Warning: don’t leave a massive family row as your legacy

RETIREMENT? Never!

Well, that is one of the conclusions that has emerged from a survey carried out by Exeter University backed by NFU Mutual which canvassed almost 700 farmers across England, Scotland and Northern Ireland where four out of five farmers aim to keep farming until the day they die.

Having worked here in the West Country for over 30 years this comes as no surprise to me, not least because the current tax regime can be very harsh on a farmer’s assets if they are deemed to have retired from farming activities before they die.

However, there is also that fundamental issue that farming is more than a “job”, it is an all-embracing way of life, which when it works well can bring huge satisfaction and happiness, with multiple generations of the same family working alongside each other.

There are few occupations where home, family and work are so closely integrated and that is why “retiring” does not happen for many people, especially if the older generation remains reliant on drawing an income from the farming business.

This is an all too common requirement, particularly in smaller or less profitable farming businesses where it may not have been possible to build up any form of independent “pension” income. But even then, it is very difficult for someone who has lived and worked on a farm for their whole life to simply “stop”. Equally, it is also important for older farmers to think about what they really want to do so as not to hold back the development of both the business and the next generation.

The responses from the survey seem to back up these anecdotal findings indicating that only 19 per cent of farmers planned on fully retiring from farming, while even fewer (two per cent) said they would quit the farm altogether. However, as farmers get older, they will inevitably be less able to do the same amount of physical work and are probably even less willing to take on all the paperwork which is becoming increasingly computerised.

Therefore, the older generation will inevitably start relying on the younger generation to pick up the slack.

Herein lies one of the pressures on farming businesses, where semiretired mum and dad still need to draw a substantial income from the business in which they are contributing less and less work and yet they may still be very much in control of the assets and purse strings.

It is this difficult transition of ownership and control which can pose significant problems for everyone involved in the whole business.

It can become an extremely emotional time where significant decisions may need to be made to help cater for the needs of all parties. In many cases, this also involves decisions on how to treat children who may have decided not to stay on the farm but make their way elsewhere in life.

However, difficult as these decisions may be, it is important that farmers, who have often built up substantial capital assets over their working lives as land values have increased by 40-50 times since the early 1970s, plan for the future.

This means speaking to the family and trusted advisors such as your lawyer, accountant and land agent to make sure your plans work legally, fiscally and most importantly for the family – there is no point in working until you die only to leave a massive family row as your legacy.