Farming and farms often run in families: from generation to generation members of the same family may want to work the same land. But if the hand-over from one generation to the next is not openly and properly planned, preferably with legal advisors and all family members fully engaged, bitter disputes over inheritance expectations may divide both the farm and the family.
A recent legal case serves as a reminder that succession planning is never easy. A daughter who had worked on and committed her life to the family dairy farm for 30 years did so in the expectation that she would inherit the business and the associated farm buildings. A fall-out with her siblings led to her leaving the farm and when her father died, only 6 months later, her inheritance expectations were denied by her mother and siblings.
The daughter took her claim for proprietary estoppel to the High Court and succeeded. A proprietary right is where a representation or assurance has been made to someone that they have acquired (or will acquire) rights in land or property. The law says that it is unfair for the other party to then go back on their word where the representation or assurance has been relied upon to the detriment of the beneficiary.
The High Court found that the daughter had relied on representations given by her father and, to a lesser extent by her mother (which were proven, although initially denied by the mother), to her detriment for the whole of the 30-year period. By committing to the dairy business she had worked longer hours for less pay than she could have reasonably expected to do elsewhere and had few holidays because of those commitments.
The High Court noted that “the clearer the expectation, the greater the detriment and the longer the passage of time during which the expectation was reasonably held, the greater was the weight that should be given to the expectation”. The Court found that the daughter had “kept her side of the bargain”. It decided that the right way to satisfy the daughter’s claim was by awarding her a cash payment up to the value of the farmland and buildings that she had expected to inherit (over £1 million) but not of the dairy business. That enterprise (which had been valued at over £400,000) had ceased shortly after she left the farm following the family fall-out.
The lessons for farming families are that verbal assurances lead to expectations. To avoid unrealistic or incompatible expectations between family members those discussions should be open and backed by expert legal advice and well drafted wills. We have experience in dealing with this sensitive area and can help to ensure that your wishes are carried out correctly.