Messy farm inheritance issue

Bass Reeves

Treppen wrote: »

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?

I am posting on the present senario on this thread not any other senario's. Her parent have put there cards on the table. Nobody has made a life time commitment

Bass Reeves

Bass Reeves wrote: »

I am posting on the present senario on this thread not any other senario's. Her parent have put there cards on the table. Nobody has made a life time commitment

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

Bass Reeves

Treppen wrote: »

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?

I am posting on the present senario on this thread not any other senario's. Her parent have put there cards on the table. Nobody has made a life time commitment in this case

Treppen

Bass Reeves wrote: »

I am posting on the present senario on this thread not any other senario's.

Ya me too!? I took your figures and broke them down into income and outgoing. Let me know if I've misrepresented what you estimated.

Bass Reeves wrote: »

Her parent have put there cards on the table. Nobody has made a life time commitment

Totally agree, although, the OPs friend has already put a lot of work into it, but maybe they should just write that off in the decision.
Based on your figures would you go all in or fold if you were in the given scenario?

Treppen

Bentlee Kind Teapot wrote: »

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

Ya I think you've hit the nail on the head.

Dunedin

Bentlee Kind Teapot wrote: »

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

100% agree.

Every other thread discussion relates to no money/losing money in farming so to think that an 80 acre dry stock farm can service the level of debt that’s being mentioned in this thread is ludicrous.

Beef could be €3 next year, mercusour could wipe us all out overnight if it ever comes.

Bass Reeves

jaymla627 wrote: »

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 bannannas

In any business there are different tax avoidance measure that can be taken. Technically the farm could be transferred into a limited company and repayments made direct after 12.5% company tax rate.

However like an business expenses are allowed. In this senario I would expect that the OP's friend and her partner can write off car, phone and ESB expenses. Two cars could have a value of 30K or 3750/year, allow tax, insurance and maintenance at 1500/car and assuming they are going to and from work mileage of 25K each translates into a fuel cost of 4500 euro, telecommunications mobiles, broadband etc 100/month or 1200/year, ESB 1000/year, giving a total of 13.5K/year before private use claw back to 9K approx.

The interest is tax deductable over the life time of the loan it averages at 6K/year. Even if you pay tax on the rest of the free cash the farm throws it pays for itself,

Bentlee Kind Teapot wrote: »

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

Grow up and when you have children of your own and you have given them all equal opportunities like ( a complete education to the maximise there ability) a farm then is only a physical asset and its inheritance or any other senario that is devised for it is at the behest of the person that has it. Her parents consider that they should sell it and divide the proceeds it up to the OP friend to put a solution in place if she wants it .

Begging letters are not the answer.

Treppen wrote: »

Ya me too!? I took your figures and broke them down into income and outgoing. Let me know if I've misrepresented what you estimated.




Totally agree, although, the OPs friend has already put a lot of work into it, but maybe they should just write that off in the decision.
Based on your figures would you go all in or fold if you were in the given scenario?

Yes you did I put a senario in place accounting for the physical farm only. I only proposed that the possible inheritor would assign about 50% of it value(not including stock, machinery and goodwill) into account. As well as I posted earlier in the thread if an inheritor is buyin/doing this they take full and total control from this date. In this case the OP's friend would be buying an asset at about 50c/euro.

Dunedin wrote: »

100% agree.

Every other thread discussion relates to no money/losing money in farming so to think that an 80 acre dry stock farm can service the level of debt that’s being mentioned in this thread is ludicrous.

Beef could be €3 next year, mercusour could wipe us all out overnight if it ever comes.

Beef could also be over 4/kg. The farm could be sitting on a natural gas or gold deposit worth millions, there is loads of ''what ifs'' senario's try to deal with reality not maybe's. Farming is a business . An 80 acre farm is well capable of servicing this level of debt. The big problem with farms is over the year eldest Johnny, thickest Johnny, like to drive the tractor Johnny or I do not like school jJohnny presumed he get the farm for nothing. Many had no ambition and were and often still are incapable farming.

Any drystock farm less than 200 acres is a part time gig 20 ish hours a week. Its an extremely profitable part time gig if you are focused. Having to pay for the privilage would sort the men from the boys and Johnny might be a lot better off if he focused on his education or doing a trade rather than cutting a few hedges and turning a bit of hay for pocket money when young and thinking he was made for life

Bass Reeves

Bass Reeves wrote: »

Grow up and when you have children of your own and you have given them all equal opportunities like ( a complete education to the maximise there ability) a farm then is only a physical asset and its inheritance or any other senario that is devised for it is at the behest of the person that has it. Her parents consider that they should sell it and divide the proceeds it up to the OP friend to put a solution in place if she wants it .

