In the farming world, it is not uncommon to hear the phrase "farmers never retire." Indeed, given that the average age of a farmer in the UK is 59, with 40% being over the age of 65, many farmers are actively involved in the day-to-day running of the farming business well into their late seventies and early eighties.
In circumstances where a farmer is unable to take an active role in the day-to-day management of their farm through a loss of capacity, the business can quickly be met with significant extra costs and financial disruption. For example, suppliers' invoices, rent or loan repayments may be left unpaid, and employees may not receive their wages on time. Such a scenario is detrimental to the farm's viability in both the short and long term. However, a Power of Attorney can help to safeguard against these difficulties.
What is a Power of Attorney?
A Power of Attorney (PoA) is a legal document that allows someone known as "the grantor" (i.e. the farmer) to give authority to another person, known as "the attorney ", to make decisions on their behalf. PoAs can cover decisions for both financial and welfare matters. What this means in practice is that should you become unable to make decisions for yourself, your attorney will be able to manage your affairs. It is generally advisable for everybody – not just farmers - to have a PoA in place but, for a farmer, their attorney's ability to manage their affairs can include the day to day running of the farm business.
You can appoint different individuals to manage your financial affairs and your welfare. In such a scenario though, it is advisable you appoint individuals that you trust wholeheartedly to act in your best interests as they will be given a lot of power to manage your affairs on your behalf.
Most people chose to appoint trusted family members or close friends to act as their attorney. However, it is also not uncommon for individuals to appoint professionals, such as an accountant or solicitor, to also act as their financial attorneys.
An important point to note here is that joint attorneys can make decisions independently of each other. While this offers a good degree of flexibility in circumstances where one of the attorneys is unavailable to make a decision, it is important to ensure that joint attorneys are likely to agree with one another.
The Advantages of a Power of Attorney
As previously mentioned, PoAs help to minimise business disruption should a farmer become incapacitated for whatever reason. Especially when considering the hazardous environment of farming compared to other occupations, where dealing with unpredictable livestock, dangerous machinery and powerful pesticides is a daily occurrence, the potential for farmers to experience a workplace accident is twenty-one times higher than the all-industry rate. Owing to this statistic alone, it would be advisable to have a PoA in place.
Another benefit of having a PoA is that it saves your family the financial cost and stress that stems from the alternative. If you lose capacity without having an operational PoA, an application will need to be made to your local Sheriff Court to obtain a guardianship order. Guardianships are much more expensive and time-consuming than the simple implementation of a PoA and are likely to require specialist legal advice. Various specialist reports – including medical reports – must also be submitted to the court before a decision is made.
Since a guardianship application is ultimately a court process; it can take upwards of 6 months to obtain an order. This can be contrasted with a PoA which allows your nominated attorneys to step in immediately and start making decisions on your behalf.
An Investment for the Future
Similar to investing in a new fence or new stock tup, a PoA should be viewed as a worthwhile future investment for any farmer looking to protect their farm and dependents in the years to come. Not only does the signing of this legal document help to safeguard against unwanted business disruption, but having a PoA in place also helps to avoid the cost and lengthy delay that comes with obtaining a guardianship order.
Please do not hesitate to reach out to your usual Brodies contact for further advice and assistance.
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2nd Year Trainee
