Partnership approach the way forward in succession stakes

THE length of time that people tend to hold on to land is quite constant, at 25-30 years, irrespective of the age that they inherit. Someone who inherits young tends to pass it on at a young age, and a person who is older when they inherit tends to be older when they pass it on.

There are exceptions. Sometimes, someone who gets land in their 60s may say, “I am not going to do that to my son.” But there are also situations where someone in their 80s wants to run it from the grave.

This pattern of behaviour was highlighted by Fintan Phelan, Teagasc Head of Farm Management last week at the latest series of Teagasc farm succession event.

While succession was once a taboo subject among Irish farmers, Mr Phelan believes this is changing.

“The (150 plus) people who are here today are already on the road,” he said at the Portlaoise event. Of greater concern are “those that are harder to reach (and) to try and get them engaged.”

To those with succession plans in place, he says that these need to be regularly reviewed, at least ever five years, both in terms of the will and from a tax point of view. “A farmer’s personal circumstances may have changed or not, but other relevant areas are continually changing, for example, in the Budget,” said Mr Phelan, citing the stamp duty changes made this time last year.

One of the main reasons farmers put off succession is that they don’t know how to go about it. “It is a complex area and no two cases are the same, so you need to get advice on the various issues involved,” he said. “Good advice, received in time, is worth its weight in gold.”

The first step in the succession process is to make a will and identifying a successor. “You would be surprised at the people that have no successor. It’s often on good, big, farms … where the children are grown up, gone off and have good jobs.”

To progress the process, Teagasc strongly advocates the setting up a partnership. “This brings together the enthusiasm of youth and the experience of the older farmer, allowing a gradual and orderly transfer,” said Mr Phelan. For the first five years of a partnership, there is a tax credit of €5,000 which is spilt between the farmer and the successor. One of the big benefits of an orderly succession is that, if managed properly, there will be usually be no stamp duty or capital gains tax to be paid.