'Family charter can help maintain balance between family harmony and best interests of the farming enterprise'

A family charter can help maintain the balance between family harmony and the best interests of the farming enterprise
A family charter can help maintain the balance between family harmony and the best interests of the farming enterprise

The passing of UK family-owned farms from one generation to the next would be made clearer, easier and efficient if a simple Family Charter is used.

The head of Agriculture and Landed Estates at Midlands and South West law firm Lodders, James Spreckley explains: "A family charter can help maintain the balance between family harmony and the best interests of the farming enterprise.

"It can be an important tool that family members working together can use to articulate and maintain a consistent approach and clear sense of purpose throughout the generations, and as a significant first step to proper succession planning."

Recent research confirms the challenge for family farming enterprises of planning succession and the handover to the next generation – the latest statistics reveal that in the region of just 40% have an effective succession plan, with the remainder having no formal succession plan at all.

According to the findings of a NFU 2015 Survey, 60% of farm owners have no succession plan in place with a similar percentage believing a succession plan to be important for the future of the business.

Succession planning 'can feel overwhelming'

"The average age of the British farmer is now 59 years," explains James, "so planning for passing on the baton represents a real risk to the future viability and sustainability of thousands of UK farms, which in turn will impact on the huge and vital contribution that agriculture plays in terms of its gross value added, employment and food production.

"The term ‘succession planning’ can feel overwhelming and bring concerns over an investment of time and resource for the family that would take them away from running their farming business," says James.

"But a family charter is a really quick and simple document that will help to ensure the future survival of the farm, and safeguard the livelihoods of all the family.

"The most enduring family charters are created in consultation by all family members and help to establish and maintain the balance between the best interests of the farm business and the well-being of the family."

James explains planning for a Family Charter should be seen as a positive opportunity for the whole family whether actively involved in the business or not: "A family charter is a tool to help the family plan for the future of the farm, to enable it to deal with problems and opportunities, to provide a framework for decision-making, and to communicate values and vision.

"A charter can be as short or long, formal or informal as you like, but it will be a start in capturing the family’s thoughts for the future.

"Take time as a family to debate and draft the charter. Bring in a neutral third party if it will help – someone from your legal team, a trusted business friend or other adviser – whose job will be to ensure all views are heard and a consensus reached.

"And choose your time carefully," James says. "Clearly the best time to establish a family charter is during a period of harmony.

'The future is a tricky beast to predict'

"You may think you will never need to deal with a family fall-out but the future is a tricky beast to predict.

"And, like all good business planning tools, you should treat your family charter as a living document that will benefit from regular review and consideration.

"By documenting the shared vision and values of the family and its approach to owning and running the family business, a family charter supports clear and consistent decision-making and longevity of that asset.

"Although the outcome of the family charter should be shared with professional advisers and may lead to a need to revisit wills and other business documents such as partnership agreements properly and tax efficiently to implement its terms, its mere existence and the time spent in recording some common goals will make that exercise all the easier to deal with."

Founded nearly 230 years ago, Lodders has always worked with farmers, family businesses, landowners, rural communities, real estate and property owners.

The firm is also highly regarded for its work in the agricultural and real estate sectors, and its specialist agriculture and real estate teams have retained their Tier 1 position in the latest (2015) Legal 500.