Scottish farmers are being urged to start planning for the handover of their business before it’s too late. Darren Thomson, Tax Advisor and Director at Douglas Home & Company warns farmers risk leaving behind a legal and financial mess for family members if assets are not transferred properly before they die, adding that leaving matters in a will is a dangerous approach.
Darren explained: “Preparing your farming business for succession is often a thorny subject, and despite the importance of planning for the handover of your business after you die, very few farmers seriously engage in the process, leaving behind an almighty mess.
“The subject often makes farmers nervous, and there is a common perception that the process is too difficult to deal with, throwing up too many unanswerable questions. But farm owners reluctant to engage with succession not only risk leaving behind a significant and costly tax problem, but potential family disputes and other legal issues.”
Planning for succession is a process that the Director led accountancy firm have been guiding business owners through with great success. Darren has over 25 years’ tax experience, many of which he has spent helping farmers pass on their business in an orderly fashion before they die.
Many farmers will leave the business and assets to spouses and children in a will, however this creates difficulty if there is a difference in opinion on whether to carry on the business or sell up.
Darren said: “It’s important to remember when there is a difference in opinion about the future successor of the business, fair doesn’t always mean equal. Farmers often think the fair approach is to leave the business and assets equally to family members through a will, but this can be the worst-case scenario for all involved, and often leads to the business in question being sold, or failing.”
“Mediating with the family is an essential part of succession planning as honest thoughts and an open dialogue early on can help mitigate costly disputes down the line.”
Darren also warned that farmers faced fees up to fifty percent more by choosing to use an accountant and a lawyer to mediate a succession plan. He added:
“It’s a common misconception that farmers need to hire a lawyer and an accountant to handle the succession of their business. Your trusted advisor should offer thoughtful and careful advice for the succession of your business but this can be difficult, costlier and more time consuming when there are two sets of advisors. With in-house lawyers in English and Scots law, Douglas Home & Co can take the lead role during this entire process with a highly personalised approach.”