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Messy farm inheritance issue
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It's coming and there's next to nothing we can really do. So much land in the west will become abandoned but prime land across Ireland will be swallowed up into mega size farms with feed lots. On the bright side farmers will get proper wages, security and benefits that comes with employment but you won't own a farm.
I dont think so, looking at the united states who are socially more advanced along the industrial agricultural plan (I did not say better). Its all big farmers and minimum wage agricultural workers. The UK is the same with the big landlords and taking in minimum wage far eastern Europeans, that come as seasonal workers.
I always maintain you are stronger working for yourself and investing than working for someone else. Under these plans the Irish family farm is doom before the next generation.0 -
skooterblue2 wrote: »Yeah that is how my parents were raised on the farm. in the 1940's to 1960's. I have never seen a man showing eggs at an agricultural show and never met a woman trained as a agricultural mechanic.
You pump kids full of all these ideas but in reality when you start to defy gender roles you get unhappy people. Seen them the whole time in university, 10% of enterents into first year engineering are women, even when they have the choice, they still choose other things. Then by the start of second year its down to about 1 in 80. Same with nursing, men dont take it up and when they do they are quite happy to get out of it and diversity after 10 years.
It happens naturally with children. My niece is all about her hens but the nephew is all about tractors. Dont mess with momma nature.
I said read not reared there is a difference.0 -
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skooterblue2 wrote: »I dont think so, looking at the united states who are socially more advanced along the industrial agricultural plan (I did not say better). Its all big farmers and minimum wage agricultural workers. The UK is the same with the big landlords and taking in minimum wage far eastern Europeans, that come as seasonal workers.
I always maintain you are stronger working for yourself and investing than working for someone else. Under these plans the Irish family farm is doom before the next generation.
Whats a big Uk farm these days, cause the landlords are gone broke and it's the contractors in doing the work these days.0 -
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So just to reply to some questions that were asked in the last few posts.
The farm is in the family as far back as can be known, the father inherited the whole farm as he was an only child and didn’t buy any more land other than what he inherited.
The question of in laws....the parents were clever in that they asked the three kids to keep it to themselves and not involve their partners so whether that has happened or not I don’t know.
Someone asked about the boys just leaving her farm, if the farm was left to her I don’t think there would have been much issue but the parents have already said it’s being split 3 ways and they can decide what they way they want to do that so I can’t see the boys walking away from that offer empty handed.
Someone else asked about how has my perspective changed since all the replies (each of which I very much appreciate regardless of whether I agree with them or not). My view is that if one of the sons was in her shoes and was farming and wanting to farm in the future there would be no question of the farm being split, yes the other two would need some inheritance but I don’t think if it was one of the sons that he would be faced with buying 2/3 of the farm at market value.
I also notice different view points of the value of the land all going to one child but she isn’t going to be selling it so to me the value is the relative profitability of the farm which is small so really the market value is irrelevant much like if you inherited your grand mother’s jewelry that was worth 20k if your going to keep it in the family and not sell it then it wouldn’t be expected that it would be valued at its market value when the inheritance was being split between the children.
I think overall the parents should have said we are going to split the farm three was but on the clause that if one person wants to stay farming and you want to sell your share you have to offer it to another sibling at 25% or market value or something like that .0 -
Waffletraktor wrote: »Whats a big Uk farm these days, cause the landlords are gone broke and it's the contractors in doing the work these days.
Not all landlords are the same. Some have been very progressive and diversified into industry like brewing, soccer, mining, arments and changed from estate farming with tenants to diverse corporations in the last century. Some have been very progressive and others have been absentee.
I see my own uncles, only getting a second tractor in the 1990's and Slatted units in the same time. They never grasped that time is money.0 -
Any person at that age can change their mind about direction at the drop of a hat. It is rare for someone to only have one career without trying out a load of things. Whose to say that If she was left the whole thing she wouldn’t wake up in 5 years say, fcuck it I’m off to Australia and sell up. Splitting it or holding it in a trust is a way of mitigating that risk.
