was entitled to the entire farm and farm partnership shares upon the death of the last surviving parent. The son had worked on his parents’ farms for 35 years, up to 18 hours a day, 7 days a week for a low wage. Although the plan initially had been for the son to receive the farm, his father left the farm automatically to his mother and a breakdown in family relations meant that his mother then changed her mind.
The son made an application to court to claim the farm, on the basis that he had been promised this by his parents and, in reliance on that promise, had carried on working on the farm. The High Court held that this was a valid promise and, as such, the son would inherit the farm on the death of his mother.
The decision summarises the common predicament that many business-owners find themselves in when trying to treat their children equally, yet passing the business, unbroken, to the next generation. Cases such as this are becoming all too common, but they clearly demonstrate the importance of a succession plan to involve the next generation, both through lifetime planning and also by putting a Will in place.
As part of the Will planning process, farmers and business-owners would be able to consider the options available to them, whether in passing the business to one child and ‘compensating’ the others by giving them other assets, or in portioning out land between everyone. There are always ways and means when considering your Will – so it is all the more important to put one in place, rather than leaving it to chance! It is also a vital opportunity to consider the many valuable reliefs from Inheritance Tax which may be available to you and to maximise your chances of claiming them.
On that basis, it is always vital to seek professional advice on your position as a whole when considering your succession plan. This is particularly the case where businesses or a large acreage of land are involved, so that your Will would unite with any business agreements or documents, to result a plan and Will to ease your mind for the future.
To find out more information, or for advice on your Will or Inheritance Tax position, please contact our experienced team of Wealth Management solicitors.