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At Kingsley Napley, succession planning is at the heart of our private client team’s work and that includes succession planning for the owners of landed estates. I was asked to speak on this subject recently at the second edition of the Thought Leaders 4 Landed Estates & Farms Tax Conference, which was attended by some of the country’s leading advisers to landed estates. I was asked to set the scene for solutions to landed estates succession and in this series of blogs I now want to share some of my thoughts on this topic, focusing on general, practical strategies to manage this successfully.
What is a landed estate?
It is commonly said that ‘you will know one when you see one’ but there isn’t a clear definition! In general, a ‘landed estate’ will refer to a large house in a rural area surrounded by a significant area of land which is owned by the family (or other ownership vehicle, such as a trust or company for a family). Typically, the estate will comprise farming and business interests derived from the land as well as residential accommodation. Landed estates may include parkland, woodlands, and property of historical and cultural importance. A family’s wealth will be inextricably linked to the land and the value of the underlying assets, which is often significant. The generation of further wealth and opportunity will derive from the management and use of the land to build a thriving business, which can support the family, its staff and to an extent the local community.
What is special about the succession to a landed estate?
There are many stakeholders who rely on a landed estate to varying degrees for their livelihoods. In that way, the estate can play a crucial role in the rural economy, meaning that their effective management is vital to many who rely on them. Dealing with succession properly not only has repercussions for the affected family-owners, but could also have a wider socio-economic impact if mismanaged and estates have to be broken up or sold.
A characteristic of a landed estate is the diversity of its assets, properties and activities. Inevitably that makes the succession to every estate unique; planning for succession takes time, understanding and creativity to adjust for specific circumstances. An ‘off the shelf’ plan just won’t cut it. Nevertheless, there are common themes and common difficulties, so the starting points may typically be the same.
Another characteristic of a landed estate is a common desire for it to pass down in single ownership rather than being fragmented between family members. That can present many challenges, for example when there are potentially high tax charges to fund, when a single heir is not obvious or there are competing family interests to satisfy.
So how might owners approach management generally in a way that can facilitate the overall functioning of the estate and, in time, its succession?
Succession solutions require clarity of aims
For all concerned in the succession planning process, the starting point is to ask: ‘solutions to what’? OR “What problems do we need to solve?”. We need to know and understand:
- the facts we have been dealt – they will change from estate to estate and family to family; and
- the aims of the succession – they may be led by the facts, but there are also some universal, consistent aims which most estate owners will share:
- the preservation of the estate first and foremost – as a bare minimum ensuring there is something left to pass down to the next generation;
- the improvement of the estate – ideally, leaving the estate in a better position than when it was acquired;
- managing a smooth and certain succession; and
- the payment of minimal tax.
So how to start going about this? The following parts of this series of blogs will aim to outline various aspects to consider, which together should provide a suitable framework for managing the succession to most types of estates.
further information
If you would like any further information or advice about the topic discussed in this blog, please contact Charles Richardson in the Private Client team.
about the author
Charles is a Partner in Kingsley Napley's Private Client group and leads the firm's Landed Estates practice. Charles joined Kingsley Napley in 2022 from Hunters Law LLP, where he began his career and became partner in 2018. He has a well-established general Private Client practice, advising individuals, families, trustees and executors, with an emphasis on complex lifetime tax and succession planning, often with an international element.
Succession to a landed estate blog series
Part 1
Setting the scene for solutions
At Kingsley Napley, succession planning is at the heart of our private client team’s work and that includes succession planning for the owners of landed estates. I was asked to speak on this subject recently at the second edition of the Thought Leaders 4 Landed Estates & Farms Tax Conference, which was attended by some of the country’s leading advisers to landed estates.
Read the blog Part 2
The essential, universal starting point
Certainty of succession – Wills and lasting powers of attorney It almost goes without saying that the owner of a landed estate will have made a Will to direct that the estate passes in accordance with their wishes on death. They will also have put in place lasting powers of attorney so that if they lose mental capacity, there is flexibility for others to effect these wishes.
Read the blog Part 3
Minimising tax
One of the biggest risks to the future of a landed estate is tax and specifically the inability to meet a liability without recourse to a sale of core estate assets. Taken to an extreme, unplanned tax charges can result in an estate having to be sold off or broken up to meet the liability.
Read the blog Part 4
Preserving and improving the estate
Running an estate is a long-term project and even with a clear aim, the succession plan is bound to encounter unexpected challenges, such as a law or family change. To provide the best opportunity to thrive, I find that setting and sticking to principles, and applying a disciplined, consistent approach normally pays dividends.
Read the blog We welcome views and opinions about the issues raised in this blog. Should you require specific advice in relation to personal circumstances, please use the form on the contact page.
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