But none of this matters, at the end of the day it’s the parents decision. Set out the stall and agree with what they decide.0 -
joeguevara wrote: »Any person at that age can change their mind about direction at the drop of a hat. It is rare for someone to only have one career without trying out a load of things. Whose to say that If she was left the whole thing she wouldn’t wake up in 5 years say, fcuck it I’m off to Australia and sell up. Splitting it or holding it in a trust is a way of mitigating that risk.
But none of this matters, at the end of the day it’s the parents decision. Set out the stall and agree with what they decide.
Farming isnt a job its a vocation. There is a love for the land that the boys dont have. She wants to go home to raise a family (its a female thing, I dont get it). If the parent hold onto the farm too long the kids lose the hunger based on them never getting it.
This farm will be gone in the next generation but it will be gone sooner if it is split. 26 acre farms wouldnt support a few cows doing weight watchers. 26 acres isnt a farm but a liability.0 -
skooterblue2 wrote: »Farming isnt a job its a vocation. There is a love for the land that the boys dont have. She wants to go home to raise a family (its a female thing, I dont get it). If the parent hold onto the farm too long the kids lose the hunger based on them never getting it.
This farm will be gone in the next generation but it will be gone sooner if it is split. 26 acre farms wouldnt support a few cows doing weight watchers. 26 acres isnt a farm but a liability.
I’m not a farmer but I know business. Of course farming is a vocation but that doesn’t guarantee that someone will stay. Yes the daughter has demonstrated her appetite for it but there is a huge difference in essentially acting as a manager and being an owner. Its much easier and exciting making decisions but not as much when all bills, all hassles, all issues lie with you. It’s one of the reasons why so many bar managers fail at being bar owners.
Simply giving a huge asset to a young person with no ownership experience is fraught with risk. If she owns it she can sell it. Splitting it with understanding that no sale or put in a trust or a bond that states if she sells it within x years then money is split evenly.0 -
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joeguevara wrote: »
Simply giving a huge asset to a young person with no ownership experience is fraught with risk..
Sure pretty much every farm is passed on to a person with no prior ownership experience.0 -
It's coming and there's next to nothing we can really do. So much land in the west will become abandoned but prime land across Ireland will be swallowed up into mega size farms with feed lots. On the bright side farmers will get proper wages, security and benefits that comes with employment but you won't own a farm.
The green agenda wont allow the above scenario to happen, commercially its not a viable model for irish farms, as access to cheap local commodites like maize etc dosent exist and the cost of environmental compliance even present day would make it a non runner, the only reason a large farming industry exists in this country is a large % of lads are happy to work for free, and even subsidize their farming enterprises with off farm income....
What you will see is farms been rewilded in poorer areas as part of the green agenda0 -
Tbh if she is looking to take on the running of the farm it should be a succession discussion not an inheritance discussion. The farm should be transferred, assuming the parents wish to or are in a position to step back and retire from the farm, to the person wishing to take on the business. Financial plans in terms of income for the person who takes over and those who are retiring should be drawn up.
Could be wrong but I'm assuming the parents or one of them were farming fulltime? Times have changed and the farm may well not support a fulltime wage and romantic notions have to be removed from it tbh and replaced with a bit of realism. Previous generations the farm would have supported the whole family. I comes back to communication, what the parents want first and foremost and then what the next generation want. Talk it out times change and adjustments in perception must change with it0 -
Bentlee Kind Teapot wrote: »Sure pretty much every farm is passed on to a person with no prior ownership experience.
I'd agree with that, I took over at 23 and it was some bumpy ride for the first ten years.0 -
So just to reply to some questions that were asked in the last few posts.
The farm is in the family as far back as can be known, the father inherited the whole farm as he was an only child and didn’t buy any more land other than what he inherited.
The question of in laws....the parents were clever in that they asked the three kids to keep it to themselves and not involve their partners so whether that has happened or not I don’t know.
Someone asked about the boys just leaving her farm, if the farm was left to her I don’t think there would have been much issue but the parents have already said it’s being split 3 ways and they can decide what they way they want to do that so I can’t see the boys walking away from that offer empty handed.
