Farm succession planning

Farm succession planning involves planning how you will transfer your farm to another person when you retire or step back from farming.

The plan covers how you will transfer ownership of the farm, but can also include transferring skills, knowledge, and labour.

This can be a complex process, so you need to plan it carefully to avoid family disputes and ensure you make the most of any available supports or tax incentives.

You should also give yourself plenty of time to make the plan, as issues such as paying into a pension for your retirement need to begin well before transferring your farm.

Get advice

You should talk to your farm advisor first. They have a good understanding of how your farm business works and have experience of other farm transfers so will be able to help with the process. They will also let you know how the transfer will affect any schemes and at what stage you will need a solicitor and accountant.

Talk to your family

You should also make sure you include the whole family in the process. It can be helpful to have an open discussion about who wants what before you make a plan. More than one child may want to inherit the farm while in certain situations, none of your children may want it.

If you are transferring the farm to one child, you may want to make other arrangements for your other children to make sure they all benefit. For example, giving a child who is not getting the farm a site or financial help.

Plan for your retirement

You will need to consider how you will manage financially when you transfer the farm. For example

• Will you be old enough to get the old-age pension or a private pension?
• Will you still get an income from the farm?

You may also need to consider housing arrangements if you are currently living on the farm.

You have a number of options when it comes to passing on your farm. These include:

• Transferring the farm to a child or family member
• Starting a Succession Farm Partnership
• Leasing the farm
• Selling the farm, either partially or entirely

Transferring to a family member

Farmers often prefer to keep the farm in the family. This may involve transferring the farm to a son, daughter, nephew or niece. A useful step in this process is to start a registered farm partnership.

This involves sharing the farm business with your successor. This gives your successor experience managing the farm and can help share the workload as you step back.

Transferring to someone else using a Succession Farm Partnership

If there is no one in your family who is interested in taking over your farm, you may choose to enter a Succession Farm Partnership with someone else.

You must be part of a registered farm partnership before you can set up a Succession Farm Partnership. This process involves transferring ownership of the farm to another person over a certain period.

There are a number of tax incentives if you transfer your farm to a younger person. These incentives apply whether the successor is part of your family or not. Read more about this in Farm transfers and taxes.

Leasing the land

You can also lease the land to a non-family member. You may be able to claim income tax relief on income you earn from leasing your farmland. To qualify for this, you must lease the land for at least 5 years. You can’t lease the land to a close relative.

Revenue.ie has more information on leasing farm land.

Selling the farm

Finally, you may choose to sell the farm. This is often a last resort for farmers. If you sell the farm, you must pay Capital Gains Tax. Read more on this in Farm transfers and taxes.

There are things you can do to make the process of transferring your farm go more smoothly. It can be helpful to define your farm business for your successor, so they know exactly what they are taking on.

It is also important to discuss your plans for transferring your farm with your family so that any issues can be resolved in advance.

Define your farm business

Before transferring your farm, it is important to define your farm business. You will have expert knowledge of your own farm, so it is essential to write this down for your successor.

You should include:

• The number of hectares you own
• The number of hectares you rent
• Your herd number
• Your farm bank account number
• The farm schemes you are getting
• Information about the people you deal with, such as customers, contacts in the bank, farm merchants, accountants or advisors

It may also be helpful to bring your successor along to meetings with these people during the succession process to help them to get a greater understanding of the business.

Discussing your plans with family and resolving disputes

It is important to discuss your future plans for the farm with your family to avoid any disputes. For example, more than one of your children might want to take over the farm, or they might not want you to sell it even if they don’t want to work it themselves.

If there are issues you can’t resolve between yourselves, you can consider using mediation. This is a way of resolving disputes between 2 people (or groups of people) by using a mediator, who is an impartial third-party. This means you can resolve your issue without going to court.

The Irish Farmers Association (IFA) has a useful document on farming and mediation (pdf).

For more on this process, see our page on Mediation and settlement of claims.

There are different steps involved in inheriting a farm.

You can transfer your farm while you are alive, or you can arrange to have it transferred after you die. To do this, you will need to make a will.

Making a will

As part of the process of farm succession, you should make a will. This will set out how you want your assets to be shared when you die.

It is important to make a will and update it if there are changes in your or your family circumstances.

If you don’t make a will, your assets will be shared out following the standard rules. These rules state:

• Your spouse gets two thirds of your assets
• Your children get a third

This may not suit you if for example, you are planning to transfer your farm to a child.

Visit our page on ‘Making a will’ to find out more about how to make a will, and what happens if you don’t make one.

Enduring power of attorney

You can set up an enduring power of attorney (EPA) to allow another person, to look after your financial or personal affairs, if in the future you can’t do so yourself.

Having an enduring power of attorney is a good way of planning for a time when you may not be able to make certain decisions for yourself, including making decisions on farm succession.

This is just one of the legal arrangements you can make if you become incapacitated or unable to deal with your affairs.

See our page on Enduring power of attorney for more information.

It is important to get good tax advice when you are transferring your farm. You should talk to a farm advisor, accountant and solicitor to help you plan your farm transfer.

The main taxes involved in farm transfers are below:

Taxes paid by the person transferring the farm

• Capital Gains Tax – tax you pay when you sell or dispose of an asset.

Taxes paid by the person getting the farm

• Capital Acquisitions Tax – tax you pay if you receive a gift or inheritance.
• Stamp Duty – tax you pay when you transfer property.