Well I can tell you that our family is doing as I have described. My siblings and I have all gone though college and have good jobs. I am the only one with an interest in the farm and it has simply been a given that the farm in it’s entirety will be going to me (half of it very soon and the rest at a later date). My siblings will be looked after but not with any of the farm as it simply madness to split up a farm. The farm is not quite as big as the the one being discussed but not too far off it and it just about breaks even including the BPS and ANC so the idea that the farm could service a massive debt for no reasons whatsoever is fantasy stuff.

doc22

Bass Reeves wrote: »

The big problem with farms is over the year eldest Johnny, thickest Johnny, like to drive the tractor Johnny or I do not like school jJohnny presumed he get the farm for nothing. Many had no ambition and were and often still are incapable farming.

Generally It isn't the best and brightest that sit about waiting to inherit a farm.

But as long as Johnny and the parents are happy so what, it's their land, there's plenty of busy fools farming for little gain.

But I just dont accept the whole he sacrificed his life so he deserves the farm malarkey because Johnny couldn't cut it/lazy to do anything else unlike siblings.

Electric Sheep

Bentlee Kind Teapot wrote: »

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

The farm belongs to the parents, not the family. It is the parents to dispose of as they choose. No amount of wailing "family farm " will change that.

skooterblue2

Electric Sheep wrote: »

The farm belongs to the parents, not the family. It is the parents to dispose of as they choose. No amount of wailing "family farm " will change that.

There are two parts to changing the ownership of a farm. There is the giving and receiving. This has to threshed out when the kids are reasonably young like 16. By the age of 12 its obvious who and who isnt going to be farming. I am not saying there is anything wrong with going off and getting a trade or profession and coming back to do the green cert at the weekend.

There are a lot easier ways to make a primary income in life than farming. I know plenty that are teachers accountants, tradesmen, publicans etc etc that have interests in farms on the side. Non farmers see a €500000 asset (plant machinery and land) and it is just "given" to youth in their 20's. Farming people see a business and also a way of life. Farming is not perfect happy clappy life either. As part of a bigger plan they may have to take on debts of the previous generation. Like remember 10 years ago farmers were enticed back in to dairying and the banks were offering loans for upgrading plants and buildings (new parlours and slurry storage) to up the herd and up milk production? Then the big dairies drop the price of milk afterwards? Beef isnt that much different with only one person buying beef in Ireland.

I would think long and hard accepting that amount of debt and faced with prospect of more industrial action by farmers when beef can be bought at a fractional cost from South America, Milk can be bought cheaper from Northern Ireland. Most vegetables are flow into Ireland. Then you have market issues to contend with the new green agenda. People telling you agriculture and horticulture releases green house gasses. The biggest green house gas isnt Methane or Carbon dioxide but water vapour. Just easier to get a trade or do a masters in Science and not have to deal with all that crap.

Dunedin

Bass Reeves wrote: »

5Beef could also be over 4/kg. The farm could be sitting on a natural gas or gold deposit worth millions, there is loads of ''what ifs'' senario's try to deal with reality not maybe's. Farming is a business . An 80 acre farm is well capable of servicing this level of debt. The big problem with farms is over the year eldest Johnny, thickest Johnny, like to drive the tractor Johnny or I do not like school jJohnny presumed he get the farm for nothing. Many had no ambition and were and often still are incapable farming.

Any drystock farm less than 200 acres is a part time gig 20 ish hours a week. Its an extremely profitable part time gig if you are focused. Having to pay for the privilage would sort the men from the boys and Johnny might be a lot better off if he focused on his education or doing a trade rather than cutting a few hedges and turning a bit of hay for pocket money when young and thinking he was made for life

‘Extremely profitable part time gig’ - you’re either having a laugh or not not with the program!!! Practically all dry stock farms are part time and I don’t really hear too often of them being extremely profitable. Absolutely they shouldn’t be losing money (I’m certainly not) and they should turn a few pound but not to the level that you are citing.

Let’s just say that she has to buy 54 acres at €5k an acre which is €270k Factor in that she may have her own house and morgage so circa €500k debt. Accept that her day job should support her own morgage but given the uncertainty of farming and the fully unforeseen circumstances of covid, I wouldn’t like any of my kids with that level of debt starting out in their working lives.

I’ll leave it with you from here.

20silkcut

15-20 hours a week sounds handy but damn some of them hours can be hard and unpredictable. And not easy if your under pressure in the off farm job too.

skooterblue2

20silkcut wrote: »

15-20 hours a week sounds handy but damn some of them hours can be hard and unpredictable. And not easy if your under pressure in the off farm job too.

