‘One day, all this will be yours’: passing on the family farm

Posted on By Joanna Pegum
farmer and cows in countryside

It can be a very proud moment for a parent to look around a farm and to say to their child, ‘one day, all this will be yours’.

Family farms are often passed from one generation to the next and the value of land means that farms can have a considerable value, even if at the time cash is tight. Often two or three generations of the same family work together on the same farm.

But sometimes, unexpected things happen: parents get divorced and remarry, or family arguments drive a wedge between parent and child. In these circumstances, a parent may change their mind and make a new will, leaving property in different shares or, perhaps, leaving it to a new partner.

Can I change my will?

Anyone is generally free to change a will at any time. When making a will under English and Welsh law, a person is entitled to be capricious, whimsical or unfair if they wish to act in that way. Sometimes a new will is made just to reflect a change in circumstances.

An individual is perfectly free to make a promise to leave a property to someone – only to change their mind later. This situation is quite common.

So what’s different for family farms?

Family farms, however, face a unique situation when it comes to owners changing their minds. For example, a property-owning farmer may say to his daughter: ‘one day, all this will be yours’. He promises this on many occasions over a long period of time, and so the daughter continues to work on the family farm and turns down opportunities to work elsewhere (perhaps for a higher wage). This encourages her to stay working on the farm for a low salary precisely because one day the family farm will become hers.

If the farmer later decides to change his mind, this starts to stray into a more complicated legal situation.

If a property owner makes a promise to someone (for example to leave them the farm), and that person relies on that promise and acts to their detriment (for example by turning down the opportunity to work elsewhere for a higher wage), then the property owner can be held to that promise – even if they make a will to the contrary.

This legal principle is known by the slightly unusual word ‘estoppel’.

Sadly, there have been numerous recent cases that have gone all the way to trial in precisely these circumstances: a property-owning farmer has made a promise to leave the farm to a particular beneficiary, only to change their mind later. These are some of the saddest cases to come to court, since they reflect a tragic breakdown of family circumstances.

Try to resolve things amicably

If you find yourself in this situation and promises have been made and then broken, a good lawyer should take steps to try to resolve any family dispute amicably, without the worry, risk and expense of a trial.

Many people embark on a process of mediation in the hope that a family relationship can be salvaged and the work of the farm can continue. Statistically, mediations have a very high prospect of success: in the region of 85 per cent of cases referred to meditation settle, with considerable benefit for family members so that they can meet again around a kitchen table rather than at in court.

Don’t make promises you can’t keep

The best defence, however, is to avoid this sort of situation arising in the first place. It may be tempting as a short-term fix to offer to leave a farm to one beneficiary, rather than to someone else. Sometimes these promises are made on the spur of the moment or in the heat of an argument. These promises can, however, have serious consequences for the future of the farm. In short, promises should never be made unless they can be kept.

Stephen Lawson TEP is a Partner and Head of Litigation at FDR Law LLP, Frodsham, UK

What happens if there is a dispute over the wording in a will or trust?

Posted on By Joanna Pegum
argument

There is a long history of courts deciding disputes over words in wills and trusts, and  what the court looks for in every case is what the person who wrote the document actually meant by the words used. They will consider:

  • What normal and natural meaning do the words have in the context of the document?
  • Looking at the document, is there any indication as to what meaning the words were meant to have?
  • Is there any other evidence that throws light on the context of the words or the meaning intended (though not all such evidence can be used)?
  • Can the words be shown to be clearly contrary to what the person meant? If so, the document may be capable of being altered (rectified) to reflect what was intended.

The judge will consider the words and any relevant evidence and will come to a decision.

What role do I play?

If you are one of the executors, or one of the trustees, your concern may be only to ensure that you do the right thing and that the argument is resolved. If that is the case, then you should not take sides, but only take the necessary steps to ensure the argument is heard or resolved.

However, if you are pressing for one interpretation over another, then you will need to act positively to ensure your argument is heard. Do not rely on the executors or trustees to argue your case for you.

Will we have to go to court?

No. These days there are many ways of avoiding things going to court. Parties can enter into a mediation, at any stage, so that they can try and agree things between them. Or they can ask a skilled person, or even a judge, to give an early indication of the likely outcome, so they can then try and agree. This is known as an Early Neutral Evaluation.

It is possible that after an agreement is reached, a court may need to approve the decision taken, for example on behalf of children. However, that is a much easier process than arguing it all out before the court.

What about all the costs?

Sometimes it is considered that as the argument needed to be resolved, the costs can be paid from the estate or trust.

However, the modern tendency is to order the party who is perceived to have lost the argument to pay all the costs. That can be a very significant sum, so there’s a very good reason to try and resolve the argument early on.

Richard Dew TEP, Ten Old Square Chambers, Lincoln’s Inn, London.