“When I die, all of this will be yours.”
“Come home and work on the farm and one day it will be yours.”
“Your brother has no interest in the farm, you will be the one to take over here when I go….”
These are just a handful of examples of some of the things that have been said to the next generation of farming families over the years. For some these words will hold true.
But unfortunately, for others, despite hearing these statements repeatedly over the years, they will turn out not to bear any resemblance to what’s actually contained in their parent’s will. So instead of a seamless transition to the next generation, a farmer’s family will find themselves embroiled in distressing clashes and legal battles to try to achieve the outcome the “promised” heir was expecting.
Shortly before Christmas a case in the English courts provided a prime example of just such a clash (Armstrong v Armstrong).
The Armstrong family partnership, consisting of Alan and Margaret Armstrong and their two sons Simon and Richard, owned and ran two farms. The relationship between their sons was not an amicable one and each son therefore had responsibility for a different farm. Both children were repeatedly told by their parents that they would inherit the farm they ran. This was reinforced verbally over the years but also by a number of actions, including the splitting of the finances for both farms. In 2018 Margaret passed away, with Alan a short time later making a new will which disinherited Richard.
Following Alan’s death Richard engaged in a court action using the English land law concept of “proprietary estoppel”, which is a legal remedy where someone is promised land, but it is transferred to someone else.
Richard argued that he had relied on the promises made over the years by his parents regarding his inheritance and that these should be implemented. The court ultimately agreed that such promises had been made and a remedy should be granted.
They highlighted that Richard had decided not to go to university on the basis he would farm the land and eventually inherit. Richard had never made contingency plans for leaving the farm as he had relied on the verbal promises and was now financially dependent on inheriting as planned. Additionally, he had paid farm debts on the basis of the verbal promises.
The Armstrong case is just one of many English farming disputes in recent years where the concept of proprietary estoppel has been used.
In Scotland we are no strangers to these types of dispute, either.
At Aberdein Considine we recently brought to an end a long running succession dispute centred on lifetime promises. Much like in the Armstrong case, promises were made to our client that he would inherit half the land and a 100% share of the company which was a tenant of the full farm.
A value had been agreed verbally between father and son that would be paid to the other beneficiary in order to eventually buy out their interest in their half share of the land. Those promises shaped our client’s actions for much of his life, resulting in him putting in time, labour and materials into the operation of the farming business. This included project managing renovation of farm buildings for third party rental and paying the utilities costs for the farm. Despite the promises, when his father died, his will left everything 50/50 to him and the other beneficiary.
However, in Scotland we do not have the concept of proprietary estoppel. Our equivalent is breach of promise. An interesting but far from developed area of the law when it comes to contentious succession.
Developing and interesting areas of law are all well and good for us as lawyers, but they are not somewhere a client wants to find themselves if they can help it. It is perhaps for this reason that many of these types of dispute in Scotland end up being resolved through mediation or negotiation between the parties’ legal teams.
Dealing with matters out of court is not something to be dismissed, however. Farming businesses, as we know, are complex and asset heavy; there are tax and financial consequences associated with many decisions. Out of court resolution often allows parties to be creative and to structure settlement in a means which is acceptable to all and which ultimately is affordable where someone is being bought out, for example settlement with staged payments. This latter point is something which will become all the more important post-April 2026, when the controversial new inheritance tax rules kick in.
Discussions around succession planning are not always easy to have and in many cases it will be the next generation that have to take that leap of faith and broach the subject with their parents. If you have early discussions about what the succession plans are, you can ensure clear and formal planning can be done in life to avoid the aforementioned clashes. Where such planning is not possible then formal advice should be sought at the earliest opportunity.
So, next time you hear the words “This’ll all be yours one day”, maybe have a conversation about what formal plans are in place for when that ‘one day’ does come around. You will all be glad you know how the land lies.
