Reviewing Your Will - A good idea for the next wet day on the farm?
Most commentators would agree that over the last generation, the farming community has enjoyed a relatively benign capital tax regime. Normally farms are eligible for substantial levels of Inheritance Tax (IHT) relief, and the absence of any charge on lifetime transfers has made passing on the family farm a relatively painless exercise – from a tax perspective at least. The main tax disadvantage of making lifetime gifts is that the capital gains tax base cost is normally frozen in the hands of the recipient but where assets are never likely to be sold this is rarely a major consideration. Practical considerations of “how will we manage when we have given away the farm?” or “what if there is a divorce?” are normally bigger constraints, and in many cases have inhibited making best use of the available reliefs at an early stage.
There has probably never been a better time than now to take a proper look at passing over the farm. We know that the political position is fragile, and the question we should really be asking is not “will the rules get worse?” but rather “just how much worse will they be?”
Aside from the pressing need to take advantage of the existing reliefs while they are still available, which may mean handing over some, or the entire farm, there is also the issue of “Will Planning”. Many clients think that once they have written a Will they can forget about it but much has changed in the last decade. Many clients will still have Wills with discretionary nil rate band legacies, a hangover from the days before nil rate bands were transferable and these may need reviewing. We now also have Main Residence Relief, with all the complexities which that entails, and with half an eye on the future, there may be an argument for leaving considerable discretion to the executors with a view to “futureproofing” the Will against whatever changes may have taken place between now and the day of reckoning.
On a simple practical level, if a Will is more than a few years old, changes are likely to be necessary: executors may have died or moved away, beneficiaries may now be much older than when the Will was first drafted and uncertain relationships may have stabilised (or terminated). There may be a new generation to consider and with an uncertain political outlook, there may be an argument for considering “generation skipping” (subject to appropriate safeguards).
Currently, most farmers will be focussed on the more pressing issue of post harvest activities but a visit to the accountants to discuss Wills and succession must be the best use ever of the next wet day.
If you would like specialist advice on the above, please contact Sarah Dodds.