Succession planning is a vital consideration for all farmers, ensuring a smooth transition of the farm to the next generation. Austin Callaghan tells us more.

Succession is an important consideration on all farms and is coming more to the fore as the farming population ages and the time comes to step back, retire and handover. It must be acknowledged that on some farms this can be a smooth process as there is a successor in place. However, on other farms while the farmer and the family realise the current structure will need to change little has been done about this. These farms may have a successor in place but the successor for various reasons is unwilling or not able to take the farm on at present. The successor likely has off farm work and this combined with other life commitments mean there is little time available to work on the farm. This is common in all developed economies where off farm well paid jobs are readily available and particularly now since 2020 where the cost of living and housing has spiralled there is a greater necessity to earn good off farm income.

While the successor may have difficulties taking on the farm, the farmer in place may also be unwilling to step back or retire from farming. In such scenarios there are options for this farmer, maybe forming a joint herd number operation (a form of partnership) mainly with a family member or a registered farm partnership. In both scenarios, both herd owners can farm in this way until the original farmer decides to fully step back or retire. This has advantages in that the successor becomes involved in the farm and therefore is more likely to farm longer term. This situation can help spread the workload and allow for a better managed farm reducing the burden on the older farmer and allowing the younger farmer to avail of off farm employment.

There are scenarios where there are no successors in place. In this situation the farmer can be distressed by this but there are options available. These options should be discussed with family, friends and your agricultural adviser, solicitor and accountant to lessen the burden on you.

When it comes to transferring land to the next generation by gift or inheritance there is misinformation particularly in relation to the taxes that are to be paid. In most cases these taxes are relatively small, particularly, where transferring to a son or daughter and tax reliefs are availed of. There can be taxation issues where proper planning has not been done in relation to this transfer. Seeking out good tax advice early in the process is vital. There is agricultural relief available on transfers even where transferring to a non-relative but again these can only be maximised where proper planning is carried out in good time.

In the short term you should seek advice in relation to your farm and what needs to be done from here. Proper planning needs to be carried out well in advance of any transfer. This can start by discussing within the family the likely outcomes. Also discuss this with your agricultural adviser / consultant and they can guide you in relation to what is available and where to go. This discussion will need to involve your accountant as good taxation advice is vital.

There are options available to all farmers and the best outcomes are where proper planning has been conducted early in the process and good advice has been sought.

Teagasc have delivered a number of on farm and online events recently as part of Generational Renewal Week.
Online webinars on generational renewal are available to view here

Find out about the upcoming Transferring the Family Farm Clinics