Part 4: Succession to a landed estate - 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.

1. Bringing together the right advisory team is important, particularly as the issues encountered are now so broad and specialist help is needed for many areas to help ensure that actions stay on track with aims. The team might ordinarily include a land agent, accountant, solicitor and others where suitable, such as investment managers. For sizeable estates there might even be non-executive appointments to bring specialist knowledge to the advisory team on an ad hoc basis.
2. Choosing the right third-party expertise to draw on is also important and I am thinking of trustee roles here as trusts rightly continue to be a favoured ownership model for landed estates. Trustees who are interested, want to understand and ask questions will bring something of their own to the table and play their part in progressing the estate.
3. Good communication with all parties is essential. That involves talking, discussing and involving others, with the purpose ultimately to achieve ‘buy-in’ to wider aims and strategies. Communication needs to be internal, i.e. exploring and managing family dynamics, but also external with communities, e.g. for on ESG projects and PR purposes, especially where land is used for the owner’s enrichment or at the expense of natural habitat. Effective communication can also be fun and sociable, and should be carefully adapted to the target audience.  
4. Maintenance of records – having a ‘blue book’ containing an easy to use, but accurate summary of the estate ownership can make day to day operation as well as planning for succession much easier.  I have lost count how often there has been a misunderstanding as to who owns what on an estate. Succession planning can only work if there is certainty as to the basic facts!
5. I think that structured and purposeful estate meetings are fundamental, although others have misgivings about their benefits and their cost.  As an adviser, I see them as an excellent opportunity to discuss risks, business plans, and future developments, as well as to float ideas generally, which might end up turning into concrete plans. Meeting minutes will also act as an important record of decisions made and business conducted. As a rule of thumb, the estates which choose not to organise meetings tend to be the ones which are least effective.

As to other strategies, an estate that remains flexible will be best placed to adapt to changes over time. Where possible flexibility should be preserved when creating or changing ownership structures.  Of course, that may not be possible, but if it can be controlled, it will be better to build that in to any planning that is done.

I would also highlight the benefits in preserving simplicity. It can take hard work to preserve simplicity, but it will generally come at a cost to get it back once it is lost. Estates which have survived for many years have often done so by being agile and reacting to circumstances as they arise, usually for the right reasons. That however does mean that the make-up of the estate looks very different to how you might envisage it looking, if you were to put it together from scratch. Complexity can be the result and this is frequently one of the top grievances for most estate owners, with simplification exercises a consistent theme. However, rolling back from complexity can itself take many years or the acceptance of a tax charge. 

Some thoughts on cost-efficiency

Many estate owners will be conscious that expenses can quickly escalate and clearly a cost-benefit analysis needs to be run so that the estate operates efficiently, but there are a few things to keep in mind:

• Spending to tap into expert advice and development ideas can be well-spent, potentially paying for itself in tax efficiencies or business opportunities (or just by avoiding the cost of mistakes).
• The cost of organising estate meetings can be perceived as unnecessary and disproportionate. However, done properly, I find that they can also be time and cost efficient in bringing everyone together around a focused agenda, avoiding the need for drawn out correspondence between all parties. They can also be run effectively now on Zoom and Teams, which we are all using.
• Having adviser teams in place at all times isn’t always essential. Third party expertise in trustee or executor roles is often unpaid, and they might have their own experience of running an estate, so the only cost of that may be in providing a nice lunch.

The general strategies and approaches I have discussed in this series of blogs will not be unique to a landed estate, but the vast number of components of an estate make a disciplined approach of the sort described all the more important for its success, and ultimately for the success of the longer-term transition to the next generation.

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.