Have you put a plan in place for the smooth transfer of your farm and otherworldly assets? If you have, is the plan you have in mind as appropriate and watertight as it could and should be?
A team of professionals will come together on Wednesday, October 2nd from 10.30 am to 1.00 pm in the Lady Gregory Hotel, Gort, Co. Galway to offer help and guidance with answering the many difficult questions which typically attach to this area of essential farm planning.
Traditionally in Ireland, family farms have been passed onto the next generation on death. In recent times, social and economic changes have resulted in more transfers taking place during the owner’s lifetime.
It is a very personal decision and every family has a different set of circumstances. It is always better to have a plan in place, and by not having one it can be even more difficult if the transfer is unplanned through illness or the death of the owner.
- P = Preparation: Organise your thoughts and have a discussion early with the family. An open conversation is recommended with all those involved so misunderstandings can be avoided.
- L = Legacy: Plan how the “farm” is going to be passed on. From both a tax and a legal point of view early planning is the key to reducing potential cost issues.
- A = Action: Make appointments with the professional experts you require to make informed decisions.
- N = Now: This is the time to get this item off the “to do” list, government policy could change significantly over the course of a few budgets. If your decision is delayed, it may be more difficult to achieve your wishes in the future.
The first step:
Make a Will. Many people put off this task as they probably do not want to think about the inevitable. In some cases, there is total denial. Starting the conversation about making the will “I don’t want our family to end up fighting like what happened with Jack’s family when he passed away.”
If there is no will, the State decides what happens to your estate using the Succession Act of 1965.
Teagasc are hosting a series of free clinics around the country, including the one planned for The Lady Gregory Hotel in Gort on Wednesday, October 2nd.
At each of the 6 clinics, an expert will make a short address, covering all aspects that need to be considered when writing a succession plan.
The clinic will then be open to the farm families present to go and have one-to-one private conversation with the professionals set up in booths around the venue.
Professionals in attendance will include:
- Accountants/Tax Advisers
- Succession Mediators
- Social Welfare Advisers
- Citizens Information
- Teagasc Education Officers/Collaborative Farming/Financial Specialists
Transferring the family farm is so much more than just a simple business transaction; there are a number of complex issues to be addressed including:
- The family home is normally inseparable from the business.
- A number of family members/ siblings/ children to be catered for fairly
- If the transfer is during the owner’s lifetime, the owner will require an income, as well as possibly the recipient depending on the circumstances.
- Creating an arrangement that can provide a solution for the different opinions of the family members involved the discussion
- If there are no successors, what are the options? Perhaps a partnership with a neighbour, changing to a less labour-intensive enterprise, leasing out or selling some land, planting some forestry could form part of the answer.
- Sharing your story with a professional or a mediator, may help you to find the answer.
Family involvement in planning for succession is essential. A key aim must be to have an open conversation with the people involved so that misunderstandings can be avoided.
Some topics you can discuss with the professionals in attendance include:
- Writing a will/forming trusts
- Starting the conversation within the family
- Income security after retirement and pensions
- Fair deal scheme and its pitfalls
- Options to cater for other siblings
- Forming a partnership with your children
There are also a number of Tax issues to be considered. On lifetime transfer of farm assets, Capital Acquisitions Tax (CGT), Capital Gains Tax (CGT) and Stamp Duty are the taxes for which a return must be filed. Reliefs may be claimed from each of these taxes.
With the drop in property values during the economic downturn, the threshold of each relief has also dropped so care must be taken in planning the transfer to reduce any tax bills.
All advice given will be tailored to your specific situation. Take a note of the date and put it in your Diary - It could turn out to be the best time you spend - for a long time to come!
By Tom Murphy, Teagasc Adviser, Galway/Clare