Advice: Failure to make a will creates untold complications on farms
Q My husband passed away after a period of illness and as he was the farmer and dealt with all aspects of the farm business I am struggling to deal with everything from banking and money to the day to day operation of the farm. He died without a will and for now one of my sons is doing the day to day work on the farm even though he works off farm. Can you advise on what I should do to start putting things in order.
A A family death is always difficult and can become a source of even greater stress when the deceased person took on a role which the surviving family members are not in a position to continue. This is particularly true in the case of a family farm when the main farmer passes away.
Wills and Succession
The importance of succession planning for all farmers and landowners and also their spouses cannot be stressed enough.
For those that die without a will (this is referred to as intestate) there is legislation which dictates how the property of the deceased person is to be divided.
In many cases this means that the wishes of the deceased person are not honoured. It is only in the presence of a properly executed will that the wishes of the deceased can be honoured.
When drawing up a will you should start by making a general plan of who you wish to leave your property and other assets to and then seek taxation and legal advice in this regard.
The best will, that is, the least likely will to be challenged after the death of the testator (that is the person who makes the will), is one which is clear in relation to what exactly is to be left to whom.
This means you should consider items of value separately. For example, in the case of a farm, you should explicitly leave your farm land (by folio if there is to be a division amongst more than one recipient), farm machinery, livestock and bloodstock and farm entitlements.
If you, as in this case, find that your spouse has died intestate the rules of intestacy will apply.
A simplification of the rules is summarised below.
• If the deceased spouse is survived by a spouse but no children, the surviving spouse gets the entire estate
• If the deceased spouse is survived by a spouse and child/ren, the spouse gets two thirds of the estate and the remaining third is divided equally amongst children.
• If the deceased is survived by no spouse but has surviving children the estate is divided equally amongst the surviving children
If the family home is owned by both spouses the surviving spouse automatically inherits the deceased spouse's share of the home. You should check to see in whose name your home is registered to establish this.
Banking and Access to accounts
Usually funds will not be released from a deceased person's bank account until probate has been taken out.
This could prove the source of great difficulty on a farm if the farm account is held in the deceased person's name solely. If this is the case you should seek advice in relation to taking out probate/letters of intestacy.
It is recommendable in many instances to have a joint account so that access to the funds can be achieved quickly in the event of the death of an account holder.
The bank should be aware from when the account is opened that the joint account holder should have this power of withdrawal.
Day to Day Running of Farm
There are many options available to you in relation to the management of the farm, it is really a matter of considering your options within the family and also outside of it.
Depending on the size and type of farm your husband was operating it may be worth considering a share farming, partnership or leasing option for the farm.
You should also consider the tax merits for yourself in relation to the income which you would receive from these arrangements. It is important to provide yourself with income security for the rest of your life.
Seeking advice from a tax consultant and agricultural consultant in relation to thee option is advisable.
It would appear unlikely that you intend to become an active farmer but one of your children may well.
The Succession Partnership Model which took effect this year provides a €5000 per year tax incentive (for up to five years) for the partners who undertake the agreement.
Part or all of the farmland is transferred from one partner to the other during the partnership. This option may be worth exploring as it could provide you with an income into the future as well as allowing for a transitional transfer of the farm to one of your children.
There are also attractive tax incentives for long term leasing options which may also provide you with a predictable income into the future.
As your husband has passed away without a will, it is essential that the probate be dealt with in relation to your husband as well as beginning the planning in relation to your own estate. This will most likely include at least part of your husband's farm. You should begin this process as early as possible and open channels of communication with family members.
The article is intended as a general guide only and you should seek professional advice in relation to your individual circumstances.
Theresa Murphy is a barrister based in Ardrahan, Co. Galway. email: firstname.lastname@example.org
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