Successor's opinions and suitability
It goes without saying that the identified successor should be consulted in the process to ensure that both parties are 'on the same page' when it comes to the timing of the transfer.
It may be worth considering whether the transfer should be done during the farm owner's lifetime. There are a number of issues including inheritance tax to be considered by the successor.
It is worth considering the impact of your succession plans on other family members. For example, if sites are identified as the inheritance by other family members, this is a matter which needs to be carefully planned for and discussed with these family members.
Upon death, especially where there is no will to be presented to the bank, it can be a difficult process to have monies released by banks.
This may cause great difficulty for family members at an already stressful time.
Also, if you have loan agreements in place with the bank that are attached to the farm, consultation with your bank manager will be necessary to ensure that the loans are transferred in a desirable manner.
If your spouse has guaranteed any loans but is not the desired successor to the farm, you should discuss the transfer of the loan to the new successors, with your bank.
Taxation issues and legal costs
There is an inevitable cost associated with estate planning, including legal costs if you chose to have a will drawn up. As there is a marked difference in the costs of this process around the country it may be worth pricing around. In doing so you should ensure that you are comparing like services, and that the lowest priced practice will provide you with all of the services needed.
The issue of life assurance is significant, particularly if there are debts outstanding at the time of death. It is essential that your spouse/partner is aware of the life assurance policy and that the desired beneficiary of the policy is named.
If you die without a will you are described as 'intestate' and the rules of intestacy apply to the division of your estate. This means that the estate will be divided up in the following manner regardless of the intentions of the deceased.
The following points are important:
• Before the estate is divided all expenses, debts and liabilities of the deceased are paid.
• If the intestate dies with a spouse and no children, the entire estate is passed to his/her spouse.
• If the intestate has no surviving spouse but has children, the estate is divided equally amongst all children.
• If the intestate dies with a spouse and children, the spouse inherits two thirds of the estate and the remainder is divided amongst the children.
• If the intestate dies without a surviving spouse or child then the parents of the intestate inherit the entire estate. If only one parent survives then that parent inherits the entire estate.
• If the intestate dies with neither spouse or child or parent then his/her estate is distributed between his/her brothers and sisters in equal shares.
If any brother or sister does not outlive the intestate, the children of the deceased brother or sister inherit the share of their deceased parent and it is divided in equal shares amongst the children.
• If an intestate dies without a surviving spouse, parent, child, brother or sister or niece or nephew then the estate is divided amongst next-of-kin.
Generally the next of kin is the person who is nearest in blood relationship to the intestate on the date of the death of the intestate.
It is important to note that relatives who are related in half-blood inherit equally as those in whole-blood of the same relation.
For example, if the intestate has a half-sister and two whole-brothers, the half-sister inherits equally to the whole-brothers.
It is easy to see that the rules of intestacy will not fit with the plans that many envisage for their estate and could cause great friction amongst families after a death.
In order to avoid unhappy relations you should be prepared to have frank discussions with family members and invite their input.
Once you have a basic plan in place for your estate you should seek the advice of your legal advisor and accountant or tax advisor.
Remember it is better to have a plan in place that all of your family are aware of so that difficulties can be avoided when you are no longer around to explain why.
Theresa Murphy is a barrister based in Ardrahan, Co Galway