Bereavement: What every farmer should do to put their affairs in order
© Cultura/Rex/Shutterstock Dealing with the death of a family member is difficult and traumatic, but if that person also happens to be a farmer it can throw up a particular set of practical challenges.
Whether the death is expected or not, there is a complex network of people to be notified, documents to be produced and filed, and decisions to be made about the future.
There can also be practical farm management problems that will need to be addressed to allow the business to continue functioning.
See also: 8 steps for farm succession planning
We asked legal, accountancy and farm management experts to share their experiences of unexpected challenges bereaved families can face and the steps farmers should take to minimise the added stress in the event of their death.
1. Face up to the prospect
If you want to reduce the burden on your family, the most important thing you can do is to take responsibility for your own affairs, says solicitor Denise Wilkinson, head of Hewitsons’ Cambridge agriculture and rural property team.
This involves keeping all your paperwork in a place where people can find it. But it is also about making a will and communicating its contents to everyone affected, so that there are no surprises.
“There is still a significant number of people who fear death and fear putting their affairs in order as if it hastens the end of their life,” she says. “But it is not about that, it is about lessening the burden on your family.
“The worst-case scenario is when someone dies and people can’t find things they need – or they think one thing is happening with the will and actually another thing is happening.”
See also: Opinion: Pondering mortality and the cycle of life
Paul White, partner at property and business consultancy Brown & Co, agrees.
He says that rather than inadvertently leaving family members “in the lurch” there should be open conversations so everyone knows what is in the will and what needs to happen in the event of someone’s death.
“It isn’t a subject that is easily discussed, but not having a plan is the biggest mistake that people can make.”
2. Review the partnership agreement
It can come as a shock to people that a partnership is automatically brought to an end on the death of a partner if there is no partnership agreement in place. This is regardless of how many partners are left in the business.
Having an up-to-date partnership agreement – which sets out not only how the day-to-day decisions are dealt with but also how partnership assets should be dealt with on death or retirement – is therefore an important part of getting your own affairs in order.
“Getting the partnership agreement right is critical in providing certainty for the partners and their families,” says Mrs Wilkinson.
3. Share business responsibility now
It is particularly problematic when someone dies if they have been the one who has taken all the business decisions or has been the only person who meets with the business’s professional advisers. Their death leaves a gaping hole.
If all the partners in a business and even the next generation are involved in the decision-making, it makes it more straightforward in the event of a death, says Mr White.
“We come across situations where a farmer’s sons and daughters in their 30s and 40s still don’t have the right to sign a cheque, or don’t get involved in management decisions and sometimes meetings with the bank or the accountant.
“But they should be involved in all discussions with the business’s advisers, so when the time comes they have a better chance of taking over seamlessly on a day-to-day basis.”
4. Make a list of professional advisers
Mrs Wilkinson says a useful practical step for people is to produce a list of all the advisers that will need contacting in the event of the death of a partner and to make sure everyone is aware where this list is kept.
This should include the names and contact numbers of lawyers, accountants, land agents, consultants, financial advisers, agronomists and anyone the business might trade with.
See also: How to manage a farm succession handover
“This is particularly important if there are family members who are not involved in the business, as they will need help in knowing who to contact. They need to know, for example, where to find the chequebook and bank details.”
5. Emergency livestock cover
People who run livestock also need to think about who will step in to look after the stock in the immediate aftermath of their death, adds Mrs Wilkinson.
“If there are no family or staff to step in, we suggest people make an arrangement with a neighbour to look after the stock for a few days until more permanent arrangements for their care can be put in place.
Once they have agreed, the name of the person should then be left with the solicitor, so we know who to contact.”
What should family members do when a loved one dies?
1. Register the death
Many of the actions that will need triggering in the event of the death of a farmer will not be possible without a death certificate, says solicitor Denise Wilkinson, head of Hewitsons’ Cambridge agriculture and rural property team.
So the first step will be to register the death. This will require a copy of the medical certificate confirming the cause of death and, where possible, a birth certificate.
Deaths must be registered within five days in England and Wales and within eight days in Scotland. It is advisable to buy extra copies of the death certificate to help when sorting out the person’s affairs.
2. Check bank accounts
It is a common misconception that a family member with Power of Attorney will have ongoing access to a deceased person’s bank accounts. In fact, the power of attorney is valid only while the person who granted it is alive.
Peter Griffiths of accountancy firm Hazlewoods warns that if the bank account is in the sole name of the deceased then it will be frozen.
However, if there is a joint account – for example, between a husband and wife – then the joint account remains accessible by the surviving partner even before probate has been granted.
If there is a partnership account, whether the account is frozen or not will often depend on whether there is a partnership agreement and whether the bank accepts that the partnership continues.
If the account is frozen, the bank may allow some of the money to be used for inheritance tax or funeral expenses but is unlikely to allow it to be used for day-to-day expenses. To cover these, the executors will have to set up a new trading account for the business.
3. Notify the insurers
An area that is overlooked fairly regularly, but needs acting on quickly, is the need to check that the death of a farmer does not affect any car, house or business insurance, warns Mrs Wilkinson. Empty properties are subject to conditions and, while insurance in partnership names may be fine, cover is likely to be affected on sole-name policies if the insurers are not notified.
Car insurance is often under the name of one person, with members of the family use the vehicle as named drivers. Unless these policies are updated, people can find themselves driving around without car insurance.
4. Basic Payment and agri-environnment schemes
The Basic Payment Scheme claim or agri-environment agreement will be made by the business, but it will be submitted by a registered person or designated agreement-holder, says Mr White.
If the person has died, then arrangements will need to be put in place so any outstanding support payments can be made and to ensure that future claims can be submitted.
See also: Scottish tenancies could be passed to non-family members
The RPA will require the personal representatives of the deceased to fill in forms or supply information so they can confirm who can receive rural payments, make claims and hold entitlements, he says.
However, it is possible the process will result in delays in BPS payments being received by the business.
Natural England will also need to be notified with regard to an agri-environment claim and change of the agreement-holder.
5. Gun licences
If the person who has died owns a gun and is the only person in the household with a gun licence, then the gun will need to be passed to someone who can legally hold it.
This involves contacting the Firearms Licensing Department as soon as possible – they will arrange for a temporary permit to be issued that will enable the gun to be moved to be held by someone who has an appropriate certificate.
The alternative is to ask the police to hold it – but that may not be the preferred course for valuable guns.
6. Check life assurance and pensions
Farmers should double-check who is nominated as the beneficiaries of any life assurance policies or pensions as part of getting their affairs in order.
“If, for example, Dad’s life is insured, he can complete forms to nominate who will have the proceeds. That would be outside his estate,” says Ms Wilkinson.
“The payout will be triggered using a death certificate, rather than on grant of probate, and often that cash can be quite helpful.”
However, if the policy was taken out as a guarantee for a loan, the lender will have first call on the proceeds.
7. Make no assumptions
The people who are inheriting will have to ask themselves if the business they are inheriting is one they are capable of running – and whether will it be profitable if they do so, says Mr White.
Any decisions also need to reflect the fact that you can’t assume that everything will carry on in the same way, particularly if there are questions about the ownership of assets.
“There are farms where the land is owned by a number of family members or other individuals who up until now have been happy to take a nominal rent while father is alive, but may want to sell the land once he has passed away,” adds Mr White.
“People may need to consider a range of different options, depending on their skills and the viability of the business, which may include selling up completely or setting up a Contract Farming Agreement.”