King Lear’s dilemma of how to divide his kingdom fairly between his children is visited in miniature upon the owners of a family farming enterprise.
The issue is sharpened where one child has committed to a life in farming but there are ‘non-farming’ siblings to be accommodated and no significant off farm assets available to counterbalance the value of the farm.
A sale of the farm and the even distribution of the sale proceeds between all of the children would arguably produce an unfairness to the farming child who would not perhaps have sufficient capital to buy their own farm. However the transfer of the farm solely to the farming child produces a clear and significant imbalance in the value of the sibling’s respective inheritance – and in any event is difficult to square with circumstances where there is more than one ‘farming’ child and the nature of the farm defies a workable dismemberment.
There are infinite variations between these extremes; the farm could pass to the farming child subject to ‘strings’ that require an income benefit to pass back to non farming siblings as a de facto (but perhaps discounted) rent. Alternatively (or additionally) the benefit passing to the non-farming siblings could be postponed unless (or until) the farm is sold (or sold and the proceeds not re-invested in a new agricultural unit); the farming child may be given access to all of the family’s farming assets but not the farm outright. The capital value of the farm (or an appropriate part) could be held back, perhaps in an ongoing trust, for the non-farming siblings.
A statement of the obvious (and rather trite) but it remains absolutely the case that the right outcome will turn on the individual family’s own distinct circumstances and in particular on their understanding of what represents a fair division of the farm – as a concept distinct from (but not necessarily different to) an equal division. A conclusion on that issue can only disclose itself if an understanding of the available ownership and occupation arrangements are filtered through careful and long consideration of the pervasive business, succession and taxation issues and most importantly of the intra family relationships and expectations that have built up over the years.
For farmers the refrain, as always, is to plan ahead and take good professional advice about the available options.