The old saying to ‘never mix family and money’ is usually a wise one; this is especially true when it comes to business. It is very rare for business partners to agree wholeheartedly at all times.
When the family business is at stake, a fractious relationship between family owners could be detrimental. The recent Thompson V Thompson (2018) case illustrated the devastating impact inheritance feuds can have.
The case begins with Mr Thompson, one of a long line of farmers, working on the family farm until he eventually inherited the working farm.
Having married, he brought up four uninterested daughters with his wife, the birth of their son ignited the hope they would have somebody interested in working and taking over the family business.
Their son, Gilbert, was raised in the culture of farming until he left school at fifteen to work on the farm. A job he has held, with increasing responsibilities, to the present day.
It is also a job that he had worked at a very low wage for most of his working life because he had always been promised ownership of the farm upon the death of his parents.
After buying the farm in 1989, Mr Thompson transferred the farm into an equal partnership, in 1992, between himself, his wife and his son.
The partnership deed was made ‘to record more formally the applicable terms on which the partnership had been carried out since August 1992.’
The deed was explicit in the expectation that their son devotes his full time and attention to the business; a sacrifice, along with partnership rights, that implied he would inherit the farm in its entirety.
In 2004, as his parents were ageing, the business partners met with accountants to discuss inheritance planning in greater and more formal detail. The attendance notes formally record the Thompsons’ desire to leave a decent inheritance to all their children without breaking up the farm which would be left to Gilbert.
The compromise involved bequeathing multiple insurance policies to their daughters. When her husband died in 2012, Mrs Thompson signed a new Will leaving everything to her son on her death, excluding the insurance policies already mentioned.
It is in the remaining years when issues started to appear. Gilbert and his partner moved into the farmhouse with Mrs Thompson, arguments ensued regarding redecorating and differences in the way the farm house was run.
During the case, Gilbert claimed that throughout his life both verbally and legally he had been promised the farm through inheritance. Because of these persistent promises, Gilbert had tethered himself to the farm and surrounding area whilst also accepting a reduced wage.
Two of Gilbert’s sisters also agreed with these claims in their testimony; the judge finding their evidence to be ‘credible, truthful and reliable.’
Despite Mrs Thompson’s and another daughter’s accusations that her son was negligent and unable to run the farm, the judge disagreed, decreeing that Gilbert’s trust in the original inheritance promises had negatively impacted his life if the promises were not made.
The judged ruled in favour of Gilbert, in part, because of the effective testimony of his sisters and the overwhelming legal evidence.
How important is testimonial evidence in cases involving family? Should a person rely on inheritance promises to inform the way they live their life?
