Small farm left to a 5 year old

Starchasers

My 5 year old has been left a small farm in a will from an uncle of mine. I am not a farmer (plumber) so have no qualifications in farming etc. Does anybody have any suggestions on getting into farming (as I would have to as his parent as hes underage). I would be willing to eventually run it on his behalf. At the moment subject to some drainage and fencing works, I would prefer to rent the best and most accessible section of it (about 6 acres), in the time being to reclaim the remaining 20 acres of grass over time, the 25 or 26 acres of mountain would be good for sheep subject to minor fencing. Any ideas on tax implications etc of renting etc? Any help would be appreciated!!

orchard farm

Long term lease 5plus years is tax free although you may be best get some legal advise as your son is under eighteen and you would technically have a caretakers role in the property

Starchasers

orchard farm wrote: »

Long term lease 5plus years is tax free although you may be best get some legal advise as your son is under eighteen and you would technically have a caretakers role in the property

That great thanks, just waiting for an appointment next week with the solicitor to check out a few options so I’m just sounding out peoples opinions so thanks for that! It’s a tough one because my son being so young, he won’t have a farming course started or done for another 15 or 16 years minimum, the intervening period being the headwrecker!!

_Brian

Know of one lad who leased similar to a local active progressive farmer.

There was an agreement that if the 5 years lease a certain amount was rent free in return for fencing and drainage works to be carried out as agreed.

Thought it was a good agreement with benefits for both parties.

737max

3 x 5 years lease(or 15 years with break periods as most farmers won't want to commit to 15 years in total) tax free then followed by the young lad spending 1 year non-resident in a country which charges no CGT so that he can sell it tax free.

Don't have a farm as an anchor around his future prospects. He might want to farm it but if it feels like an anchor then an anchor it is.

jimini0

Find yourself a good farm advisor too. He/she will be able to help a lot better than us here.
If therer is farm entitlements and payments from your late uncles estate the advisor will be able to help a whole lot better knowing the exact details of the land.
If you tell us your location I'm sure somebody will give you details of a good trusted advisor.

LionelNashe

Starchasers wrote: »

My 5 year old has been left a small farm in a will from an uncle of mine. I am not a farmer (plumber) so have no qualifications in farming etc. Does anybody have any suggestions on getting into farming (as I would have to as his parent as hes underage). I would be willing to eventually run it on his behalf. At the moment subject to some drainage and fencing works, I would prefer to rent the best and most accessible section of it (about 6 acres), in the time being to reclaim the remaining 20 acres of grass over time, the 25 or 26 acres of mountain would be good for sheep subject to minor fencing. Any ideas on tax implications etc of renting etc? Any help would be appreciated!!

How about forestry? I think there are lots of grants and tax breaks, and I'd imagine it's less complicated than livestock.

patsy_mccabe

Keep every receipt and record all the hours you spend working it. Easy backtrack for accounts etc when you have all the info.

Floki

LionelNashe wrote: »

How about forestry? I think there are lots of grants and tax breaks, and I'd imagine it's less complicated than livestock.

It's only for 15 years though and then what?
Farmland for setting is quickly catching up and passing out in some cases the price paid for forestry ( depends on quality of land). Forestry 15 years of a premium, farmland can be leased forever and it's also tax free atm when it's 5 years and over of a lease.

beechwood55

Will there be CAT due on it?

Dakota Dan

beechwood55 wrote: »

Will there be CAT due on it?

How will a 5 year old pay it unless he sells the farm.

Muckit

Dakota Dan wrote: »

How will a 5 year old pay it unless he sells the farm.

An post state savings account fed from his childrens allowance

_Brian

Dakota Dan wrote: »

How will a 5 year old pay it unless he sells the farm.

Communion will be soon enough

Starchasers

_Brian wrote: »

Know of one lad who leased similar to a local active progressive farmer.

There was an agreement that if the 5 years lease a certain amount was rent free in return for fencing and drainage works to be carried out as agreed.

Thought it was a good agreement with benefits for both parties.

That’s a really good idea I think, if tied down initially it would be really mutual beneficial. I suppose as all the animals have been sold by another beneficiary, the emphasis is on leasing it having done a certain amount of work to get it back in order rather than primarily renting it to get an income. There’s an old farmhouse too to do up in time so that’s more my type of project!

Starchasers

737max wrote: »

3 x 5 years lease(or 15 years with break periods as most farmers won't want to commit to 15 years in total) tax free then followed by the young lad spending 1 year non-resident in a country which charges no CGT so that he can sell it tax free.

Don't have a farm as an anchor around his future prospects. He might want to farm it but if it feels like an anchor then an anchor it is.

3x5yr leases sound the way to go as is, it leaves the option to maybe step in myself in time subject to me being knowing what I’m doing by then.
The farm is in the family for about 120 years so when he’s of age to take it over I just want it to have it as good a shape as it can be so he might say that he’ll keep the farmhouse and sell the land etc or if he’s interested in farming part time then the option is there.

beechwood55

What is the farm valued at?

cruizer101

For an uncle the threshold before tax is due is only 32,500 so there is going to be tax due on it. Exactly how it works given the recipient is only 5 I'm not sure but it is something to consider.

