Farm Succession – A Serious Business – James Staines – LinkedIn
Posted Sep 2023
Farm succession should be straightforward. However, as one client, who resolutely refused to consider making a will, stated to me, “Any man he ever knew who made a will – died”.
Farmers need to look carefully at Farm Business Succession – bringing the next generation into the farming enterprise as well as Farm Succession – what happens when you pass on and your farm and assets are dealt with under a Will or an Intestacy.
IFA has campaigned consistently to put in place structures to encourage the next generation into farming. Commissioner Hogan has placed an emphasis in the CAP review on “inter-generational change”.
Farmers need to identify a successor and work closely to bring them into the business. If there are concerns about transferring all the farm now, farm partnerships, farm succession partnerships (with their tax advantages) or transferring part of the land can all be considered.
Macra Na Feirme’s Land Mobility Service has done great work in promoting Farm partnerships and long-term leasing.
If no immediate successor can be identified, long term leasing of 5 years or more to a qualifying farmer could be considered as this can generate a substantial tax-free income whilst still keeping the land in the family and available for future options. Perhaps consider share Farming.
The failure to identify a successor or deal with your assets in a will can lead to serious unintended consequences.
Where no will is made the land (if in your sole name) will pass under the Rules of Intestacy which could see two thirds of the farm going to the surviving spouse and one third divided between all the children. If no surviving spouse, the land will be divided amongst all the children. This can be a recipe for disaster as the farm may not be left as the farmer intended. The son or daughter farming may have to fight with their siblings to get back what they believe should have been for them.
Making a Will allows for your intentions to be put in place. Tax planning can be provided for, together with Specific bequests and proper provision for family members – all providing a level of certainty.
Proper estate planning can also avoid substantial tax bills by allowing the beneficiaries to avail of either agricultural or business relief. Agricultural relief can be obtained by the beneficiary having 80% of their assets deemed agricultural (which includes farm land, stock and farm machinery) at the time of the gift or inheritance. They must hold it for 6 years and farm it as a full-time farmer or lease it to a qualifying farmer for a minimum period of 6 years.
Farm succession is a difficult issue, and many try to duck it. However, it is essential that the conversation is started. This can be a lengthy process.
Start the Conversation
Look at other members of the family who are genuinely interested in farming – including children other than the eldest son, – perhaps your niece and nephew. Teagasc provide a very effective workbook that guides farm families in this sometimes difficult task www.teagasc.ie
Get proper Legal & Tax advise
Proper and comprehensive farm business succession can ensure that your intentions are carried out, substantial tax bills be avoided or minimised and distressing conflicts within the family as the consequential substantial.
For further advise on Farm Business Transfer and Farm Succession contact James Staines on james.staines@staineslaw.ie; www.staineslaw.ie; @StainesLaw
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