Farming partnership agreements
It is common for family farming partnerships to have an unwritten understanding between them. However, this is often not ideal in protecting the business and ensuring that it is grown and taken forward in the manner intended.
When considering whether a Partnership Agreement is required, you should consider the following questions:
- If an existing partner died, would you want to guarantee that the business can continue without difficulty?
- What would happen if one of the partners were to lose capacity and be unable to manage their affairs – who would be best placed to step into their shoes in making business decisions? More importantly perhaps, who should not be authorised to make those decisions?
- If a partner plans to retire, how would they extract their capital from the business without impacting on its day to day running?
- How would you want to expel a partner if circumstances dictated so? Would that end the partnership entirely?
- Is the farmland owned by the business or by you personally, and what are the consequences of that?
- How are the profits to be divided?
We believe that having an agreement in writing is crucial for your business, particularly where you farm in partnership with family members. In those circumstances, many of the above points would otherwise arise at times when a family member has become ill, died or where perhaps relations have broken down. We understand that such times can be extremely stressful, emotive and difficult and we will guide you through them if and when necessary. However, we also believe that preparing an agreement setting out exactly what is to happen in each situation is invaluable, as each partner knows what to expect, their rights and responsibilities.
Our specialist team can assist in preparing agreements for different types of farming partnership, reviewing and analysing the implications for you.
Our team can advise you on:
- New Partnership Agreements
- Adapting existing Partnership Agreements to meet tax planning objectives and/or changes to the structure of the partnership
- Reviewing current Partnership Agreements to ascertain how they impact on current business objectives and finding solutions to any hurdles which may present themselves.