Bass Reeves

Even though your son is a minor it may well be the case that because the farm is in his name that he is entitled to a tax credit. This would mean that the first 8K of rental income was subject to minimum prsi so even if rent was not tax free it could be declared in this way.

Starchasers

beechwood55 wrote: »

What is the farm valued at?

I haven’t got it valued yet, I’ll be popping into the auctioneer tomorrow. There’s maybe 25 acres of mountain and 25 acres of green fields of mixed condition. The fields were once in great condition but due to neglect and blocked drains etc,they can only look better, cattle were left out 12months of the year so the surface of the land got well damaged. A stream is bounding the land lengthwise and the land is sloping towards it so it favours easy draining once sorted

Starchasers

Bass Reeves wrote: »

Even though your son is a minor it may well be the case that because the farm is in his name that he is entitled to a tax credit. This would mean that the first 8K of rental income was subject to minimum prsi so even if rent was not tax free it could be declared in this way.

I’ve to get an accountant, a solicitor and a good auctioneer whose a friend to knock heads together to see about issues like this, next week should tell a lot!

Bass Reeves

cruizer101 wrote: »

For an uncle the threshold before tax is due is only 32,500 so there is going to be tax due on it. Exactly how it works given the recipient is only 5 I'm not sure but it is something to consider.

If the uncle had no children he may be entitled to be treated as a favoured nephew/neice in a farming context so same allowances as a son would apply. However the farm may need to be farmed because of that. A good advisor in the way of an agri accountant or solicitor would be advisable.

Starchasers

Bass Reeves wrote: »

If the uncle had no children he may be entitled to be treated as a favoured nephew/neice in a farming context so same allowances as a son would apply. However the farm may need to be farmed because of that. A good advisor in the way of an agri accountant or solicitor would be advisable.

It my uncle left the farm to his grand nephew (my son) so the favored nephew clause won’t hold weight here unfortunately. The solicitor etc is next week so hopefully it will clear things up

martinr5232

cruizer101 wrote:

For an uncle the threshold before tax is due is only 32,500 so there is going to be tax due on it. Exactly how it works given the recipient is only 5 I'm not sure but it is something to consider.

Only if the uncle is a blood relative its 32500 if hes not its only about 16000.

blue5000

I suppose your uncle was expecting to be a lot older when he died. It's an unusual case. I'm just wondering does your 5 year old son have to make a will, or is the farm techically going to be yours until he's 18? God forbid anything happening to your son, but you need to look into it when your meeting advisors next week.
Was there any livestock on the land when he died? You might have to look into getting a herd/flock number in your name too.

Starchasers

blue5000 wrote: »

I suppose your uncle was expecting to be a lot older when he died. It's an unusual case. I'm just wondering does your 5 year old son have to make a will, or is the farm techically going to be yours until he's 18? God forbid anything happening to your son, but you need to look into it when your meeting advisors next week.
Was there any livestock on the land when he died? You might have to look into getting a herd/flock number in your name too.

My uncle was 87 when he died. I suppose what influenced him strongly was to keep the family name on the farm so he chose to leave it to his grand nephew rather than me as a non farmer. My son was always going to be young (he made the will when my son was a year old & that was 4 years ago) when he inherited the farm. I suppose technically my son would need to have a will written out but how can a child understand what there signing etc!!! There was cattle on the land and they were sold as per instructions and the money went/ is going to a another beneficiary of the will so a herd number would have been in existence. Leasing once drainage and fencing etc is complete seems the easier option. As somebody suggested to have a 5 year lease paid in part money and part fencing/ drainage works etc. it’d be my thought to get the place in order slowly but surely and not try to make money out of it etc

orchard farm

The inhertance tax will be based on land value so i wouldnt be doin any improvements till thats sorted and paid,the lower the valuation the better in this case

Mooooo

orchard farm wrote: »

The inhertance tax will be based on land value so i wouldnt be doin any improvements till thats sorted and paid,the lower the valuation the better in this case

Well if he decided to sell in the future the difference between the value at acquisition and sale will be subject to CAT so best to discuss with an (edit) accountant

Panch18

Starchasers wrote: »

it’d be my thought to get the place in order slowly but surely and not try to make money out of it etc

Personally I would disagree with you on the above point

I think you have an opportunity to make your son a very wealthy person without really doing anything

Lease it out for 15 years tax free, say 5,000 a year. You could actually buy a house in trust for your son on the strength of the lease and rent out the house as well. Rent from the house and land would easily pay the mortgage on the house

Your son could have 25 acres of land, 25 acres of mountain, did you say a farmhouse? And another house all owned and probably all paid for before his 21st birthday, what a start in life

