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Transferring a Farm or Agricultural Holding to a Family Member

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If you are considering transferring ownership of your farm or agricultural holding to a family member, you may be wondering what the best options are for doing so. Here we answer some key questions around succession planning, the methods of transfer, tax implications, and handling potential disputes with other family members.

What is farm succession planning?

Farm succession planning involves preparing for the transfer of farm ownership and management from one generation to the next. It encompasses legal, financial, and personal considerations to ensure a smooth transition, minimise tax liabilities, and maintain family harmony. Key elements include creating a succession plan, selecting a successor, arranging for training, and addressing inheritance issues. The goal is to preserve the farm’s viability and family legacy while accommodating the needs and goals of both the retiring farmer and the successor.

How do I transfer my farm to a family member?

Start by consulting with legal and financial advisors to create a detailed succession plan. Consider the best transfer method, such as gifting, selling, or creating a partnership. You will need to carefully consider the tax implications of your plan. For example, many transferors mistakenly believe that gifting land is exempt from Capital Gains Tax (CGT), but it is considered a “disposal” by Revenue Commissioners. The transfer of your farm or agricultural holding will need to be formalised through legal documentation, ensuring the family member is prepared for their new responsibilities. Communication with all family members is crucial to prevent disputes and ensure a smooth transition. Finally, your solicitor will need to draft the necessary legal documents and register the transfer with the Land Registry or the Registry of Deeds.

Is a Farm Partnership a good option for starting the process?

Yes, you can enter a Farm Partnership with both family and non-family partners. A Farm Partnership is an agreement between two or more farmers to share resources, enhancing economies of scale and work-life balance. The partnership can include various farming enterprises and provides financial supports such as the Collaborative Farming Grant Scheme and preferential stock relief. Lands and assets are licensed to the partnership, not transferred. Applications for registration are accepted year-round and must include necessary documentation. This arrangement allows farmers to participate in support schemes and maintain a cohesive management structure.

What is a Succession Farm Partnership?

A Succession Farm Partnership is an income tax incentive aimed at encouraging farmers to transfer their farm business to an identified successor. The partnership involves registering with the Department of Agriculture, Food and the Marine and meeting additional criteria, such as having at least one partner under 40 years old and creating a plan to transfer 80% of farm assets to the successor within a specified timeframe. The partnership benefits from an annual €5,000 tax credit for up to five years, divided according to the partnership’s profit-sharing ratio​.

What are key considerations I should take before transferring to a family member?

This sometimes involves asking difficult questions. Is there a potential successor for the farm? If so, do they possess the necessary skills, knowledge, and motivation to run the business successfully? If not, what alternatives exist? If you are in the fortunate situation of having a capable successor, willing to take it on, you will need to be very clear in defining your farm business for them along with clarity about what they will inherit. It’s also crucial to discuss your plans with your family in advance to address any potential disputes among other family members.

Prior to the transfer, it is vital to document the specifics of your farm business, as your expertise will be invaluable to your successor. This documentation should include details such as the number of hectares owned and rented, your herd number, your farm bank account number, the farm schemes you participate in, and information about your key contacts, including customers, bank contacts, farm merchants, accountants, and advisors.

Introducing your successor to these contacts and involving them in meetings during the succession process can also help them gain a deeper understanding of the business.

Engaging in discussions about your future plans with your family is essential to prevent disputes. Conflicts may arise if multiple children wish to take over the farm or if they oppose the sale of the farm despite not wanting to run it themselves.

If you are unable to resolve these issues within the family, mediation can be a useful tool. Mediation involves an impartial third party who helps resolve disputes between individuals or groups, offering a solution without the need for court intervention.

Require assistance with the legal aspects of transferring your farm?

The family law team at McCarthy + Co Solicitors LLP has extensive experience in helping our clients to resolve property and family business related disputes. If you are in the process of considering how to transfer ownership of your farm or agricultural holding to a family member, our team can also assist you with all aspects of the legal documentation and process. Arrange a consultation with a solicitor today by completing our highly confidential contact form.

Clíodhna O'Regan

Born and raised in Clonakilty, Clíodhna O’Regan is an Associate Solicitor specialising in conveyancing, with a particular interest in commercial conveyancing. She also specialises in family law. She has been an integral part of McCarthy + Co. for six years since she returned West in January 2017, after gaining experience as a conveyancing and probate solicitor in Cork city.

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