A survey has found that half of those making business inheritance assurances to their children also admit they could still change their minds.
The study by Lime Solicitors revealed despite 82% of agricultural business owners having discussions with their children, and 67% making promises, only 50% of all farm owners have committed their intentions to paper.
With no will in place, families left behind could see their livelihoods taken away or be forced into inheritance disputes, racking up thousands of pounds in legal fees thanks to broken promises.
Alistair Spencer, legal director at Lime Solicitors said: “Promises and assumptions are futile without a will and misunderstandings can often lead to lengthy and emotional disputes. When a family is in mourning, dealing with legal disputes is the last thing anyone wants to go through so even though conversations about inheritance can be tricky, transparent communication early on can help ensure that expectations match up to the reality of children’s inheritance.”
Business owners cited that the main reasons they would exclude a relative from inheriting the family business were worries they would sell the farm to a member outside the family (32%) and concerns that their relatives were not skilled enough to effectively manage the business (32%).
A further 46% of respondents believed it should only be inherited by people who have worked in the business.
However, there is no doubt that the unexpectedly severe changes to agricultural property relief and business property relief made by the Chancellor of the Exchequer in the Autumn Budget, will also now influence farmers’ decisions about the future.
The company believes it may force agricultural business owners to sell off some of their assets during their lifetime to stay under the £1 million threshold and not pass on the tax implications to future generations, or sell their land and business altogether, impacting the inheritance of those left behind.
It is therefore urging families and loved ones to have open and honest discussions early on to avoid any shock or disappointment which could lead to family disputes after a loved one has passed away.
The firm, which handles more than 200 inheritance disputes a year, is encouraging families to seek appropriate professional advice to prevent distressing legal battles. This is particularly crucial ahead of inherited pensions being brought into inheritance tax.
Commenting on the research, Andrew Wilkinson, head of inheritance said: “Agricultural businesses are unique as they not only provide careers and income for multiple generations, but they are usually where the ancestral home is and contain many treasured memories, making inheritance discussions emotionally sensitive.
“However, this research highlights how important it is for every agricultural business-owning parent to sit down with their children and make clear what the future looks like, especially in light of upcoming tax changes.”
