The final of a series of Teagasc national seminars on Transferring the Family Farm took place in Kilkenny last week. The large audience was given much food for thought and discussion around the family table as all aspects of succession were discussed. Traditionally family farms in Ireland have been passed on to the next generation on death. In recent times social and economic changes have resulted in more transfers taking place during the owner’s lifetime. It is a very personal decision and you can transfer by succession (lifetime), inheritance (on death) or in a stepped approach using a partnership type of model. Planning the transfer can be a difficult task for any parent whatever the circumstances. However it can be even more difficult if the transfer is unplanned through illness or the death of the owner. It is important for every land owner to make a decision on the future ownership of the farm business so that their wishes can be carried out. By not making a decision you are planning to have your assets divided using the rules of intestacy i.e. you are leaving it to the state to decide. These rules mean that the farm could be divided among a number of your next of kin. This often results in family disputes and the outcome may be the break up of the farm business.
Transferring the family farm is so much more than just a simple business transaction; there are a number of complex issues to be addressed including:
The family home is normally inseparable from the business.
A number of family members/ siblings/ children to be catered for fairly
If the transfer is during the owner’s lifetime, the owner will require an income, as well as possibly the recipient depending on the circumstances.
Creating an arrangement that can provide a solution for the different opinions of the family members involved the discussion
There is a lot of interest in the area of succession and inheritance recently. This has arisen for a number of reasons:
Recent changes in the tax code to stimulate early transfer of the farm business
Agricultural asset values have bottomed out, so now is seen to be a good time to transfer, as tax limits have also lowered significantly in recent years
There are increased numbers of students on agricultural courses in colleges, many of these are looking at farming as a career
With many young farmers planning significant expansion in the next few years, many of the farm partnerships between parents and children need to be regularised so the farm can get access to credit to fund expansion.
P = Preparation: Organise your thoughts and have a discussion early with the family. An open conversation is required with all those involved so misunderstandings can be avoided.
L = Legacy: Plan how the “farm” is going to be passed on. From both a tax and a legal point of view early planning is the key to reducing potential cost issues.
A = Action: Make appointments with the professional experts you require to make informed decisions.
N = Now: This is the time to get this item off the “to do” list, government policy could change significantly over the course of a few budgets. If your decision is delayed, it may be more difficult to achieve your wishes in the future.
The family discussion should take place early and be planned. It should not take place on the eve of a 35th birthday or by the bedside of a dying parent. Where relationships are difficult, using a professional mediator will help solve any difficulties or dilemmas. Meet with your solicitor and prepare a will, if you have not done so already. It should be updated every few years as the tax laws and family circumstances can change significantly. A will should be prepared even though you may decide not to transfer the farm until such a time that a family agreement is reached. Get expert professional advice - Seek help from the experts working in the agricultural sector. You should consult with your solicitor and your tax adviser / accountant. A mediator may be required if you have a complex family decision and you should contact the Department of Social Protection in relation to your pension and entitlements. Good advice will make the task less daunting. All of the relevant experts working in this area give the same advice – PLAN. This must be done early to avoid the pitfalls as many of these will reduce the value of the assets being transferred.
Cattle Grassland Issues
Grazing management has been very difficult all year and in many cases stock have been housed early which will place pressure on already scarce winter feed supply. This earlier than normal housing of stock may result in heavy covers of grass being left on fields as we head into the winter. In order to have an adequate supply of spring grass 60% of the grazing area should be closed by now. So what should we do if there are heavy covers left on fields?
If at all possible we need to try and get these heavy covers (>10cm) grazed off. If we don’t what is likely to happen is that after heavy frost the grass will begin to die back. Firstly from the top and then from the base so by the time we get to next spring we could be looking at bare patches in paddocks. This will impact on our ability to grow grass early next spring.
What are the options? In order to minimise any damage caused by stock on wet ground target grazing out with lighter stock such as weanlings. You may have to back fence in some cases to minimise damage to the sward. With wet conditions we may have to accept the fact that we will not get the chance to graze out paddocks as cleanly as we might like.
Autumn born weanlings also offer the possibility of grazing off some of these covers as they are let out in the morning to graze and back to the shed to suckle the cows in the evening. Their demand initially however will be quite low. Taking in sheep will also help take down grass covers but you will need reasonably good fencing. Ewes or store lambs are the two main options with store lambs being the easier of the two to contain. This exercise will help your grass problem and it will also help cash flow. Remember to have all your cross compliance issues in order when taking in extra stock. Paddocks that have been damaged are best left recover until next spring where early nitrogen and if necessary some grass seeds will improve the situation. Don’t roll now even if things dry up because you will just damage the tillers that are there. Do not be tempted under any circumstances to go back on grazing ground which has been closed off since early to mid October.