Farmers are being warned to keep written partnership agreements to minimise the risk of expensive and stressful will disputes.
It follows a court case involving two dairy farming brothers from Derbyshire, who disagreed about what assets were part of the farming partnership following the death of their father.
The court heard that Ben Wild died in 2003 and the farming partnership continued between his two sons, Malcolm and Gregory Wild, until 2016, when relations broke down between them.
Gregory Wild believed the farm and bungalow to be a part of the farming partnership, therefore said it should be subject to the partnership’s winding-down proceedings.
However, his brother Malcolm Wild, his wife Abigail and his mother Jean argued the farm and bungalow had passed to Jean as specified in Ben Wild’s will and were not part of the assets of the partnership.
They argued that the late Mr Wild owned them in his own right before entering into a farming partnership with his son and that he did not bring them into the partnership.
Malcolm and Abigail had also invested significantly in the bungalow’s renovation, which during the case was valued at £285,000.
However, another point of contention was how much of the renovation’s budget had come from the farming partnership, which Gregory argued was a majority.
Accounts for the partnership and mentions of the farm and bungalow were patchy as records had been lost or never kept.
After High Court hearings in July and August 2018, Judge Eyre QC ruled that the £1.65m farm and bungalow were to be included in the deceased’s estate rather than part of a farming business.
Heather Roberts, an associate in the will, trust and estate disputes team at Irwin Mitchell Private Wealth said: “This was a complex dispute that involved deciding whether the farm, and by extension the bungalow that defendants Malcolm and Abigail Wild lived in, was a part of the farming partnership or part of the deceased’s estate.
“It was a good outcome for the defendants as the judge ruled the farm and bungalow were indeed belonging to their mother Jean Wild and that they had a proprietary estoppel claim against the bungalow, which has been their home for decades.
“However, the dispute could have been avoided had the family made sure that all assets were clearly accounted for either in a will or a formal partnership agreement decades earlier.”
Ms Roberts said farming families and businesses should always have partnership agreements and assets formalised.
“Other families that have a family business and have an understanding that it may pass to them upon the death of their parents should look into drawing up a formal agreement to avoid this situation – the more complex a structure, the lengthier and more costly the dispute could be.”