Pre-nup is a good way to avoid future conflict over family farm
Our legal expert on the value of a pre-nuptial agreement in relation to future claims against a farm.
Question: I am a young trained farmer and have worked with my parents on the family farm for over 10 years. I feel that I am ready to take over the farm but my parents are not ready to transfer the farm to me as they fear that the farm might end up being lost if I end up getting divorced or separated in the future. I don't know what I can do to put their mind at ease because I cannot tell what the future may bring.
Theresa replies: Results of the 2011 census show that 87,770 people in Ireland are now legally divorced. That's up from the 35,059 listed as divorced in the census carried out in 2002. Along with this is a study carried out by Macra na Feirme on 'Land Mobility and Succession in Ireland' which identified that keeping the family farm within the family is a concern for those handing on the farm to the next generation.
So your parent's concerns may be stemming from the increase in the instance of separation and divorce which has occurred since 1995. For many taxation and the exposure to Capital Acquisitions Tax will not be the only factor under consideration when deciding what is the best time to transfer on the family farm, more personal factors like the stability and the financial position of the transferee will often be considered as well as the circumstances of other children.
With changes to the Agricultural relief requirements since January 2015, it may be worth examining them to assess assess your eligibility.
The obvious ease to your parent's concern may be found in your agreement to enter into a pre-nuptial agreement with any future spouse.
You should also bear in mind that if you become a qualified co-habitee (you live with someone for a period of two years, if you have a child together, or a period of five years if you do not) there are consequences upon the ceasing of the co-habitation very similar to marriage.
However, you can enter into an agreement with your co-habitee similar to a pre-nuptial agreement, whereby one co-habitee can agree not to seek redress including any portion of a particular asset, eg, the farm, when the co-habitation ends.