An attentive crowd turned out at Roscommon's Abbey Hotel last week for a ‘Transferring the Family Farm’ event.
Last week Teagasc Roscommon/Longford held a very successful ‘Transferring the Family Farm’ event in the Abbey Hotel Roscommon.
At the meeting families were able to engage with a number of important stakeholders in the legal, financial and agricultural professions to receive advice on this important area for farm families.
Land in Ireland continuously passes from one generation to the next.
This transfer of ownership does not always go smoothly. While there is no magic formula to guarantee the successful transfer from one generation to the next, major pitfalls can be avoided by planning ahead and putting a succession plan in place.
By seeking legal, agricultural and financial advice and also achieving a good family discussion, a fair outcome can be reached and the greatest pitfall of all, intestacy can be avoided.
The family farm transfer is much more than just a simple business transaction. There are a number of complex issues to be addressed including; continuity of the farm business; financial independence of the owners and their spouse; provision for other family members;minimisation of taxes.
In all of these considerations it is best to be realistic about the costs involved and the income earning potential of the farm.
The importance of family discussion.
Honest and open communication is well acknowledged as the major key to successful planning. Family involvement in planning for inheritance and succession is essential.
The family discussion should take place early, not on the eve of a 35th birthday (a key date in terms of succession) or by the bedside of a dying parent.
The main aim is to have an open conversation with the people who will be involved, so that future misunderstandings can be avoided and those involved will know what to expect.
Obvious topics for discussion at this stage would include drawing up a will in consultation with a solicitor; what is the income generating capacity of the farm?; starting the succession conversation within the family; income security and pensions for parents after retirement; the Fair Deal Scheme and its pitfalls; options to cater for other children/siblings; forming a partnership with your identified successor.
Transferring, leasing or selling the family farm will always involve legal and financial advisers, seek out the best and go into your consultations well prepared.
Consult your solicitor, tax adviser and the Department of Social Protection in relation to your pension and other entitlements. Good advice will make the task less daunting and could also help to avoid some of the pitfalls which could reduce the value of the assets to be transferred.
There are good tax incentives (i.e. Stamp Duty Relief) to promote early farm transfer, but this is a personal decision for every landowner to make.
Your Teagasc adviser or accountant can explain these tax breaks to you, but remember at the end of the day, it’s what works best for you and your family that matters.
If you don’t have a will made, as a priority ask your solicitor to prepare one for you. It should be updated every few years as the tax laws and family circumstances can change significantly.
There are also a number of tax issues to be considered.
On lifetime transfers of farm assets, Capital Acquisition Tax (CAT), Capital Gains Tax (CGT) and Stamp Duty are the taxes for which a return must be filed to Revenue.
Your adviser will inform you of the reliefs which may be claimed from each of these taxes. Be aware that Government policy can change significantly over the course of a few budgets and these reliefs could be reduced, increased or eliminated.
If you die without making a will, you are “intestate” and by default the State will implement its plan under the Succession Act, which may not be in line with your wishes.
The rules of intestacy mean that the farm / assets will be divided among a number of your next of kin.
This often results in family disputes and the outcome could result in the disposal of the farm / business.
No farmer is too young or too old to make a Will. A Will is an important legal document and should be prepared with a solicitor. Making a Will ensures that your property passes to the person of your choice without unnecessary expense or family conflict.
Just remember, in the succession stakes, there is no second chance.
There is no magic formula to guarantee the successful move from one generation to the next. The only safe bet is to plan carefully, consult your legal, financial, agricultural advisers and have that all important ‘round the kitchen table discussion’ involving all the family.
For further information contact your local Teagasc office. They have offices based in Roscommon Town (Tel: 090 6626166), Castlerea (Tel: 094 9620160) and Longford Town (Tel: 043 3341021), You can find us on Facebook @Teagascroscommonlongford.