Farming isnt something you can pick up either for a few hours, you got calving and them cows love getting up early morning calving. Farming isnt plane sailing either. My cousins found a bull caught in an electric fence and he couldnt get out and died. Another cousin had a slurry tank wall break. You can get hit with TB, foot and mouth, swine flu.... who knows what is around the corner that you will never be faced with in private industry. Banks will still demand to be paid no matter what the weather.

20silkcut

skooterblue2 wrote: »

Farming isnt something you can pick up either for a few hours, you got calving and them cows love getting up early morning calving. Farming isnt plane sailing either. My cousins found a bull caught in an electric fence and he couldnt get out and died. Another cousin had a slurry tank wall break. You can get hit with TB, foot and mouth, swine flu.... who knows what is around the corner that you will never be faced with in private industry. Banks will still demand to be paid no matter what the weather.

Fair rotten feeling too having to get into the car and go to work and leave a sick animal in a field until you can sort it after work or come home after a hard day and face into moving 200 bales of silage. Or get a phone call at work that your cattle have broke into the silage field. All this happened me in the last fortnight.
Granted most of the time it is fine but there are a few very hard days every year.

Electric Sheep

Electric Sheep wrote: »

The farm belongs to the parents, not the family. It is the parents to dispose of as they choose. No amount of wailing "family farm " will change that.

It’s the family farm, farms are passed down from generation to generation and each generation is simply a caretaker. From someone not from a farming background which you obviously are not that might be hard to understand but that’s the way it is.

20silkcut wrote: »

Fair rotten feeling too having to get into the car and go to work and leave a sick animal in a field until you can sort it after work or come home after a hard day and face into moving 200 bales of silage. Or get a phone call at work that your cattle have broke into the silage field. All this happened me in the last fortnight.
Granted most of the time it is fine but there are a few very hard days every year.

Agreed on the sick animal and the break out but I’d look forward to getting home and up into the tractor for moving the bales, the cab of the tractor is therapy to me and clears the head of the stresses of work like nothing else.

20silkcut

Bentlee Kind Teapot wrote: »

It’s the family farm, farms are passed down from generation to generation and each generation is simply a caretaker. From someone not from a farming background which you obviously are not that might be hard to understand but that’s the way it is.



Agreed on the sick animal and the break out but I’d look forward to getting home and up into the tractor for moving the bales, the cab of the tractor is therapy to me and clears the head of the stresses of work like nothing else.

Ah yes tractor work is grand when everything working as it should there is a certain therapeutic factor to it.

blackbox

Bentlee Kind Teapot wrote: »

A family farm should not require the person taking it over to take on such a large debit that even if a profit can be made it will eat it all for decades. It’s madness and the idea wouldn’t even be entertained by most families where the full farm goes to the person who wants to farm it, no splits, no loans or buy outs or other mad suggestions. It’s the family farm ffs.

If its not able to pay the interest, its not making a profit.

If people really want to leave all their assets to one child, the only fair way to do it is to only have one child.

skooterblue2

blackbox wrote: »

If its not able to pay the interest, its not making a profit.

If people really want to leave all their assets to one child, the only fair way to do it is to only have one child.

Farming isnt fair, life isnt fair. If you were to cut your cloth to fit your pattern in life you would be left short. Also the population would be decimated in 4 generations on a one child plan.....like China. That logic of subdividing every stage would have us all back in potato famine times. Do the best for all your children but you have to be sensible with assets.

Siamsa Sessions

The best time to resolve this issue was 20 years ago. But the second best time is now. At least, the parents didn't wait til they died and left a messy will for the siblings to fight over.

Probably mentioned earlier, but the lady in question is part of the reason the farm is now worth whatever it's worth. She has helped build the value. Maybe it'd be useful to try put a figure on the value she has added over the years? Not easy, but it might give the family something kinda impartial and solid to focus on rather than philosophical debates and entrenched positions.

doc22

Siamsa Sessions wrote: »

The best time to resolve this issue was 20 years ago. But the second best time is now. At least, the parents didn't wait til they died and left a messy will for the siblings to fight over.

Probably mentioned earlier, but the lady in question is part of the reason the farm is now worth whatever it's worth. She has helped build the value. Maybe it'd be useful to try put a figure on the value she has added over the years? Not easy, but it might give the family something kinda impartial and solid to focus on rather than philosophical debates and entrenched positions.

Unless she reclaimed a few acres from the sea it'll be hard to see how one would add to land value. Unless she was personally putting money into the farm and as she doesn't do much of the hard labour it'd be hard to argue she added much value one way or another.

dubrov

Raina Ripe Suds wrote:

It’s the family farm, farms are passed down from generation to generation and each generation is simply a caretaker. From someone not from a farming background which you obviously are not that might be hard to understand but that’s the way it is.

