Running a business can be stressful, and sometimes, disagreements between owners escalate to levels that need external help to resolve. This is particularly prevalent in agriculture, where many farming businesses are family businesses.

In recent years, we have seen an increase in the number of people asking for our help in resolving family disputes. These disputes affect the smooth running of the business and affect the relationships between relatives.

In this update, we look at the most common causes of family disputes and what can be done to resolve them.

Succession Planning and Inheritance Disputes
Disagreements often arise over who should take over the farm when the owner retires or dies. Conflicts can stem from differing opinions on the suitability of heirs, perceived favouritism, or unclear succession plans.

For example, one child may have worked on the farm for years, expecting to inherit it, while others might feel entitled to an equal share of the estate despite contributing less to the business.

Management and Operational Conflicts
The family members involved in the daily operations may have conflicting views on the farm’s future; they may have differing opinions on business strategies, or the disagreements could relate to day-to-day management decisions – who takes them and what they should be.

For instance, one family member may wish to diversify into new crops or agri-tourism, while another prefers to maintain traditional farming practices.

Financial Disagreements
Disputes over financial management, profit distribution, and reinvestment decisions are common. Differences in financial priorities and transparency can lead to mistrust. Conflicts might arise if one family member feels that profits are being unfairly distributed or if there is a lack of clarity about financial records.

Workload and Contribution Disparities
In some businesses, some of the owners are more involved than others, or there is a perception that one person is doing more than their fair share. If some family members feel they are doing too much and relatives too little, tensions can escalate.

Interpersonal Conflicts
Personal relationships can significantly impact any business, but when co-workers are relatives or siblings, the situation is often much more heightened. Historical grievances, personality clashes, and sibling rivalry can affect professional interactions, and it is not uncommon for us to become involved in long-standing family feuds or conflicts.

Avoiding Family Disputes
It is almost impossible to be specific about how family disputes can be resolved, but some things can be implemented to reduce the chances of disagreements arising or escalating to the point where external counsel is needed.

Clear and Comprehensive Succession Planning
Developing a well-documented succession plan with input from all family members can mitigate inheritance disputes. This plan should outline roles, responsibilities, and timelines for transitioning ownership and management.

Effective Communication and Regular Meetings
Regular family meetings to discuss business operations, financial matters, and future plans can improve transparency and trust. Open and honest communication channels help address concerns before they escalate into conflicts.

Legal and Financial Advisors
There is often hesitancy to involve solicitors and lawyers in family matters; after all, blood is thicker than water. However, ensuring that all of the important legal aspects of the business are covered with clear agreements and that contracts and financial arrangements are in place for important areas can be highly effective in ensuring clarity amongst all family members. Clearly defining each family member’s role and responsibilities within the business can prevent overlaps and reduce misunderstandings.

Walter’s Rural has been assisting rural businesses for over 30 years. If you need help resolving a dispute, valuing, marketing or selling your farm, please call Ray Phillips on 01522 696496, email ray@walters-rural.com