Farm transfers and tax reliefs

There are a number of different tax reliefs available to people inheriting and passing down farms. These reliefs can eliminate or reduce the tax you need to pay.

Agricultural Relief

If you inherit a farm, there are certain taxes you will have to pay. However, you may qualify for Agricultural Relief. This reduces the taxable value of agricultural property and land by 90%.

You must meet certain conditions to qualify for this relief, including passing the ‘Active Farmer Test’. This means you must have been farming for a certain amount of time.

Revenue.ie has more information on how to qualify for this relief.

Consanguinity Relief

Consanguinity Relief is available when transferring farmland between certain family members. This reduces stamp duty to 1% on family farm transfers that qualify.

To qualify, you must be related to the person transferring the land and do one of the following:

• Farm the land yourself for at least 6 years
• Lease the land to someone else for a minimum of 6 years, so they can farm it

The person farming the land must also do one of the following:

• Have a relevant agricultural qualification, or get one within 4 years of the date they got the land
• Spend at least 50% of their time farming land (including this land transfer)

You can find more information on this relief on revenue.ie.

Farm Consolidation Relief

This relief is for farmers who buy and sell agricultural land in order to join their holdings and improve the viability of their farms. It provides for a stamp duty rate of 1% on these transactions.

Revenue.ie has more information about the Farm Consolidation Relief (pdf).

Retirement Relief

If you are 55 or older, you may be able to claim Retirement Relief if you are passing on your farm or business. This is a relief from Capital Gains Tax. There are different rules if you are transferring the farm to someone in your family or outside your family.

See revenue.ie for more information on Retirement Relief.

Young Trained Farmer Relief

The Young Trained Farmer Relief gives you full relief from stamp duty if you meet certain criteria.

You must:

• Be under 35
• Have a relevant agricultural qualification
• Have submitted a business plan to Teagasc
• Be registered for income tax
• Be the head of the farm holding

You must also intend to:

• Spend at least 50% of your normal working time farming the transferred land for at least 5 years from the date of transfer
• Keep ownership of the land for at least 5 years from the date of transfer

There is a limit on the amount of relief that can be claimed.

You can read more information about the Young Trained Farmer Relief on revenue.ie (pdf).

Succession Farm Partnership

Succession Farm Partnerships are an income tax incentive which encourage farmers to transfer their farm business to their successors by giving them a tax credit.

The incentive is worth an annual tax credit of €5,000 for up to 5 years. The credit is split each year based on the profit-sharing ratio of the partnership between the farmer and their successors.

To qualify, you must meet certain criteria:

• Your farm partnership must be registered with the Department of Agriculture, Food and the Marine’s Register of Partnerships and have a Farm Partnership Registration Number (FPRN)
• Your farm partnership must have at least 2 people in it and one of them must be younger than 40
• At least one person must have farmed a minimum of 3 hectares for the past 2 years. This person is known as the “farmer”.
• At least one other partner must be under 40, have an appropriate qualification in agriculture and hold an entitlement to at least 20% of the profits of the partnership. This person is known as the “successor”.
• You must apply in writing

To apply, you must complete and submit a Registration of Succession Farm Partnership application form (pdf).

You should talk to your farm advisor and get professional legal and financial advice before entering into a Succession Farm Partnership agreement.

Gov.ie has more information on the scheme.

Farm succession is a complex issue. You should get advice from different people before making any decisions. You should consult your:

• Farm advisor
• Accountant
• Solicitor

Getting advice on farm succession can be expensive. The Succession Planning Advice Grant can help with these costs.

Succession Planning Advice Grant

The Succession Planning Advice Grant is a grant to help with the costs of succession planning. It helps with legal, accounting and advisory costs.

The Succession Planning Advice Grant can cover up to 50% of these costs, To qualify, you must be:

• Aged 60 or older
• Farming at least 3 hectares
• Farming for at least 2 years

To apply for the grant, you must submit a completed application form (pdf).

For more information on the Succession Planning Advice Grant, see the scheme terms and conditions (pdf).

If you inherit a farm, you may have to pay Capital Acquisitions Tax and Stamp Duty. There may be different tax reliefs available to you to reduce these taxes. See Farm transfer and taxes below.

You may also have to:

• Change the registration details of the herd
• Manage any outstanding payments from schemes and transfer scheme entitlements

Changing the registration details of your herd number

You Regional Veterinary Office (RVO) normally looks after issues with your herd number. When they are told that a farmer has died, they will:

• Record the death on the Department of Agriculture, Food and the Marine’s systems
• Begin transferring herd registration details to the new owner
• Arrange the registration of a ‘herd keeper’ to look after livestock in the herd, if this is necessary. A herd keeper is responsible for looking after a herd but may not be the owner of the herd.

Gov.ie has a list of contact details for Regional Veterinary Offices (pdf).

Managing any outstanding payments from schemes and transferring entitlements

The Inheritance Enquiry Unit (IEU) will help you to manage any outstanding payments from farming schemes and to transfer any payment entitlements to you.

The Inheritance Enquiry Unit works with different sections of the Department of Agriculture, Food and the Marine to make sure the correct payments are made.

You can contact them by:

• Phone: 057 8689 995
• Email: Inheritance@agriculture.gov.ie

Your farm advisor can provide advice for your situation. You can find a list of farm advisors on gov.ie.

Revenue.ie has more information on tax reliefs for farming.

Teagasc has a useful guide to transferring the family farm (pdf).