FARMING is a business but it is quite unusual as it involves the whole family. As many of us know, farming is a great way of life but it is a hard life. The subject of transferring the family farm is one conversation that every family should have.

Why the succession conversion is so important now, is due to the fact that one in three farmers are over the age of 65. Ireland’s ageing farming population, and a decline in young farmers entering the sector over recent decades, has the potential to pose challenges to the future sustainability and resilience of agriculture going forward.

That’s according to Dr Emma Dillon, a Teagasc Senior Research Officer and Economist with the Teagasc National Farm Survey (NFS) Department.

In terms of transfers of the family farm the worst case scenario is where the transfer is unplanned as a result of illness or the death of the owner, leading to tax and legal complications.

So, putting a plan in place is so critical to the future of the farm and also to the asset owner’s piece of mind. Before any discussion takes place on succession go to your solicitor and make a will to avoid issued after an untimely death.

The will would need then to be updated after a lifetime transfer takes place to reflect the decisions taken. Succession planning a lifetime transfer. Making sure that you have a will made is the first step and after that the following steps will lead to a positive outcome.

1. The importance of communication

Organise your thoughts and have a discussion with your Agricultural advisor re the step to follow to achieve a favourable outcome. After you have a plan in place then sit down with the family and discuss with them your plans for the farm and indeed for your retirement.

Listen to the views of the Family make sure everyone is involved in the process and everyone feels they are involved. After the family discussions then it is up to the asset holder to decide on the Successor. It can be beneficial to bring in a specialist adviser to facilitate this discussion.

2. Deciding on who successor(s) will be

When the decision is made talk with the successor and put a plan in place re educational and living arrangements on the farm and the practical day to day running of the farm.

What is the retiree’s role in the future operation of the farm of the farm? All these issues should be discussed and ironed out with the solicitor present before transfer papers are drawn up.

3. Important to talk with professionals

Professionals are there to help and guide you through the process. The first port of call is to your solicitor to get legal advice re the transfer. After that, talk to your accountant re. the reliefs that are available to you in the process of transferring the land.

Talk to your agricultural advisor on the process of transferring the herd number and BISS entailments and any schemes the farm may be involved in.  When talking to the professionals make sure that all angles are covered and if you are unsure about something don’t be afraid to ask.

Getting good taxation advice is a key ingredient in creating a successful succession plan. It is important to complete a taxation calculation, prior to any handover taking place. If there is a potentially large tax bill, then it might be possible to mitigate against this by adjusting the plan or time-lines of the transfer.

4. Implementation of the succession plan

Implementing the plan will involve a number of tasks, such as completing the legal transfer of assets, getting valuations of assets for making tax returns, changing the ownership of the herd number and making contact with the DAFM so that any schemes the farm is involved in can be taken over by the new farmer.

For some, it may involve setting up a farm partnership. So allow plenty of time to get this work done as there are many deadlines with DAFM schemes. It would be wise to consult with your advisor regularly during the process.

5. Review will and update if necessary

Once the plan is completed, the will needs to be reviewed in case there are any unintended consequences. The new farmer should now also complete a will as they now have significant assets in their name.

Conclusion: the value of planning for future

Farm succession is a very complex area. Farm families should use all the available supports available. Follow the five key steps outlined above. A poorly thought-out plan could be costly from a taxation perspective and result in poor family relationships. Communication is a key part to effective succession planning. It is important to have the discussion early and with all family members. This should help prevent disagreements and ensure that all family members have had the opportunity to discuss their needs, fears and requirements as to how the farm business will continue.

Put a plan in place so that everyone involved in the farm knows their role after the transfer has taken place. There are a number of articles and booklets available on the Teagasc Website. A guide to Transferring the family Farm is available to download at the following Link A-Guide-to-Transferring-the-Family-Farm.pdf (teagasc.ie) Supports re. mediation around succession planning available at www.successionireland.ie

Pictured: Succession: Talk about it!