Someone else asked about how has my perspective changed since all the replies (each of which I very much appreciate regardless of whether I agree with them or not). My view is that if one of the sons was in her shoes and was farming and wanting to farm in the future there would be no question of the farm being split, yes the other two would need some inheritance but I don’t think if it was one of the sons that he would be faced with buying 2/3 of the farm at market value.
I also notice different view points of the value of the land all going to one child but she isn’t going to be selling it so to me the value is the relative profitability of the farm which is small so really the market value is irrelevant much like if you inherited your grand mother’s jewelry that was worth 20k if your going to keep it in the family and not sell it then it wouldn’t be expected that it would be valued at its market value when the inheritance was being split between the children.
I think overall the parents should have said we are going to split the farm three was but on the clause that if one person wants to stay farming and you want to sell your share you have to offer it to another sibling at 25% or market value or something like that .
Thanks op, I'm not versed in valuing land or splitting farm inheritance into 3. But essentially what are the possible outcomes. Make a list. I'm coming up with this.
1. Split and buyout to keep farm going. Not worth it going by posts on here and your own opinion.
2. Change of will. Sounds like that's a no go.
3. 2 Brothers (and their spouses :pac:) just let the interested sibling have it. Dream on.
4. Do nothing and let farm run down because of impasse. Not worth it.
5. Sell farm and split. Worth some money (although you might have to forget any possibility of compensation for work put in).
Option 5 seems like the least hassle for best outcome.
Will the work put in now by ops friend make the sake with any more.
Maybe it's time for the OPs friend to try and upskill in another area and start to earn their own money. It'll be difficult to break ties with family farm work, but being honest the OPs friend needs to think about their own pension and getting money together NOW, rather than investing in a post inheritance sale which will be split 3 ways anyway.
A very gradual withdrawal of labor (but not total) , maybe then the father will see that the farm value isn't all they think it is. Each time just say that you won't be around next month because of a course. Eventually a question will be asked about why they're going this path instead of working with daddy to build the empire. Just be factual and say that you need to be financially secure for your own pension because if the farm is split you can't afford a buyout (maybe have some figures to remove the emotion out of the statement).
I totally agree that if it were a male in line there'd be little thought going into a split/buyout. But don't mention this, it'll become apparent with a very gradual withdrawal of labor.
The father will cop on pretty quick when it comes to their own retirement/wind down and they realise the daughter isn't going to be breaking their back for little return. Would they return to option 2 though... Very hard to change a will without sibling rivalry.
You always have to have a "I can take it or leave it" position in negotiation OP. Tell your friend look for other sources of income now.0 -
What amazes me us the amount of people that consider that an eighty acres farm of what seems to be fairly good land is unable to turn a profit to justify a buyout as part of the solution.
One of the big problems with farming over the years was the assumption that stay at home Johnny got the farm. It was an easy decision for a young with limited ambition or was unwilling/ did not like to study/ or just plain lazy. On some cases it has left a cohort in charge of farms who do not look at it as a business.
If an inheritor wants a farm if it is the only family asset they should put s buyout plan in operation. Farming is profitable but it is a business and you have to adapt for it to be profitableSlava Ukrainii
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Bass Reeves wrote: »What amazes me us the amount of people that consider that an eighty acres farm of what seems to be fairly good land is unable to turn a profit to justify a buyout as part of the solution.
One of the big problems with farming over the years was the assumption that stay at home Johnny got the farm. It was an easy decision for a young with limited ambition or was unwilling/ did not like to study/ or just plain lazy. On some cases it has left a cohort in charge of farms who do not look at it as a business.
If an inheritor wants a farm if it is the only family asset they should put s buyout plan in operation. Farming is profitable but it is a business and you have to adapt for it to be profitable
Unless its a turn key dairy farm been bought out fully stocked and kitted out needing no money spent,no other farming enterprise could pay market value for buy-out to siblings....
For arguements sake if a 500k loan was taken out over 25 years to faciliate "paying of, off siblings" 32000 a year would need to be found to meet repayments, but once intrest is payed down and principal repayments are been made the farm will need to be making a 50k plus profit to meet the 32k repayments as the taxman needs his cut, and then if a modest salary was taken of say 20k for the poor unfortunate servicing the loan a clear profit of over 75k a year needs to be made....
