When farm succession goes wrong, those who lose out can fight back
When farm succession goes wrong, those who lose out can fight back, writes
Succession planning can often be a daunting task.
However, it is highly necessary to plan ahead in matters such as these, especially when there is a family farm involved.
Historically, the family farm would pass to the eldest son after the death of the father.
Nowadays, however, things can be much more complicated.
Often, there is only one family member who has the desire to continue farming but, in some cases, there may be a few different family members to choose from.
The latter situation can cause problems where the family farm is only an average sized farm, that would only have the capability of providing a sustainable career for one family member.
As this is often the case, some difficulties may arise in how to divide the estate, in a will. Sometimes it is not feasible to equally divide the estate, as this would involve breaking up the farm, and ultimately affect the viability of the farm, if payments have to be made to each child.
The primary difficulty here is that the farm may be the only asset under the estate, and there will be no feasible way for all the children to benefit.
As a result of these issues, it may sometimes seem that a will is unfair, or indeed that a child of the deceased does not receive fair compensation for work done throughout their lifetime.
While in many cases the deceased may have had no choice but to make this decision, and it reflects their wishes, there is an option for redress in cases where a child who has worked on a farm has not been properly provided for.
Section 117 of the Succession Act 1965 provides that a child, including an adult child, of a deceased parent who has made a will, can apply to court and claim the parent failed in his or her “moral duty to make proper provision for the child” in accordance with the parent’s means during the parent’s lifetime.
If the court agrees that the parent failed to comply with the duty to make proper provision for the child, it can make an order that adjusts the amount left to the child in the will, and order that a different amount that the court thinks is proper should be made for the child out of the parent’s estate.
This is a costly application, and the courts will be reluctant to go against the wishes of the testator or the deceased, but it should be considered if it can be proven that proper provision was not made.
The other difficulty with such an application is that the costs of the application will potentially come out of the estate, and can reduce the value of the estate.
Proprietary estoppel is a remedy from the common law, which may arise where there is a disputed transfer of ownership.
Proprietary estoppel will only transfer rights if the following criteria are met:
It is important that you have evidence to prove this, preferably a written document or evidence from an independent witness that this assurance was given.
Examples of this would be hat you have worked on the farm for many years; invested in the farm, such as purchased machinery or erected farm buildings; farm accounts were transferred into your name; you were making mortgage payments, or suppliers and creditors were directly dealing with you; or entitlements or a herd number are in your name.
Both these potential application can be difficult to prove in court. Nevertheless it is strongly advised to consider these if you believe proper provision has not been made for you, given that you acted to your detriment, and there is a strong possibility the court will award in your favour.
It is highly advisable to seek legal representation and advice as soon as possible if you face an issue like this.
