A farming partnership wishes to introduce younger members of the family into the business but not put at risk the capital of the business which the older members have built up by hard work and careful saving over many years.
The younger generation wish to be certain that if they commit to the business they will on the death or retirement of the older generation reap the rewards of their hard work and commitment and become the owners. Working with the family’s accountants and tax advisors we recommend a restructuring of the business bringing the farm land into the partnership but ring fencing the ownership of the land by the older generation of partners.
We then provide a partnership agreement which provides for the younger partners to have an option on the death or retirement of the older land owning partners to acquire their interest in the farm land for a nominal sum.
In this way, the younger generation can be certain of having the opportunity to buy the farm at an affordable price and avoid the uncertainty and anxiety of relying upon an older partner’s will. The older generation can also be reasonably certain that they have protected the farm land from the risks of bankruptcy and divorce of younger partners. Where there is a particular asset such as a house which a retiring partner wishes to continue to own (perhaps to be left to a non-farming member of their family) we can provide in the partnership agreement for the asset to be taken out of the partnership upon retirement by way of part repayment of the capital sum owed to the partner by the partnership.