Are Your Partnerships Assets Protected?31st October 2018
Do you own Partnership assets?
Do you operate your business as a Partnership?
Do you farm in Partnership?
Do you know and are you sure what happens to those assets in the event of exit or death of one of the Partners?
The recently decided case of Wild vs Wild highlights the significant difficulties and losses that can arise, in this case, to a farming partnership.
It was thought in the Wild case that assets, to the value of £1.65m, belonged to the partnership, but after a number of years of Court battle, it has been ultimately decided the assets had actually passed to the surviving spouse under the terms of the late farmer’s Will.
This has been a long and complex legal battle, but by way of a basic outline, Father, Ben Wild, died in 2003. The farming partnership continued between his two sons, Malcom and Gregory, until relations between the brothers broke down and the farm and the bungalow were believed by Gregory to be part of the partnership.
It was argued by Malcolm, his wife and his Mother Jean that the assets had passed to Jean under the terms of Ben’s Will with matters being further complicated by way of the money Jean and her family had spent on the renovations to the bungalow. The Court has ruled in favour of Malcolm, in the absence of comprehensive partnership records proving that the assets were to pass otherwise leading to significant loss, despite his expectation and belief, for Gregory.
A person may know the ins and outs of how their Partnership operates and trust their partners implicitly, but the lack of or loss of formal agreements and documentation over time can lead to inadvertent distress and loss for some parties, as seen above and any anticipation they are to benefit from partnership assets in the longer term greatly undermined.
Our advice would be not to underestimate the importance of written, up to date partnership agreements and accurate account record keeping and/or the putting in place of an up to date Will, especially in relation to farming and family businesses. Or at the very least for a comprehensive review to be undertaken in respect of any existing partnership documentation to ensure there are no hidden surprises.
Lengthy, stressful, expensive disputes can be avoided, or mitigated against, by ensuring the formal agreements are in place in a timely way and that the assets pass as anticipated under the terms of the most appropriate documents. The drawing up of or amending such documents need not be onerous or complex but is to be encouraged as entering the arena of dispute resolution is a great deal more costly and stressful for all concerned and can sour partnership/family relations to the point of significant breakdown.
-Accredited Lucy Hoskyns-Abrahall