Blog
Permission to Visit - Goldilocks and the Three Bank Statements
Robert Houchill
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. Wills and LPAs are crucial documents and widely discussed elsewhere. Everyone should have a Will even if the estate itself passes by some other means, e.g. under the terms of an ongoing trust.
Letters of wishes
We commonly recommend to landed estate owners that they write a letter of wishes to record, in their own words, their overriding aims for the management and longer-term succession of the estate. Letters of wishes are a blank canvas, but they can offer the following benefits:
- Forming a succession plan for a landed estate is not always an easy task and the mere process of making a letter of wishes encourages the owner to think through all the issues enabling a plan to form.
- A letter of wishes allows the owner to define the meaning of the estate and set the parameters for core and non-core assets for example – i.e. those that must be preserved and those on which a view might be taken about a sale to raise liquidity. That can provide focus on what is important to the succession in the long-term and can affect shorter-term actions.
- Letters of wishes can also highlight any other issues that are deemed important at a particular time, e.g. wider family issues requiring discretion, privacy, community responsibility and the public gaze, approaches to risk or the acceptability of tax planning strategies.
- They can offer a convenient starting point for subsequent reviews of the plan.
Typically, a letter of wishes will be written by the individual owner and will state that it is confidential to the addressee. However, in our experience, they work best if their contents are discussed with those affected and allowed to take root and be understood. It can be absolutely critical for the success of the succession plan to get buy in from the next generation and other stakeholders.
Family charters
Family charters are similar to letters of wishes in their essence, but will usually be more formal and will typically involve the whole family in the drafting, seeking to produce an agreed document that balances the overriding aims and needs of the estate with those of the individuals involved with it.
Family charters simply won’t be suitable for some families, but in the right circumstances the collaborative approach needed to prepare them can work to define:
- a common purpose,
- a long-term family strategy,
- each family member’s responsibilities and expectations,
- maintain family relations, and
- ultimately deliver a harmonious succession.
Involving professionals in the preparation of letters of wishes and family charters
Professional advice is by no means essential; neither a letter of wishes nor a family charter requires any particular legal knowledge or formality. However, engaging with experienced professionals in the drafting process can bring rewards, in particular by bringing a balanced and comprehensive perspective covering all eventualities and by tackling difficult issues head on, which might otherwise be missed (or intentionally avoided).
Depending on the complexity of the estate, and of the family, a letter of wishes or family charter can vary considerably in length, from a few pages, to several dozens. Whatever the size of the estate and the length of the document, if should be drafted so as to provide clarity, support buy-in from the family, and enable the resolution of conflict.
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.
You may also be interested in:
Blog
The rise of the cryptoassets in financial remedies
Connie Atkinson
Blog
Supreme Court clarifies VAT group rules in Prudential v HMRC
Waqar Shah
Share insightLinkedIn X Facebook Email to a friend Print