Considering Gifts and Inheritance Tax
Kate Marsh | 04.11.2019
15.08.2018 Philip Whitcomb
A Property & Financial Affairs Lasting Power of Attorney (LPA) can prove essential in helping to protect a farm should the farmer become unable to take an active role in its day to day activities, through old age, accident or mental/physical illness.
Without an LPA, a farm can very quickly face significant disruption to farming operations and extra costs, all of which would have to be borne by the farming business.
If a farmer suffers either mental or physical incapacity, and if financial assets such as bank accounts or credit cards cannot be accessed by anyone else, suppliers’ invoices cannot be met, employees will not receive their wages and loan/mortgage payments will fall into arrears, all of which can have a profound emotional impact on the farmer and their loved ones.
An LPA allows the farmer to appoint up to four attorneys whom they trust implicitly, and who have the necessary skills and experience to legally manage the financial and business affairs of the farm. Attorneys can be family members, friends or professionals as they see fit.
Attorneys can carry out their duties either on a short-term basis, typically after illness or an accident, or longer term if the illness or accident has resulted in a fundamental change in the farmer’s ability to manage the farm.
Attorneys can also be given the authority and requirement to act jointly or be given authority to make both joint and individual decisions. This latter option offers a great degree of flexibility. If one of your attorneys cannot be party to a decision (for example if they have either predeceased or are on holiday), the others can continue to make decisions. If an attorney is nominated on a joint basis only, then should an attorney die, the LPA cannot be used.
As a farm can be a dynamic and fast-moving operation where financial decisions need to be made quickly, the use of a single attorney or the requirement to act jointly should be avoided unless your situation is such that joint decisions are essential.
Due to the nature of a farming business, many farmers never formally retire but continue to be involved with the farm, having a management, financial or emotional connection. As such, mental capacity may become an issue due to old age or infirmity.
Farming can be a hazardous environment and having an LPA in place to sit alongside relevant insurance policies should be considered as essential in order to ensure uninterrupted running of a farm. It ensures that should the farmer be unable to fulfil his or her professional responsibilities, the people they trust can act on their specific requests or even independently should the need arise.