Potential tax changes mean it’s time to talk succession

There has been much recent speculation as to whether an increase in the capital gains tax rate is in the offing, and/or changes to APR or reweighting of BPR eligibility. Rishi Sunak will certainly be motivated to fill the fiscal gap left by the pandemic and it is anticipated he will announce plans in 2021. The new year might therefore be a very good time for owners of farms and rural estates to discuss succession planning, ensuring the best possible outcome for all involved.

Of course, the greatest threat to prosperity may not indeed be changes to CGT: failure to talk openly, to discuss sensitive issues about wealth and inheritance, to identify and respect individual skills, and to agree a common purpose can all spell disaster.

That’s where third party professional help is invaluable. Those of us who work in this field can have discussions with family members that they might feel uncomfortable having with each other. Parents, for example, might find it impossible to tell a child they don’t want to include their spouse in a business plan. We can ask the questions no one else will, and that can lead to greater understanding.

It pays to involve children in discussions early, to prepare them for choices they might one day have to face together. It’s important to grow up with a long-term understanding of what wealth means and the responsibilities it entails. This is particularly important where an estate will be inherited by the oldest child. If everyone agrees the purpose is to conserve heritage and legacy, younger brothers and sisters can accept that dividing it up into equal shares isn’t an option.

Having said that, though they might inherit a title, the oldest child may not have the right skills to protect and build the family assets. Being a younger child doesn’t necessarily rule him or her out.

Drawing up a written family constitution will help avoid misunderstandings and maintain focus, and that is something we do for clients regularly. But above all, communication and trust remain key to effective succession planning to protect family wealth.