I think that sums it up really.

The choice is either to divide the farm fairly or divide it in a way to preserve the farm.

I guess each farmer will have a different opinion on their priority when the time comes

Buford T. Justice XIX

doc22 wrote: »

Unless she reclaimed a few acres from the sea it'll be hard to see how one would add to land value. Unless she was personally putting money into the farm and as she doesn't do much of the hard labour it'd be hard to argue she added much value one way or another.

Work doesn't come for free, if she's worked at breeding or doing the messy wheelbarrow loads of paperwork that is necessary these days then the value of that over a number of years should be added to her portion of the division and deducted from the division of the others.

Young95

The only way I can see this working is if she can buy out the other two brothers at a much reduced actual value of the land . It can be stated it the fathers will the agreed amount which they can agree at a family meeting and then right up the will there after . Even if she has to pay out anywhere from 200000 to 300000 that’s what will have to be done . Shel have to work off farm and just let the farm pay away at the debt . If she has children in the future itl be one of her children that will benefit from her years of paying the farm off .

wrangler

dubrov wrote: »

I think that sums it up really.

The choice is either to divide the farm fairly or divide it in a way to preserve the farm.

I guess each farmer will have a different opinion on their priority when the time comes

If she's going to be responsible for looking after the parents she should get the place.
Again I see partnerships here and there's no improvement in quality of life for the old pair. Those farms should be divided.
Another farm where one son was away for years and came back lately, I asked the other sibling was the brother home to farm, to which they replied ''well he's home for the farm anyway'' There was no begrudgery in that answer as they had married into a huge farm themselves,

skooterblue2

wrangler wrote: »

If she's going to be responsible for looking after the parents she should get the place.
Again I see partnerships here and there's no improvement in quality of life for the old pair. Those farms should be divided.
Another farm where one son was away for years and came back lately, I asked the other sibling was the brother home to farm, to which they replied ''well he's home for the farm anyway'' There was no begrudgery in that answer as they had married into a huge farm themselves,

That is very tempting for an older couple..... grandchildren on the doorstep to help them collect the eggs and sweep the yard and see them growing up. Not every grandparent gets to see their grandchild every day, week or month. The farm can be a distraction from professional life and hinder progression in industry.

Like someone said before this should have been decided long before kids went and did their Leaving Cert. They made informed choices. Best thing for this girls would be to get her green cert done at weekends (someone better informed than me, can this be still done).

wrangler

skooterblue2 wrote: »

That is very tempting for an older couple..... grandchildren on the doorstep to help them collect the eggs and sweep the yard and see them growing up. Not every grandparent gets to see their grandchild every day, week or month. The farm can be a distraction from professional life and hinder progression in industry.

Like someone said before this should have been decided long before kids went and did their Leaving Cert. They made informed choices. Best thing for this girls would be to get her green cert done at weekends (someone better informed than me, can this be still done).

That's the reason I said that she should get the farm as compensation, Grand parents childminding would also be an advantage.
She can take over the farm and do the green cert after, she'll get back teh stamp duty when she as it done

the_syco

Which of the three ways gets the yard & road access? Will the house be included?

TBH, letting the parents know that splitting the farm up will probably mean that the farm the parents worked on will cease to be, as it may only be economically viable for the OP's friend to start fresh elsewhere, or to walk away. As she does the book work, she'd probably have an idea of how viable a 3rd would be.

If either of the sons took an interest, I'd wonder if the farm would still be getting split. Does the OP's friend only have farm experience, or does she have a farming certificate/degree?

Siamsa Sessions

skooterblue2 wrote: »

Best thing for this girls would be to get her green cert done at weekends (someone better informed than me, can this be still done).

Yes, lots of different ways to get the green cert done - part-time, full-time, distance learning, etc. There's also an option for those with a non-farming degree to get credits for that and not have to do the whole course.

Education is a business these days in many places and those selling it are competing for customers students.

skooterblue2

the_syco wrote: »

Which of the three ways gets the yard & road access? Will the house be included?

TBH, letting the parents know that splitting the farm up will probably mean that the farm the parents worked on will cease to be, as it may only be economically viable for the OP's friend to start fresh elsewhere, or to walk away. As she does the book work, she'd probably have an idea of how viable a 3rd would be.

If either of the sons took an interest, I'd wonder if the farm would still be getting split. Does the OP's friend only have farm experience, or does she have a farming certificate/degree?

The modern thing is the elderly couple built an age friendly bungalow and move out of the yard. A third is nothing, its not a small holding or a farm. Once Fellas leave a farm they dont come back generally, marriage makes it even harder to return. A green cert is easy to get and the faster you get it the better.