‘A farming business usually serves as both the family home and a source of income so emotions run deep about the way it is owned and run,’ says Douglas Godwin*, Partner and Head of Agriculture and Rural Services. ‘Farms are also often handed down through generations and ownership shared between the wider family – often without formal legal records of how it is held or should be run. This, coupled with the fact that most or all of a farmer’s money is tied up in the business, means disputes can arise both during the farmer’s lifetime and after their death.’
Douglas explains some of the common causes of disputes in farming families and provides guidance on how such clashes can be avoided or resolved.
Inheritance disputes
On the death of the farmer, disputes can arise over the absence, validity or the fairness of the will.
- Absence - if a farmer dies without making a will, their estate will be divided between family members according to the strict rules of intestacy, which may not reflect their wishes and could mean the farm has to be sold off so that each of the beneficiaries receive their fair share.
- Validity - a will’s validity may be challenged if it does not meet the provisions of the Wills Act 1837 which requires a will to be signed, witnessed, made voluntarily and without duress by a person of sound mind. Such challenges may arise if a family member accuses a sibling of putting undue pressure on the farmer to make a will in their favour, has had a will fraudulently drafted, or claims the farmer was not in their right mind when they made the will.
- Fairness - when writing a will, farmers need to achieve a delicate balancing act between ensuring the continuing success of the farm and being fair to all their loved ones. If they do not get this right, their will could be open to legal challenges by disgruntled actual or would-be beneficiaries. For example, they might decide to leave all or most of their estate to a child who has always lived and worked on the farm. However, dependants (such as a spouse or other children) could bring a claim for reasonable financial provision under the Inheritance (Provision for Family and Dependants) Act 1975 if they feel they have not received a fair inheritance. If a child has lived and worked on the farm for years for low or no pay, or turned down lucrative career offers because the farmer has assured them that they will inherit the farm on their death, they may bring a proprietary estoppel claim if the farmer reneges on their promise. If the challenger can show they acted on the promise to their detriment, the court may make an order to counteract the farmer’s ‘unconscionable’ behaviour.
If a will is challenged on one of the above grounds, it is possible to mount a defence, as long as it can be shown that the will was valid, correct and fair. Evidence that could help fend off such challenges includes showing that:
- the deceased farmer had mental capacity and was not acting under duress;
- the will was drawn up in accordance with the Wills Act;
- the person bringing the claim has no valid claim on the estate;
- the promise to hand over the farm supposedly made before the death was not really made or was not intended to be taken seriously; or
- the individual contesting the will has been left enough under the terms of the will already.
If someone wishes to contest a will, they can lodge a ‘caveat’ which stops a grant of probate being obtained to administer the estate until the dispute is resolved and the validity and justness of the will approved.
It is possible to get a caveat lifted using negotiation or mediation to encourage the caveator to voluntarily withdraw it. If this fails, the caveat can be removed if the caveator fails to respond to a ‘warning’ served upon them, or by applying for a court order.
Partnership disputes
Many farms are run by family members as a partnership but, because of the close family ties, formalising the terms of the partnership in a legal partnership agreement may not have been considered necessary. This can lead to a variety of disagreements over matters such as:
- who owns what if a farmer dies and there is no partnership agreement;
- how big a cut of the profits each partner should receive;
- how to expel a partner who is not pulling their weight;
- dealing with the fall-out from unwise investments or a partner’s failure to take professional advice;
- what each partner’s responsibilities should be with regard to the running of the farm; or
- who should receive what if a partnership is also a family relationship which breaks down.
Court action is clearly an option for resolving disputes, but litigation is time-consuming and expensive. In addition, given the commonly close-knit makeup of farming families, litigation can lead to a total breakdown in relations among the family which could be disastrous for the farming business.
Any issues should be addressed early to prevent feelings festering and, if a good heart-to-heart discussion among the family does not work, professional legal help should be sought.
Our experienced solicitors can sit down with a family and, through the use of negotiation or mediation, help resolve any farming partnership dispute without the matter having to go to court.
If matters still cannot be resolved, as a last resort they can guide a farmer through a court process to allow a judge to come to a final decision on the issues, which would be binding on all parties.
Cohabitation
It is a common misconception that a common law spouse cannot gain an interest in a farming business. However, for example, if a child moves a partner into the farmhouse and they have children, the partner may obtain an interest in the farm if they have contributed money or ‘monies worth’ into the property. If the couple subsequently split, the farm may need to be sold to ensure the partner gets what they are owed.
Negotiation and mediation can both be useful tools in this scenario, and our solicitors are usually able to persuade the cohabitee to accept a settlement – perhaps with the use of periodic payments made over a length of time – without the farming business being threatened.
How we can help
Our team of civil litigation experts can work with farming families to help resolve disputes over wills, partnerships or claims to a share of the farm.
With the use of negotiation, mediation or court action, they will ensure that the farming business is protected and can continue to flourish no matter what life throws up.
For further information, please contact Douglas Godwin or a member of the Agriculture and Rural Services team on 01905 721600 or email worcester@parkinsonwright.co.uk
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.