I would strongly urge you to ignore any idea or mad notion you have about trying to farm a bit of land and to think about maximising the returns you can get for the land, try to invest that income wisely, and set your son up for the rest of his life. It’s an amazing opportunity

on the river

What a wonderful gift
Your sons life will change for the better
However you must be careful how you manage this farm
When your son comes of age he can demand a detailed summary of all the happenings in this farm. I can also recall a old narrative told my neighbour many years ago,where a child was left a portion of land
He not only farmed the land to his very best but only made a fortune gaining more land in the process
A wonderful achievement for a young person

Starchasers

on the river wrote: »

What a wonderful gift
Your sons life will change for the better
However you must be careful how you manage this farm
When your son comes of age he can demand a detailed summary of all the happenings in this farm. I can also recall a old narrative told my neighbour many years ago,where a child was left a portion of land
He not only farmed the land to his very best but only made a fortune gaining more land in the process
A wonderful achievement for a young person

Exactly,I want to do the best thing on my sons behalf as it was such a great gift to bestowed by my uncle on his grand nephew. Especially when it has been on the family for so long (maybe about 120 years), I don’t want it to end on my watch as such!
5 year leases seem the way to be with the rent payable in part split of money& an agreed amount of fencing and drainage for the first 5 years at least with the option for extensions subject to maybe money only rent terms as hopefully the rest of the land can be rehabilitated within 5 years bit by bit.

MIKEKC

Bass Reeves wrote: »

If the uncle had no children he may be entitled to be treated as a favoured nephew/neice in a farming context so same allowances as a son would apply. However the farm may need to be farmed because of that. A good advisor in the way of an agri accountant or solicitor would be advisable.

To be treated as a favoured nephew he would have to have worked on the farm part time

Starchasers

MIKEKC wrote: »

To be treated as a favoured nephew he would have to have worked on the farm part time

That doesn’t apply here as it’s my deceased uncle that left the farm to my 5 year old (his grand nephew). Thanks for your reply

Bili

Is there any way that you can get your accountant, solicitor and ag advisor to meet with you all together for an hour so you can sound out ideas - that way you can be sure no decision can make things difficult for you in the future (I found this out the hard way).

I've had discussions with various experts about my will in case I die before my son reaches 18 - one thing they mentioned is to make sure that anyone I would be leasing or renting to would have to be a 'qualified' farmer. Is there anyone you could lease to who would be kind enough to let your son help out during holidays, the bits of knowledge he'd pick up would be worth more that money in the long term and would give him a love for the land.

Forestry seems like easy money but once the trees are planted they are there forever.

Second Yellow

737max wrote: »

3 x 5 years lease(or 15 years with break periods as most farmers won't want to commit to 15 years in total) tax free then followed by the young lad spending 1 year non-resident in a country which charges no CGT so that he can sell it tax free.

If I ever get left a farm I know who I'll be coming to for advice.

Starchasers

Bili wrote: »

Is there any way that you can get your accountant, solicitor and ag advisor to meet with you all together for an hour so you can sound out ideas - that way you can be sure no decision can make things difficult for you in the future (I found this out the hard way).

I've had discussions with various experts about my will in case I die before my son reaches 18 - one thing they mentioned is to make sure that anyone I would be leasing or renting to would have to be a 'qualified' farmer. Is there anyone you could lease to who would be kind enough to let your son help out during holidays, the bits of knowledge he'd pick up would be worth more that money in the long term and would give him a love for the land.

Forestry seems like easy money but once the trees are planted they are there forever.

That’s exactly my intention, just waiting to finish meeting each person initially and then to knock heads together. I’ve a couple of people in mind who would take the land subject to some improvement works of course and they would be helpful enough to give me and most importantly my son the initial start. I’ve a great love of the land, it’s the lack of farming knowledge hampers me but it’s something I want to give to my son so he can appreciate all going well that he’s minding the land for another generation. When he’s of age to take it over, I’ll be in my 50’s so if he’s training for a full time job off the farm that I can step in for him. I feel that a little bit of thought and planning now will make it easier in the long run.

anthony500_1

Slightly off topic in relation to the Grand nephew so if mods want to delete or remove no problem.

In relation to the favorite nephew, it's not quite as easy to get as some might have you to believe,
I went through it in 2015, uncle passed away and left me the farm, I would have been helping on the farm from the time I was able to walk as I just loved it as a child and still do, I had green cert completed in 2011 and the solicitor said it was a Hugh help, also she asked for farm insurance policy that stated I was named in the policy as an unpaid worker on the farm, also I was living within 2 miles of the farm, and it was on the strength of these 3 items I was eligible for the favorite nephew clause. Thank God

I also remember her saying that if I lived the opposite end of the country that it would reduce my chances greatly as I would be unable to "help out" around the farm regularly.

To the op, get the best legal and financial advice you can and do the best for your son. He is a lucky boy, and hopefully in years to come he will love his farm and the way of life it brings, if not he will have a great start in life that so many others can only dream about.