How to plan for the smooth transfer of the family farm
Land in Ireland continuously passes from one generation to the next. This transfer of ownership does not always go smoothly and while there is no magic formula to guarantee the successful transfer from one generation to the next, major pitfalls can be avoided by planning ahead and putting a succession plan in place.
By seeking legal, agricultural and financial advice and also achieving a good family discussion, a fair outcome can be reached and the greatest pitfall of all, intestacy can be avoided.
The family farm transfer is much more than just a simple business transaction. There are a number of complex issues to be addressed for example.
- Continuity of the farm business.
- Financial independence of the owners and their spouse.
- Provision for other family members.
- Minimisation of taxes.
In all of these considerations it is best to be realistic about the costs involved and the income earning potential of the farm.
The importance of family discussion
Honest and open communication is well acknowledged as the major key to successful planning. Family involvement in planning for inheritance and succession is essential. The family discussion should take place early, not on the eve of a 35th birthday (a key date in terms of succession) or by the bedside of a dying parent.
The main aim is to have an open conversation with the people who will be involved, so that future misunderstandings can be avoided and those involved will know what to expect. Obvious topics for discussion at this stage would include the following.
- Drawing up a will in consultation with a solicitor.
- What is the income generating capacity of the farm?
- Starting the succession conversation within the family.
- Income security and pensions for parents after retirement.
- The Fair Deal Scheme and its pitfalls.
- Options to cater for other children/ siblings.
- Forming a partnership with your identified successor.