How to resolve a farm inheritance dispute

It is sadly not uncommon for families who own and operate a farming business to be left in a difficult situation when the legal owner of the farm dies.

This is especially so if, for example, only one of their children has been working on the farm.

How do you ensure that your child, whose livelihood is dependent on the farm, doesn’t lose this? How do you ensure this isn’t at the expense of your other children? What if there are assets that the farm is reliant on, but aren’t strictly farming assets?

These are questions that an increasing number of people are having to grapple with when deciding how their estate should pass when they die. Often, despite the best intentions, those left behind fall out. This could be for several reasons, such as:

• The “farm” has been left to a person who helped the deceased run it and who depends on it for their livelihood, but there is insufficient cash in the estate to pay the other legacies or any inheritance tax due. This can result in feelings of unfairness within a sibling group, or in a situation where beneficiaries are asked to inject their own cash into the estate to prevent the need to sell the farm.
  
  
• The “farm” has been left to one child of the deceased, but there is a disagreement as to which assets form part of the “farm”. For example, if some of the land or outbuildings were in the name of the deceased, how do you establish what constitutes a farming asset?
  
  
• The legal owner of the farm has not made a will, or their will does not deal with the farm directly, but they promised the farm would ultimately pass to someone who worked on the farm. Can the person who relied on that promise, and perhaps gave up other opportunities on the understanding that they would ultimately inherit the farm, do anything?
  
  
• What if the farm has been left to one child, and it was the only asset, but another child was financially dependent on the deceased (e.g. they lived with them or the deceased was paying their mortgage)? Can they do anything?

Regardless of the specific circumstances, when a dispute arises within a farming family, there are steps that can be taken to resolve it.

Usually, this can be achieved without involving the court, but it depends on the parties' attitudes and the specific circumstances.

What is proprietary estoppel?

A common type of claim in the context of a dispute within a farming family is “proprietary estoppel”. It is a means of addressing an injustice in which someone has acted to their detriment in reliance on a promise by the legal owner of the farm that they would one day inherit all or part of it.

The idea is that if someone has genuinely relied on such a promise to their real detriment, they should not be left in an unfair position.

What evidence is needed in farming inheritance and proprietary estoppel disputes?

The type of evidence needed in relation to a farming family dispute will largely depend on the specific claim being made and the unique circumstances of each case. If, for example, someone claims they should receive a greater share of the estate than they have, they will typically need to disclose their financial position. If someone is claiming that they were promised “the farm” or some other particular asset, they will need to try and evidence

• the promise that was made; and
• what detriment they have suffered in reliance on the promise.

If the dispute is about which assets form part of the “farm” this will likely come down to expert evidence and valuations.

Can farming inheritance disputes be avoided?

Some pre-death planning could often avoid farming inheritance disputes. Firstly, the legal owner of the farm and its assets should make a will, and we would recommend that they seek professional advice from a specialist wills lawyer and, if appropriate, an accountant.

This can ensure that appropriate conversations are had whilst the legal owner is still alive, so that the farm and its assets pass exactly as they intend, and can also assist in reaching workable solutions to any issues that arise in ensuring each of their chosen beneficiaries is treated fairly. Another crucial way to avoid farming disputes after the legal owner has died is for all concerned to discuss what will happen when they die and why. This can help iron out any concerns or questions the intended beneficiaries may have whilst the legal owner is still alive, and perhaps able to address them.

Finally, we recommend that anyone relying on a promise to inherit a farming business seek their own legal advice. It may be that issues around inheritance can be avoided by addressing the matter head on whilst the legal owner is still alive.

Sadly, it is not always possible to prevent farming inheritance disputes. With the best will in the world, it may simply not be possible for the legal owner to “please everyone” and this can lead to conflict after they have died. Certain claims cannot necessarily be foreseen and, therefore, cannot be prevented. But planning, open discussions and ensuring one’s legal paperwork is in good order can certainly help prevent the emotional and costly exercise that a farming inheritance dispute can be.

What can be done to resolve farming inheritance disputes?

Wherever reasonably possible, we encourage parties to try and resolve matters without involving the court. This is because court proceedings are costly both financially and in terms of the time it can take for a case to run from start to finish, and the emotional toll this can have. Generally, mediation is a preferred option, as it doesn’t restrict what agreement can ultimately be reached. The freedom to construct your own settlement terms is particularly useful in farming disputes where the specific circumstances and the make-up of a farming business often lend themselves to creative solutions.

If a resolution between the parties cannot be reached, various court applications can be made, depending on the specific issues. For example, if someone is seeking a greater inheritance from the estate, they can issue an Inheritance (Provision for Family and Dependants) Act 1975 claim. This is a means of asking the court to order that, despite the terms of a will or the rules of intestacy, the applicant should, in fact, receive greater provision from the estate, such as cash or the right to live in a property.

It may be that the parties need the court to direct what should happen in a particular scenario that is preventing the estate from being distributed (e.g. the court can prescribe steps that must be followed to ensure an estate property can be sold). Alternatively, if someone claims they were promised the farm or a particular asset, they may be able to bring a proprietary estoppel claim to enforce the promise they relied on to their detriment.

What does the farmer receive if the claim is successful?

In a case where a farmer successfully claims they should inherit the farm, the outcome will depend on what they claimed they were promised. The court’s general approach is towards ensuring that they are not left in an unfair position.

If, on the other hand, a farmer is claiming that their inheritance of “the farm” should include certain assets which the farm depends on, but that were in the deceased’s sole name, and there is a dispute as to whether they were in fact the deceased’s personal assets, a successful outcome would see those assets being transferred into the name of the farmer.