Farm Transfer - Examine all the options

Andy Ryder, Drystock Advisor, Teagasc Westport

For some farmers the process of transferring the family farm is a relatively easy decision to take, for others it is a decision taken out of their hands if they pass away before making a Will. In this case, other people decide how the farm is transferred.
Teagasc ran a successful series of ‘Transferring the Family Farm’ clinics in October and there was good engagement from farmers. It is evident that this is an important issue on many farms.

There are many things that we are certain will happen on every farm. Firstly, the farmer is not going to live forever and secondly, they cannot bring the farm with them. Even with this knowledge farmers are slow to put a plan in place for transferring the farm.

Make a Will

The easiest way to start the process is to engage a solicitor and draw up a Will. Farmers should put all their wishes down on paper. This can be changed in the future if needed.

Income/tax

Many farmers still depend on an income from the farm and the successor is often working full-time off farm in well paid jobs. In this case, transferring the farm does not make financial sense and is often the reason why the situation does not change. There are options for both parties to farm by applying for joint herd numbers or setting up a partnership.

No Successor

Many farmers state that they have no successor. There is, indeed, a successor for every farm. But not every successor will farm the land. For farm transfers to be successful, the successor should be informed of their future inheritance, so they can prepare to inherit or receive the gift in as tax efficient a way as possible. This applies to transfers to niece/nephews and transfers involving larger holdings.

Two better than one

Some of the most successful farms have embraced the next generation and over time have handed control and responsibility over in such a way that enables the farm to develop and grow. Younger farmers bring ambition, energy and drive while the existing farmer has experience, skills and knowledge. Benefits include extra labour, lower stress and flexibility with holidays. This may not be feasible in every situation. However, it is still vital to get the next generation involved as soon as possible.

Farm Schemes

With the move to area-based schemes, some farmers continue to farm at lower stocking rates. Others are in 5-year schemes and may be afraid to change the situation until the scheme is over, thereby delaying the process. Adding a person to a herd number or transferring the herd number is never an issue as long as it is done at the correct time of year.

Farm system

Some farmers are happy to continue farming as they always did while the other party may want change. To make things work, there needs to be a compromise, allowing the successor the space to develop.

Cost of transfer

The cost of the transfer process is often an excuse used to delay it. However, delaying it may make the process much more expensive in the long run, for example, missing out on reliefs, young farmers scheme, TAMS grants etc.

Policy changes

Be aware of any changes to inheritance (gift tax) thresholds. There are currently good reliefs available when completing transfers. Inform yourself and seek advice on how to maximise these reliefs. Each successor needs to evaluate if he/she needs to complete a recognised Agricultural course to avail of tax reliefs and to maximise the benefits from all available Dept. schemes.  Initiate the process by seeking professional advice. Ask the questions and tease out the problems. The process may take a number of years, so start in good time, but, there is plenty of help and advice available.