You reap what you sow

3rd November 2014

Radio 4's 'The Archers', an everyday tale of farming folk, is in the midst of a gripping storyline about the sale of Brookfield Farm and its ramifications to the Archer family.

The plot highlights a very real issue among today's farmers: what happens to the future of a farm when it is hit by sale, marriage, divorce, retirement or death?

Leading Midlands law firm Higgs & Sons has a rural services team made up of specialists in all the legal challenges facing a modern agricultural business. Farming is an often unpredictable sector and under increasing pressure to deliver services and products in the face of greater regulation and an ever changing statutory regime.

Sarah Martin, a member of the family team at Higgs & Sons, highlights a recent court case which serves as a reminder of the importance of having a robust partnership agreement in place that allows a farm business to continue even upon the retirement of a partner.

Sarah said: "The Hams started farming in 1966 with five hectares but by the time their 19-year-old son John joined the family business, it had grown to 178 hectares with a sizeable dairy herd. The partnership continued for 11 years but broke down when there was a disagreement about the future of the farm; John decided to leave and served notice of his retirement from the partnership.

"The issue for the court was how was the net value of John's share to be valued as the partnership agreement failed to distinguish between assets and capital. The decision of the court of appeal was in John's favour and permitted him a share of the farm property. Mr and Mrs Ham, who saw the farm as their only source of income and a legacy to their children, will have to sell the farm to pay John."

Too often farms that have been farmed by families for generations have to be sold because of family disputes. But, comments Sarah, it doesn't have to be this way.

"A partnership agreement that comprehensively dealt with the issue of exit strategy for any partner wanting to leave the partnership could have permitted Mr & Mrs Ham to retain the farm and would have made sure that there was no misunderstanding between the partners about what their share really was.

Farm business partners should consider if their children hold, or will hold, shares in the farm business and whether they will ask them to enter into a pre-nuptial agreement before marrying. Or, if they are intending to transfer some of the farm to a married child, will they ask them to sign a post nuptial agreement? These are important issues to consider as divorce can have a disastrous impact on the farm business.

Sarah added: "In the event of your death you are likely to want the farm business to continue. However, in the absence of careful succession planning, many farm businesses do not survive the transition from one generation to the next. Discussing succession issues amongst family members, and documenting the agreement reached, through family charters, significantly increases the likelihood that the farm will survive."

At Higgs & Sons we understand that it is often difficult for busy farm owners, partners or sole traders to find the time to put their personal affairs in order.

With this in mind, we will tailor our approach to suit your needs and those of your farming business; we offer a unified approach to the challenges and opportunities faced by the agricultural community and draw on expertise from all areas of the firm to offer a range of rural, legal services and advice uniquely tailored to landowners, farmers, agri-businesses and other rural enterprises.

Higgs & Sons is based in the heart of the Black Country at the Waterfront Business Park in Brierley Hill. The growing team now boasts 100 plus specialist lawyers available to support clients in a comprehensive range of business and private sectors.

For more information on our agricultural services please contact us on 0845 111 5050.


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