Rob and Karen have two children, Mary is a teacher and Jim works at home on the farm with his father. When Jim left school and went into partnership with his parents they decided it was time to sort out their wills. But they couldn’t decide who was getting what so their lawyer sent them to have a chat with me.

The farm simply wasn’t big enough to split and was really only capable of supporting one family at a time, but Karen was anxious that their daughter Mary didn’t ‘miss out’. What we did was set up a long-term regular investment plan, creating an asset that would eventually go to Mary when the farm went to Jim. But it would take time for this investment to build up so we also took out a life insurance policy on Rob & Karen to produce cash in case they died before the investment plan had established a substantial value. The costs were paid out of farm profits so there was a bit less available for Jim but it meant that, in the end, he’d inherit the whole farm and his sister would get cash from the life insurance and/or the investment.

But we did a couple of ‘extra’ things too. Firstly, we put the investment plan and life policy into a trust so that if anything untoward happened such as Mary dying before her parents or getting divorced, then ‘her’ money would be safe either for her (if she was divorced) or her children (if she’s died). Secondly the farm also took out a life insurance policy on Jim, so that if he died before his parents, his wife could get the money from this policy, which would mean Rob, & Karen could then pass the farm on to Jim’s or Mary’s children.

Darren and his wife were farming the family farm but the future wasn’t looking rosy. He has two sisters and Darren’s mother believes that whilst the farming assets should go to Darren, the land should be split three ways. His parents were taking so much money out of the farm to provide for the girls that the farm was barely viable. Darren & his wife will struggle for the rest of their lives to make the farm pay. It’s got the potential to be a family & farming disaster. So my advice to Darren & his wife was to leave the farm and take a smaller farm of their own where they are in control of their own destiny. Their time and effort will then create a farm that they can leave to their own children.

Vernon was the youngest of three children who were all teenagers when their mother died. When Vernon’s father remarried, he made a new will dividing the farm between the three children. The two girls eventually left home and moved away leaving Vernon farming at home with his father.

It was one of those families where no one talked much about wills or money and it was something that Vernon’s father had meant to sort out. But he didn’t. And when he died the negotiations between the family over the farm valuation and the unfairness of Vernon having to pay his sisters for all the years of his work, resulted in the relationship between Vernon and his sisters and their husbands breaking down. In the end Vernon took on a huge loan to buy them out but he couldn’t service it and in the end he had to leave the farm.

Approaching an experienced advisor would have helped Vernon’s father to deal with the whole money business. And planning ahead would have saved the farm, and the family. Knowing you want to sort the problem is the first step.

A savings plan builds up in value during your lifetime (like your farm does) and pays out on a specified date of your choice. An insurance policy covers the risk of you dying before your savings plan has built up sufficiently. And if you opt to use a trust you can choose who to pay the proceeds to. Knowing you’ve got it sorted for all your children you can get back to farming with real peace of mind.

It’s all about planning ahead. Instead of families going to the bank on the death of their parents to borrow the money to buy each other out – it’s the farm quietly planting financial seeds to produce a crop exactly when it’s needed.

The premiums are paid out of the farm profits. In the end your farming child gets the farm and the siblings get the cash from the policy proceeds. It works because you plan ahead, just as you do with your farm.

If you are concerned about the cost then just do what you can afford. Such policies are flexible and a small regular payment now can make a big difference to the future of the farm, and your children. If family circumstances change – just vary the trust. The secret is to use a suitable policy, a flexible trust and have an experienced adviser. And remember what you’re buying is peace of mind for you AND the next generation.