Finance: 'I never thought our family would fall out over land. But, unfortunately that's turned out to be the case.'

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Deeds of Transfer: Can you change your mind after transferring a farm?

Deirdre Flynn

Q I never thought our family would fall out over land. But, unfortunately that's turned out to be the case. My father was a beef farmer for 40 years until his sudden death a few years ago. I am one of five siblings but none of us were interested in working the land. Inheritance and 'who would get the land' never really entered into any of our minds until our father's passing. Even at that point the problem was kicked down the road as our mother inherited the farm and the land was rented out to a neighbour.

However, two years ago one of my brothers decided that he wanted to return from Australia with his family and live on the family farm.

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We were all delighted at first as it resolved an unanswered question as to what was going to happen with the land

It was decided that the land and the house would be transferred into his name and my mother would buy a smaller house in the local town.

However, despite the preparations over the past two years, including my brother and his wife doing some work on the house, the plan looks like it is going to fall apart. At the last minute my brother's wife decided that she didn't want to live 'down the country'.

And this is after my mother has moved out of her home to facilitate the move.

Further, it seems relations between my brother and his wife are not good and she is saying she won't leave Australia for rural Ireland.

We are all now concerned that a divorce may be on the cards and are unsure what could happen. What can we do to protect our home? Can my mother change her mind and reverse the transfer if my brother is in agreement to do so?

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A Marital breakdown is difficult for a family and the division of assets is a big concern. This is particularly so for farming families where a farm has been passed down for generations and there is concern that some of the family farm will be lost due to a judicial separation or a divorce.

I note you say the farm and house on the farm have been transferred over to your brother, and that your brother and his wife have done some work on the house in preparation for their move from Australia.

You also state that relations between your brother and his wife are not good over the situation and that she is now saying she will not leave Australia for rural Ireland. I assume from this that your brother's wife will move to Ireland but will not move to the countryside.

To get to the heart of the issue, it's important to understand there is a misconception that a spouse is automatically entitled to half of the farm in the event of a marital breakdown.

This is not always the case and the outcome of family law cases vary depending on the particular circumstances of each case.

You query whether your mother can now change her mind and reverse the transfer of the farm and the house to your brother if your brother is in agreement to do so.

There are a few issues to deal with here.

Firstly, unless your mother signed a Deed of Transfer with a Power of Revocation, she cannot now change her mind and reverse the transfer. Such Deeds of Transfer are rare.

A Power of Revocation is where a person gives a gift, such as in this case the farm and house, but has the right to take it back. You should consult with a solicitor who acted on behalf of your mother in the transfer of the property to your brother to see what Deed of Transfer was in fact signed.

An alternative is for your brother to voluntarily transfer the farm and house back to your mother, but this transfer will trigger several taxation implications for both your mother and your brother.

For example, if your brother claimed agricultural relief or any other kind of a relief on the transfer of the farm and house to him, disposing of the asset so quickly could trigger a clawback of the tax relief he claimed. The option of your brother transferring the farm and house back to your mother also creates a difficulty in that if a judicial separation or a divorce occurs for your brother in the near future, this transfer of the property to his mother could be seen as his attempt to try and dissipate his assets before any family law proceedings commence.

Your sister-in-law could make an application to the courts to have any such transfer set aside (i.e. rendered null and void) on the basis it was done in attempt to try and put the assets out of her reach pending family law proceedings.

A further issue with this is that you have said that your brother and sister-in-law have done some work on the house. If she has spent any of her own money on the house, she would have what is called a beneficial interest on the house. In any family law proceedings, your brother would have to effectively buy out her interest in the property.

I also query whether your brother and sister in law took out any mortgage or loan to carry out the works to the house and if your sister in law is on said loan, then she would have to be released from those borrowings.

As you can see, the transfer of the property from your brother back to your mother is not without its difficulties and you would have to obtain specific and detailed legal and taxation advice before considering this option.

In the likely event that such a transfer cannot take place, you should be aware that courts are in fact reluctant to divide a farm that has been in a family for generations and has been inherited or gifted to a successor (in this case your brother) with the intention that it will eventually be passed down to their successors.

Courts also tend to treat inherited property differently to property which has been obtained by both spouses during their marriage.

While further legal and financial advice should be sought in this case, unfortunately, there is very little you and your siblings can do to change the situation.

Deirdre Flynn is from a farming background and practises as a solicitor at Deirdre Flynn Solicitors, 4 Ivy Terrace, Tralee, Co Kerry

 

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