How Trusts Can Help You with Your Farming Estate Planning

• Using a trust to manage farming land can be beneficial in allowing the land and any farming assets to remain together under the management of carefully appointed trustees.
• A trust also helps to protect the assets for your children and future generations. Often, it is difficult to predict which family members will be able to continue working in the farming business and how your loved ones' circumstances may change in the future. The trustees can assess the situation as time passes and act flexibly according to the best interests of the beneficiaries. You can leave a letter of wishes as guidance to your Trustees.
• It may also help to reduce the likelihood of disputes within the family if the Trustees can take into account the beneficiaries' circumstances before making decisions, rather than an outright gift of the farming assets over which you will no longer retain control and may no longer be appropriate.
• It can be more tax efficient for inheritance tax purposes to leave your farming assets to a discretionary trust on death rather than outright to your spouse or another non-exempt beneficiary such as a charity. Information about the claim for relief from Inheritance Tax in relation to agricultural property is detailed below.

Agricultural property means agricultural land or pasture and also includes:

• Woodlands and buildings used in the intensive rearing of animals if they are being used with agricultural land or pasture.
• Grazing land where you are responsible for the upkeep.
• Cottages, farm buildings and farmhouses, and any land occupied with them, if they are of a character appropriate to the property.

Importantly, the land does not have to be in the UK.

If you have agricultural land and property in the Channel Islands, the Isle of Man, or a European Economic Area, your estate can claim APR to reduce the tax bill.

Why is it important for you to be aware of APR now?

If you can make these enquiries now, it will help you to mitigate your Inheritance Tax liability and consider whether it will be beneficial to transfer your agricultural property to a trust during your lifetime or in your Will.

This exercise will involve understanding the extent of the land in your name, the purpose for which the land is used and obtaining a valuation of the land.