A lot of farms not dairying farming 80 acres would do well to have gross sales of 75k a year0 -
Bass Reeves wrote: »What amazes me us the amount of people that consider that an eighty acres farm of what seems to be fairly good land is unable to turn a profit to justify a buyout as part of the solution.
One of the big problems with farming over the years was the assumption that stay at home Johnny got the farm. It was an easy decision for a young with limited ambition or was unwilling/ did not like to study/ or just plain lazy. On some cases it has left a cohort in charge of farms who do not look at it as a business.
If an inheritor wants a farm if it is the only family asset they should put s buyout plan in operation. Farming is profitable but it is a business and you have to adapt for it to be profitable
There is a difference between turning a profit and it providing an income as well as paying off anyone else0 -
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Unless its a turn key dairy farm been bought out fully stocked and kitted out needing no money spent,no other farming enterprise could pay market value for buy-out to siblings....
For arguements sake if a 500k loan was taken out over 25 years to faciliate "paying of, off siblings" 32000 a year would need to be found to meet repayments, but once intrest is payed down and principal repayments are been made the farm will need to be making a 50k plus profit to meet the 32k repayments as the taxman needs his cut, and then if a modest salary was taken of say 20k for the poor unfortunate servicing the loan a clear profit of over 75k a year needs to be made....
A lot of farms not dairying farming 80 acres would do well to have gross sales of 75k a year
I agree, also there is the fact that these calculations are based on what happens AFTER the inheritance.
The friend of the OP has been working this farm for a good while now AND will be continuing to keep this farm going up until the Will is enacted. That could be another 20 years.
If you worked in McDonalds 1 day a week for those 20 years, you'd be financially better off when it was going to be split anyway down the line.
You have to take into account income foregone when planning to make an investment of your time ...for 20+ years:eek:
Basically at the moment the Op's friend is just providing free labour for their Father's hobby.
What extra amount will this free labour yield at the other end, after a long journey of hope?0 -
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Bentlee Kind Teapot wrote: »Sure pretty much every farm is passed on to a person with no prior ownership experience.
Yes you are probably right. But I doubt so young. Maybe I am wrong. But no way would I handover my most valuable asset to someone who basically has no real experience in ownership. I would have a strategic plan with specific milestones that need to be reached and particular areas of expertise that is required to be learned over a certain period. Nobody should say nothing but come in, take the deeds and bellow arrivederci.0 -
Join Date:Posts: 3567
Coming to this discussion late, but if it helps, here's what happened to the farm here. Apologies if it sounds in any bitter - it's not meant to be. Life is short. People make decisions for better or worse and you have to get on with it.
Grandfather had 240-ish acres. Some inherited, some bought. My father did the normal thing, left school at 15 and worked as a "farm labourer", with the boss-man (my grandfather) calling all the shots. I've three uncles - sometimes they hung around the farm, doing bits when it suited them. The three all worked off-farm.
Come 1994 and the land was divided up: my father got 120 acres. His three brothers got 120 between them. Now, you could say 120 acres was enough for my father to make a go of things, but the farm wasn't set up that way - there was dairy, beef, tillage, and sheep all tied into the operation. To change the set-up would have meant changing everything, and my grandfather and uncles wouldn't agree to it. A messy business followed with informal leases, formal leases, tax returns, etc.
Bottom line: I leased out the 120 acres my father got for 15 years after he died in 2001. And we're only now slowly taking it back. Passing on any farm is messy. But whatever happens, think of this Chinese farmers attitude: https://www.youtube.com/watch?v=sWd6fNVZ20o
Will not getting the place be the making of that lady's life? Maybe...Trading as Sullivan’s Farm on YouTube
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Bass Reeves wrote: »What amazes me us the amount of people that consider that an eighty acres farm of what seems to be fairly good land is unable to turn a profit to justify a buyout as part of the solution.
