Farmers could leave their families with massive tax and inheritance problems after their deaths unless they plan ahead, a lawyer has warned.

‘Succession planning’ is vital to safeguard the future of farms, according to Jerome Dodge, head of private client at Blandford-based Blanchards Bailey.

He said: “Our extensive experience in the agricultural field shows that the estates of deceased farmers do not always fully benefit from Inheritance Tax reliefs available because those farmers have failed to plan ahead during their lifetimes.

“Farmers are busy people, but if they don’t act on this issue they are storing up huge problems for their families.

“There are simple and inexpensive steps which can be taken to rectify the situation and which ought to be considered. Farmers should take appropriate advice, which is almost always best provided by the farmer’s solicitor, accountant and, quite often, land agent working together to provide the most effective solutions.”

A national survey has revealed that fewer than 50 per cent of farmers had succession plans in place. Lawyers say those that do have a plan need to review it in the light of changes in tax law.

Mr Dodge, listed in the Legal 500 guide to the industry, said there was a need to maximise agricultural property relief (APR) and business property relief (BPR).

He said: “Most farmers’ estates benefit from a combination of APR and BPR from inheritance tax. As farmers diversify more and more, the availability of BPR for farmers has become increasingly important. Relief can easily be partially or completely lost if appropriate legal documentation is not in place.

“An important point to note is that land which attracts BPR rather than, or in addition to, APR. In principle, such land attracts 100 per cent relief from inheritance tax if it is owned by the farm partnership, but only 50 per cent relief if it is owned by the individual farmer and used by the partnership. An example would be land with development potential beyond its agricultural use.”

He said HMRC looks into the issues closely when a farmer dies.