Tax bills and divorce fallout the big succession worries for farmers
Beef farmers worry about tax bills for a successor, but dairy farmers are more concerned about the impact of a divorce on their farm, according to a new study by Teagasc and NUIG.
The study found that many beef farmers who highlighted taxation as a concern failed to avail of professional advice on the subject. Instead, they built their opinions on anecdotal evidence which led to “a sensationalised perception of possible consequence”.
Dairy farmers worry about the potential loss of the farm through division of assets in the event of a successor’s marriage breakdown. The study states: “Marriage was seen as a barrier to farm transfer… something that is construed as a risk which may in certain circumstances constitute a reason to defer a farm transfer.”
While some dairy farmers sought to use a prenuptial agreement, these were found to have very little legal standing and to be insufficient to stop the break-up of a farm postdivorce.
Taxation was not seen by the majority of dairy farmers as an issue when it comes to succession as many exhibited a more comprehensive knowledge of structures and reliefs associated with land transfer tax, which led to a more positive approach to farm transfer, the research found. Both beef and dairy farmers have concerns about income post-retirement.
They raised concerns that if they were dependent solely on a contributory Irish state pension once the farm has been transferred, this would not provide enough income; 82pc of all farmers would be dependent on such a pension once their successor had taken over the farm. Dairy farmers are more likely to have a private pension.
Both types of farmers worry about being unable to pay for nursing home stays when they get older. Many raised concerns about the Fair Deal scheme, fearing that they would have to sell the farm. The research found that direct payments were also an impediment to earlier farm transfer, with farmers able to receive them while only farming at a minimum level.
The study on ‘Risky business: Perceptions of economic risk in farm succession and inheritance’ concludes: “In the absence of a means by which to protect the farm, farmers will continue to avoid engaging in farm transfer as a result of the uncertainty present and the perception of risk that it constitutes.”