80 acres can't make a sufficient profit to feed a family and repay for itself anymore than a 20 or 30 acres can. In fact I think no size farm can make a profit and also make repayments on anything approaching a fraction of the value of the land.0 -
joeguevara wrote: »Yes you are probably right. But I doubt so young. Maybe I am wrong. But no way would I handover my most valuable asset to someone who basically has no real experience in ownership. I would have a strategic plan with specific milestones that need to be reached and particular areas of expertise that is required to be learned over a certain period. Nobody should say nothing but come in, take the deeds and bellow arrivederci.
You have to grow up a lot faster on the farm. You see life and death, happening every day. You quickly have to drive a tractor, you are growing up in a dangerous environment. You learn to work earlier and what are your jobs. You have more chance of being killed on a farm than in the Defence Forces. You are learning on the farm from the day you can walk. No woman will come onto a farm as a wife unless it is financially secure for her family. Anyone who is waiting for the old man to knock off at 80 for a hand over is an idiot like my uncles. Its not fair. That stuff should be threshed so the kids can make an informed decision about life and education. A farm is no good at 45 when you have given the best years of your life. Young farmers have energy, ideas, exposed to new ideas, need to get married and have families.
Farming is a different way of life to other trades.0 -
skooterblue2 wrote: »Not all landlords are the same. Some have been very progressive and diversified into industry like brewing, soccer, mining, arments and changed from estate farming with tenants to diverse corporations in the last century. Some have been very progressive and others have been absentee.
I see my own uncles, only getting a second tractor in the 1990's and Slatted units in the same time. They never grasped that time is money.
I can assure you 90% are going broke as the one who earned the money is long gone their just at differing stages of selling off. 5% get lucky with owning property that is desireable to purchase or rental value, 3% are new money or can earn it and the final 2% know which clever people(who wont inturn screw them out of said money) to hire to work their money for them. More money just means more people to try and relieve you of some.
10 years ago the super hero contract farmers farmed in 1,000's of acres now it's ha's and you can predict what the yards line up of machinery is.0 -
80 acres can't make a sufficient profit to feed a family and repay for itself anymore than a 20 or 30 acres can. In fact I think no size farm can make a profit and also make repayments on anything approaching a fraction of the value of the land.
This just seems to point to a bubble in the price of land. Or else the land isn't being put to the use it's being valued for.0 -
I agree, also there is the fact that these calculations are based on what happens AFTER the inheritance.
The friend of the OP has been working this farm for a good while now AND will be continuing to keep this farm going up until the Will is enacted. That could be another 20 years.
If you worked in McDonalds 1 day a week for those 20 years, you'd be financially better off when it was going to be split anyway down the line.
You have to take into account income foregone when planning to make an investment of your time ...for 20+ years:eek:
Basically at the moment the Op's friend is just providing free labour for their Father's hobby.
What extra amount will this free labour yield at the other end, after a long journey of hope?80 acres can't make a sufficient profit to feed a family and repay for itself anymore than a 20 or 30 acres can. In fact I think no size farm can make a profit and also make repayments on anything approaching a fraction of the value of the land.
An 80 acre drystock farm is no longer capable of supporting a family full stop. It is not a fulltime unit either. A drystock farm of that size and even double it is capable of being run in 15-20 hours/week. Anybody on such a farm unit can hold down another job the question is can you pony up money to siblings.
Let look at this situation the parents have a bungalow that will come into play and the daughter is working in a profession career somewhere in the accountancy/financial sector it seems. She is not intending to give up this career but looking to move back and work and farm from home with her possible partner. Likes attract so more than likely he is in the same career pay bracket.
There wages will set up a home either on the farm or where they live now, they will access a site on the farm so unless they intend to build a big f@@koff house they will have a modest mortgage. With or without the farm they will have an decent lifstyle. However the farm is an asset in the 550-600K bracket.
What income is a farm of that size capable of throwing free. SFP on such a drystock farm would be in the 8-10k minimum rage, ANC is 2500, Enviormental plans look being back in vogue but at present are worth about 5K . So paynents are about 16-18K. This farm seemed to have been capable of raising a family in the not too distant past so it must be a fairly decent land. Such a farm is capable if farmed as a business of throwing 15-20 profit a year. All in all with payments it capable of throwing 30k+ in free cash ever year.
