Succession Planning Solicitor Cork and Midleton: Succession is a process, not an event
Succession planning solicitor Ireland. Each year, we see a huge amount of interest and queries in relation to succession and the transfer of the family farm.
Sometimes, there are cases whereby one or both of the involved parties are nearing the age of 35 or 66 years, and the pressure is on to transfer the property or farm in advance of these milestones.
But the most important advice I would give to farmers thinking about succession is to view it as a process, rather than an event.
Succession Planning Ireland
It takes time, research, and clear communication, and should not be rushed into towards the end of the year.
Implementing an effective succession plan involves more than minimising the tax payable. Succession should be considered from every angle.
I get a lot of questions every year from farmers, one of the main ones being: “Is it advisable to transfer my farm while I am alive or leave it until my will is administered?”
There will of course be both pros and cons when it comes to leaving farmland to others in your will when compared to making a transfer when you are alive, so it is important that you make this decision along with your family based on your own unique needs and often financial circumstances will come in to play.
Many parents wish to transfer farmland to their children during their lifetime, to avoid probate proceedings on their death, or because they want the children to have the use of the property during the parents’ lifetime.
Legally Plan for the Future of your Business
The Nursing Home Support Scheme Act of 2009, known more commonly as The Fair Deal Scheme, gives us some food for thought when it pertains to a parent voluntarily transferring farming assets to a child.
Disadvantages that may occur due to the transfer of property within your lifetime
If you transfer the property, it is important to realise that you have lost control of this asset, this transfer can no be reversed. It is possible to put certain clauses or
However, you can put covenants into the Deed of Transfer, for example, a right of residence in the farmhouse, or a right of maintenance, or both.
You lose control of the asset.
You have no say if the property is sold or mortgaged, unless you have a right of residence or maintenance over the property.
You lose a valuable asset. You need to ensure beforehand that you will be financially secure into your old age without the farm, before you transfer.
Advantages for the transfer of property within your lifetime
When you transfer property in your lifetime, there is no requirement for probate upon your death (assuming any other assets in your possession are under the threshold).
The person who is receiving the farm/property can get to work growing the business and implementing their own plans to gain immediate benefits. This can also ensure that interest in the farm doesn’t dwindle over time and that a genuine drive for success of the business is in place.
Should you ever require assistance from the Nursing Home Assistance Scheme, the farm/land will no longer be listed in your name and therefore not included in any means testing. (Keep in mind that this is subject to the 5 year look back rule that is in place.)
Some disadvantages that may occur due to leaving the transfer of your farm, land or property in a will
Negative feelings can arise between family members if the successor of your property expected to receive it while you were still alive. It’s quite possible that they may move on to other interests or career opportunities instead of waiting.
If there comes a time where you require the assistance of the Nursing Home Support Scheme in Ireland, the farmland will have to be declared in your application. This application is means tested so the farm or property will be taken into consideration when determining the support you may receive and/or the contributions you have to make to care yourself.
When your will is being administered, your will will need to be submitted to the Probate Office in order to correctly have the estate administered. This means that the will has to be authenticated by the probate office prior to the executor undertaking their duties. This process needs to be completed prior to any distribution of land, monies or other aspects of your estate.
Some advantages for transferring the farm or property in your will
The property remains yours until you die and you will always have control of the farm/property.
A will can be changed at any time in your lifetime, as many times as you wish and in any way.
The security that comes with having the farm in your possession for the duration of your life.
The above is only a broad outline of some of the advantages and disadvantages that may occur when transferring property while you are alive or leaving it pass in your will.
You will need to take legal advice in relation to your own situation and circumstances.
But if you are thinking of transferring the farm before the end of the year, you should start the process as soon as possible, and explore the matter from every avenue, to ensure matters are not done in haste!
See walshandpartners.ie/blog for more!