Farming Finance: Smooth transfers
Some common-sense planning will protect both parties in farm transfer arrangements, writes Theresa Murphy
Q: I am a farmer, getting close to retirement. My wife and I have two children and would like to pass on part of our farm to each of our children. We would like to see them build the farming business their own way in our lifetime, so we intend to transfer the farm in the near future. What do we need to consider before making the transfer?
The planning process for the transferring of the family farm can be broken down into two main elements. First, is the financial element. You must ensure that both you and your wife have financial security for your retirement and old age.
You should also consider the tax implications, for both you and your children, of a transfer. This may take considerable planning and you should seek professional advice to ensure you are benefiting from the reliefs that exist.
The second element is the legal dimension to handing over the farm. Before approaching your solicitor, it's worth considering the following points.
For many Irish farming families, the farm house is at the heart of the holding, both physically and emotionally and many will not want to see the farm house severed from the farm.
In the case of splitting the farm between two children, it is essential that the farm house and its 'curtilage' (the garden and immediate surrounds) is provided for legally. It may be that the farm house will be transferred to one child but it is important to protect the interests of both people living there into the future.
By creating a 'life interest' in the farm house you can ensure that you and your wife will be able to enjoy the house as your home until you both die. This will also protect your rights if either of your children mortgaged the farm house during your lifetime.