James McDonnell, Teagasc financial management specialist, recently appeared on Teagasc’s Beef Edge podcast with presenter, Catherine Egan, to discuss transferring the family farm.
In this article, That’s Farming summarises the main messages that McDonnell conveyed in the podcast:
- Decide what you want to do with your assets – Firstly, start with a will which becomes the backstop as to what happens to your assets if you were to pass away before having a family succession plan in place. Do not put making a will on the backburner;
- If a will is not in place, the intestacy laws come into play as per the 1965 Succession Act. Therefore, if you die and do not have a will made, the state decides how your assets are distributed;
- Because the will is the backstop, you need to gather all family around the kitchen table or the fireplace and discuss your intentions which can be difficult for some more than others. If you have young children that are not adults, have a plan as to who cares for them should you pass untimely;
- Be fair and equal. In very few cases, the only way to do that is to put a for sale sign up and sell everything to divide cash. In some cases, one child might want a site, or the other might prefer to pursue their studies and carve a career off-farm;
- It is not a matter of going into the solicitor and writing down your will or transferring it over. Beware of tax implications;
- Farm payments: Consider supports that you may be able to draw down under the forthcoming new CAP, which Alicia Temple, freelance writer, takes a look at in this news article. Start gathering information now before the next CAP kicks into effect on January 1st, 2023.
- Government supports: Find out about stamp duty relief for young trained farmers, agricultural relief – CAT, stock relief – income tax and succession farm partnership income tax credit.
- Takes time – lots of ‘leg work’ – focus on one part at a time;
- Every case is different – seek expert advice – ag advisor/consultant, education officer, accountant, or solicitor for your individual circumstances;
- Have a family discussion – the conversation is about what direction the farm is taking in the next ten years, not the next five years;
- Then, go to your accountant to figure out the tax implications of your plan;
- Once something has been signed off, you cannot wind this back – seek an accountant’s advice before transfer;
- If there are tax implications, figure out if you can minimise tax (stamp duty exemption) by tweaking plans and then return to your solicitor;
- Plan early to avoid large tax bills – Read more in this news article
- Explore all options: Consider farm partnerships, joint herd numbers or maybe a mediator if required.