Ideally where the landowner is married the decision should be arrived in consultation with his/her spouse. Your spouse may have very definite preferences and ignoring their views may sow the seeds of discord in later years. Both parties should attend all meetings with your accountant, solicitor or agricultural advisor.
The day is long gone where succession fell to the oldest son or to the least academically inclined member of the family. Modern day farming demands commitment, dedication and a desire to succeed along with the necessary agricultural educational attainments. Your successor should possess all of these traits.
If your intended successor does not possess all of these traits maybe you should wait or reconsider. Rushing succession or yielding to pressure should be resisted if you are not sure.
Your intended successor needs to be fully involved in the succession planning process and needs to understand what responsibilities and obligations he/she is undertaking and that they are fully in agreement with same. They may not particularly like some of the conditions associated with the transfer, such as making provision for other family members.
Such issues should be discussed maturely and if discussion does not yield a satisfactory outcome the opinion of the family accountant or agricultural advisor should be sought as to whether the suggested provision is reasonable.
CONSULTING WITH OTHER FAMILY MEMBERS
The choice of successor is generally a foregone conclusion and seldom generates acrimony from the other siblings.
However, there may be some level of expectation among the siblings that they would not be entirely excluded from the process, whether that expectation relates to receiving some form of gift/inheritance or simply being made aware of what is being proposed and whether they are comfortable with that.
Their inclusion in the process may avoid disharmony in later years. There will of course be situations where it may be more prudent to proceed without their involvement in the process.
PART OR ENTIRE TRANSFER OF MANAGEMENT
Increasingly farmers are choosing to enter partnership or form a limited company with their successor whereby they maintain a meaningful involvement in the running of the farm business even though they have transferred some or all of the main farming assets. Such arrangements have a lot to recommend them and can be beneficial from a labour and management point of view and also from a taxation and grant aid access perspective. It also enables the parent to retire on a phased basis at whatever pace they so choose.
PART OR ENTIRE ASSET TRANSFER
Assuming that if it is your ultimate intention that all of your farming assets go to your successor, whether you transfer all or part at the outset may be determined by your personal financial resources. If you are satisfied that you have sufficient resources to grant you a comfortable retirement, you may be happy to transfer the entire.
If on the other hand you are unsure of having sufficient resources to meet your retirement needs it might be wise to retain some portion of the farm and perhaps specify in your will that it goes to your successor.
Another valid reason for retaining a portion of the farm might be as a hedge against your successor running into matrimonial or financial difficulty. On the other hand, you may consider the possibility of future nursing home care as a potential burden that you do not wish to impose on your successor in which case you choose to transfer all of the farming assets.
CONDITIONS ASSOCIATED WITH TRANSFER
A deed of transfer may contain whatever conditions one chooses to include and such conditions can be registered as a charge on the title deeds to the farm.
Such conditions could be a lifetime right of residence in the farm dwelling or a right of maintenance or income for the transferor.
However care needs to be exercised in terms of the variety and extent of charges on title deeds as such charges may render the title deeds unacceptable to banks for securing loans or may preclude one from entitlement to means tested state benefits such as the Old Age Pension Qualified Adult Allowance.
POST SUCCESSION INCOME SOURCES FOR THE TRANSFEROR
In the vast majority of cases the transferor will have entitlement to the contributory old age pension but this may not be sufficient to meet their needs. Assuming that they have no personal pension entitlement, income supplementation may have to come from the family farm.
This could take the form of a wage, a partnership salary or perhaps rent for lands which were not transferred.
It should be noted that persons in receipt of a contributory pension are not subject to means testing and may receive unlimited income from any source. However, the Qualified Adult Allowance (spouses allowance) is subject to a means test.
It will be necessary to talk to your bank manager if there are existing loans that it is intended that the transferee will take over.
Where loans are at a particularly low interest rate you should check with the bank manager if changing the loan to your successor's name will alter the interest rate.
In all cases you will incur costs which will include the solicitor's fees, Land Registry fees and VAT. There is no set fee for this work and you should negotiate a figure prior to commencing the process.
If your successor satisfies the Stamp Duty Exemption conditions there will be no liability to Stamp Duty otherwise there will be a charge of 2pc.
* Teagasc published a very useful booklet in 2015 called a Guide to Transferring the Family Farm. This is available online and can be downloaded the publications menu on www.teagasc.ie
Where to start
A succession planning process requires consideration, dialogue and consultation. The following is a suggested step by step guide that is designed to involve all of the relevant parties at the most appropriate time:
Set out your preferences
Discuss with your spouse
Discuss with your successor
Consult a reputable succession planning expert (ideally an Agricultural Advisor/Consultant who is experienced in this area)
Discuss with other family members
Meet with your bank (if necessary).
Set a time deadline
Consult your tax advisor