Repayments on 300K over 20 years at 4%( and if she is in the accountancy/financial sector she will beat that by at least 1%) is 21K/year. At the end of 20 year you own the farm.Its 1750/month. It doable, I know I have done it in similar circumstances, and I had to build every shed on the place, fence it, buy every bit of machinery and stock it. It a business not a some precious entity.Slava Ukrainii
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Bass Reeves wrote: »An 80 acre drystock farm is no longer capable of supporting a family full stop. It is not a fulltime unit either. A drystock farm of that size and even double it is capable of being run in 15-20 hours/week. Anybody on such a farm unit can hold down another job the question is can you pony up money to siblings.
Let look at this situation the parents have a bungalow that will come into play and the daughter is working in a profession career somewhere in the accountancy/financial sector it seems. She is not intending to give up this career but looking to move back and work and farm from home with her possible partner. Likes attract so more than likely he is in the same career pay bracket.
There wages will set up a home either on the farm or where they live now, they will access a site on the farm so unless they intend to build a big f@@koff house they will have a modest mortgage. With or without the farm they will have an decent lifstyle. However the farm is an asset in the 550-600K bracket.
What income is a farm of that size capable of throwing free. SFP on such a drystock farm would be in the 8-10k minimum rage, ANC is 2500, Enviormental plans look being back in vogue but at present are worth about 5K . So paynents are about 16-18K. This farm seemed to have been capable of raising a family in the not too distant past so it must be a fairly decent land. Such a farm is capable if farmed as a business of throwing 15-20 profit a year. All in all with payments it capable of throwing 30k+ in free cash ever year.
Repayments on 300K over 20 years at 4%( and if she is in the accountancy/financial sector she will beat that by at least 1%) is 21K/year. At the end of 20 year you own the farm.Its 1750/month. It doable, I know I have done it in similar circumstances, and I had to build every shed on the place, fence it, buy every bit of machinery and stock it. It a business not a some precious entity.
So you could be potentially be paying out maybe 400k
+All your own work/money/time put into it after the will is enacted.
+All the work put into it, for at least 20 years prior to inheritance.
To get a farm worth maybe 550k
+ Potential of getting 10k profit per year while paying of the brothers.
+Maybe a house
Am I reading that right.
Would there be tax implications?0 -
Bass Reeves wrote: »An 80 acre drystock farm is no longer capable of supporting a family full stop. It is not a fulltime unit either. A drystock farm of that size and even double it is capable of being run in 15-20 hours/week. Anybody on such a farm unit can hold down another job the question is can you pony up money to siblings.
Let look at this situation the parents have a bungalow that will come into play and the daughter is working in a profession career somewhere in the accountancy/financial sector it seems. She is not intending to give up this career but looking to move back and work and farm from home with her possible partner. Likes attract so more than likely he is in the same career pay bracket.
There wages will set up a home either on the farm or where they live now, they will access a site on the farm so unless they intend to build a big f@@koff house they will have a modest mortgage. With or without the farm they will have an decent lifstyle. However the farm is an asset in the 550-600K bracket.
What income is a farm of that size capable of throwing free. SFP on such a drystock farm would be in the 8-10k minimum rage, ANC is 2500, Enviormental plans look being back in vogue but at present are worth about 5K . So paynents are about 16-18K. This farm seemed to have been capable of raising a family in the not too distant past so it must be a fairly decent land. Such a farm is capable if farmed as a business of throwing 15-20 profit a year. All in all with payments it capable of throwing 30k+ in free cash ever year.
Repayments on 300K over 20 years at 4%( and if she is in the accountancy/financial sector she will beat that by at least 1%) is 21K/year. At the end of 20 year you own the farm.Its 1750/month. It doable, I know I have done it in similar circumstances, and I had to build every shed on the place, fence it, buy every bit of machinery and stock it. It a business not a some precious entity.
Farm income will be taked at 44% plus prsi/usc etc if you assue her own salary and husbands have them already in the higher tax bracket, your also assuming a guaranteed 30k of pure profit every year our 400 euro a acre which is bannannas0 -
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