Succession planning & farm transfers are challenging events that require a great deal of planning. With informed professional advice it is possible to navigate this complex area and achieve an excellent outcome for all concerned.

Some of the issues to be considered are:

• Initial discussions to bring relevant parties to the table
  • Successful farms across multiple generations are indicative of good planning. Often times a plan may be an unwritten set of ideas that have not been communicated to the other relevant parties who are usually the other family members. Given the scale, complexity and volatility that modern farm businesses encounter, it is important to have discussions with each family member so that ideas and expectations can be canvassed.
• Identify options
  • It can be helpful to look at every possibility when considering the options. Continuing to farm without any changes is at one end of the spectrum and perhaps sale of the entire farm might be at the other end, with the best option for everyone being somewhere in between.
• Establish relevant parties priorities and ambitions
  • Clarity around goals and expectations is needed for both the retiree and successor. Often in family farm situations, full retirement for the parents and full-time farming for the successor may not be the immediate target.
• Identify successor
  • A suitably qualified and willing successor is a prerequisite if the farming enterprise if to continue across generations, and this is usually a daughter/son or niece/nephew.
• Options if no successor
  • Collaborative farming options such as partnerships, share farming or leasing can be considered when a successor cannot be identified. Sale of the farm is of course an option and it may be important to acknowledge this, even if it is the furthest thing from the retiree’s mind.
• Funding of transition
  • Finances are always very relevant and it is important to assess farm viability. If the farm is not viable in it’s own right it may be necessary to consider options such as off-farm income and expansion to achieve viability.
• Income in retirement
  • It is important to establish if there will be adequate income in retirement. Most farmers do not have well-funded private pensions and generally rely heavily of state pension, which can be topped up by rental income, dividends, investment and a contribution from the farming enterprise of the successor. Naturally, another side to this coin is that the successor also requires sufficient income.
• Identify professional advisors required
  • It is best to involve your advisors from an early stage and seek their input as you move through the process. Accountant, solicitor and agricultural advisor are key to achieving a good outcome for all concerned.
• Tax consequences
  • Whether you transfer or lease or collaborative farming, your farm is a high value asset. It is therefore important to plan early to avoid unnecessary tax bills and protect your assets.
• Tax Reliefs available including CGT/CAT/Stamp Duty
  • Tax reliefs are an essential part of the succession plan. The primary reliefs are CGT Retirement Relief, CAT Agricultural Relief, CAT Business Relief, CAT Favourite Nephew Relief, Stamp Duty Young trained Farmer Relief, Stamp Duty Consanguinity Relief and Long-Term Leasing Relief.
• Grants available
  • Succession Planning Advice Grant is available to encourage and support farmers aged 60 years and above to seek succession planning advice by contributing up to 50% of vouched legal, accounting and advisory costs, subject to a maximum payment of €1,500. Applications are made to the Department of Agriculture. Registered Farm Partnerships can apply for a Collaborative Farming Grant that provides 50% funding up to a maximum spend of €3,000 (max grant of €1,500) to help cover the financial outlay for professional fees associated with drawing up the partnership agreement.
• Registered Farm partnerships
  • Registered Farm Partnership (RFP) are a legal arrangement where two or more individuals operate as a single business, sharing profits, decision-making, and responsibilities. This model is often used as the first step in succession planning, bringing the next generation into the farming business at an earlier stage and officially recognising their role in the farming operation. They can be a powerful tool to blend experience with energy—combining an older farmer’s knowledge with a younger partner’s ambition. The advantages include enhanced benefits under Targeted Agricultural Modernisation Scheme (TAMS) with the ceiling for RFP’s capped at €160,000, compared to the €90,000 ceiling for sole traders. Where a partnership includes a young trained farmer, the first €90,000 of this can be claimed at 60% and the remaining €70,000 at 40% (or 60% if there is also an eligible woman in the partnership).  In addition to the increased TAMS funding, partnerships that include a young trained farmer can also avail of the Complementary Income Support for Young Farmers and the National Reserve, where eligible.  These schemes often provide vital capital funding to develop and enhance the farm, ensuring its viability into the future.
• Succession Farm Partnerships
  • As part of the legal agreement, the asset owner (generally parent/aunt/uncle) must commit to transfer a minimum of 80% of the Agricultural assets to the successor between the end of year 3 and the end of year 10 of the succession plan.  The time and details of the transfer are outlined in the succession agreement.  Families that apply for a succession partnership can avail of €5,000 tax relief per year for a maximum of five years, up until the year prior to the young farmer turning 40. Companies are excluded. It is not permitted to transfer the assets for the first three years of the succession partnership agreement, and as a result the age of the successor has implications for stamp duty relief.  Unless the successor is under 32 years of age at the commencement of the succession partnership, they would no longer be eligible for the 0% stamp duty relief for young trained farmers and would instead have to consider the 1% stamp duty associated with consanguinity relief.