A trust can be set up during your lifetime or on death in your Will.
It is important to appoint trustees who understand how your farming business is run, ensure they are responsible and can act objectively.
The trust can provide an income for your beneficiaries.
It can also be flexible by allowing your Trustees to decide when and how to distribute assets between your potential beneficiaries depending on their circumstances.
As part of your estate planning and an assessment of your Inheritance Tax position, it is important to be aware of the extent of the land owned in your name and whether it will attract Agricultural Property Relief ("APR").
Agricultural property relief ("APR") is a relief from the Inheritance Tax granted under the Inheritance Tax Act 1984. The relief is available on the agricultural value of an agricultural property, which is transferred either in lifetime (which would be a gift) or on death.
Often, farmland has been passed down from one generation to another, and it may not have been registered with the Land Registry. After you have died, it can:
After you have died, making these enquiries will increase the costs and time for dealing with the administration of your estate.
Agricultural property means agricultural land or pasture and also includes:
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.
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.