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Child Item

Messy farm inheritance issue

roosky

Hi all,

I have a friend involved in a messy issue and I would appreciate your opinions on it as she came to me for advice and i want to have a balanced point to make.

Okay so her father and mother have a 80 acre sucker farm, she is actively involved in the farm and also does all book work and herd health and breeding decisions. Working away from home but home every weekend working on farm and takes holidays for calving etc...

She plans to return home in next two years to farm with father (will also have off farm job) and to live on farm or locally. She has two brothers living in Dublin with good jobs and no interest in farming and have no involvement in the farm or never had.

The parents have decided to split the farm equally between the three kids and said one can buy out the other if they want to farm.....obviously buying your home farm even at 2/3 of market value is not an attractive option and planning life and career around a 25 odd acre farm is silly.

Do you feel she has reason to feel upset and let down by her parents as she feels if she was an only son working in agri industry, actively involved in the family farm, planning on moving home and farming and had two sisters with no interest in the farm that the farm would not be split three ways and left unviable looking forward.

Are her parents doing the fairest thing or are they being silly to have a child interested in carrying on the family farm and letting that opportunity slip in the interest of “fairness” regardless of the gender thing ??

TIA

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[Deleted User]

blackbox wrote: »

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

The interest isn't the issue, that can be written off. its the massive capital repayments that are the problem. Of course a farm could be making a profit and not be able to service a massive debt. Someone could be pulling in 10k profit a year from the farm but that's not going to service a 30k per year debt.

blackbox wrote: »

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.

Its not all their assets, they could give them a site each and I'm sure there is cash in the background too. You can't look on a farm the same as you would on say a large cash inheritance or even assets like a number of rental properties. Dividing up a farm is the end of the farm, buying people out is neither fair nor feasible. People need to get away from looking at the value of a farm, it's meaningless. If the parents gave 50k to each of the sons its likely worth more to them as a farm worth 700k is to the person receiving it as you are never ever going to earn a fraction of the land value from the business. You could very well just break even every year even without the loan.

Expecting the daughter to buy out the brothers means she will spend decades spending any cent the farm makes and likely off farm income paying her brothers, she may never make a cent on the farm herself and they have gained massively. It's a terrible and backward idea.

skooterblue2

wrangler wrote: »

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

Follow it through, would you promote a person whose energys were divided between work and a family farm/pub/shop? I would rather have the former

[Deleted User]

wrangler wrote: »

she'll get back teh stamp duty when she as it done

Just as an aside, the stamp duty is only a minor reason for doing the green cert. You have to be under 35 to get the exemption and the stamp duty is only 1% anyway (not nothing but not a major amount either).

The biggest advantage of the green cert is being able to avail of agri relief on CAT as this is a vastly bigger benefit than the stamp duty reliefs.

wrangler

skooterblue2 wrote: »

Follow it through, would you promote a person whose energys were divided between work and a family farm/pub/shop? I would rather have the former

She shouldn't get the farm if she's going to stay working, she's no better entitled than the siblings that have jobs then.
Parents should sell/farm or whatever and enjoy it as they wish in that case and the remainder split when they're finished with it.
If you work on a farm all your life, you're entitled to do as you wish with it at the end, you owe no one anything

wrangler

Bentlee Kind Teapot wrote: »

Just as an aside, the stamp duty is only a minor reason for doing the green cert. You have to be under 35 to get the exemption and the stamp duty is only 1% anyway (not nothing but not a major amount either).

The biggest advantage of the green cert is being able to avail of agri relief on CAT as this is a vastly bigger benefit than the stamp duty reliefs.

Your parents can give you €3.5m worth of agri assets tax free, not many farms are worth more than that and that allowance is not dependent on the green cert.
You do have to farm it or lease it to a farmer for six years after

[Deleted User]

wrangler wrote: »

She shouldn't get the farm if she's going to stay working, she's no better entitled than the siblings that have jobs then.
Parents should sell/farm or whatever and enjoy it as they wish in that case and the remainder split when they're finished with it.
If you work on a farm all your life, you're entitled to do as you wish with it at the end, you owe no one anything

Its a good job the vast majority would not hold this opinion. Working off farm is vital for the vast majority of farmers, if you think otherwise you haven't a clue. Her brothers dont work on the farm and have shown no interest in it while the daughter has massive interest and works on it, this is why she is the one who should get the farm.

wrangler wrote: »

Your parents can give you €3.5m worth of agri assets tax free, not many farms are worth more than that and that allowance is not dependent on the green cert.
You do have to farm it or lease it to a farmer for six years after

Yes, it is fully dependant on the green cert, it's the main reason I did the green cert. I am able to get some other advantages too like top ups and grants if I want to avail of them but the green cert is required to avail of agri relief (unless you rent out the farm on a long term lease to someone who qualifies).

roosky

The last group of comments discussed the green cert being a issue, she has the required agricultural education as her college degree and off farm work are in the agricultural sector, id sooner not give out her job title as Its not my place to do so and I would sooner keep some level of anonymity on the thread....thanks for all opinions

minerleague

roosky wrote: »

The last group of comments discussed the green cert being a issue, she has the required agricultural education as her college degree and off farm work are in the agricultural sector, id sooner not give out her job title as Its not my place to do so and I would sooner keep some level of anonymity on the thread....thanks for all opinions

your friend will have to be the one who comes up with a workable solution as she is the person looking to change the parents mind. what about limited company( 20% to each 2 parents 3 children Shares only traded inside) maybe too complicated for 80 acres. Times have changed in that children who moved away from farm years ago often had a better life( cheaper housing, jobs for life, good pension etc) compared to today, coupled to increase in land values means giving farm completely to one child may not be as common from now on. Is the farm to be physically split? now or in will?

wrangler

Bentlee Kind Teapot wrote: »

Its a good job the vast majority would not hold this opinion. Working off farm is vital for the vast majority of farmers, if you think otherwise you haven't a clue. Her brothers dont work on the farm and have shown no interest in it while the daughter has massive interest and works on it, this is why she is the one who should get the farm.

Yes, it is fully dependant on the green cert, it's the main reason I did the green cert. I am able to get some other advantages too like top ups and grants if I want to avail of them but the green cert is required to avail of agri relief (unless you rent out the farm on a long term lease to someone who qualifies).

I didn't say she shouldn't work off farm, I said she was no better entitled than her siblings. 25% of the farm would do the same job as in satisfying her graw for farming and the rest would be a huge back shove to the others. You cannot ignore the chance of a mortgage free home each for your family in these times.
You mightn't agree with my opinion but it's the same opinion as the parents and that is all that matters

[Deleted User]

wrangler wrote: »

I didn't say she shouldn't work off farm, I said she was no better entitled than her siblings. 25% of the farm would do the same job as in satisfying her graw for farming and the rest would be a huge back shove to the others. You cannot ignore the chance of a mortgage free home each for your family in these times.
You mightn't agree with my opinion but it's the same opinion as the parents and that is all that matters

The horse has most likely bolted at this stage as they have now suggested it but it's a terrible decision by the parents. 20 acres is only going to cost you money, at least with 80 you could make some money on it (once you weren't servicing debt).

I would personally not want to see the farm split up even if I was not interested in farming it so I would opt out of a share if I was one of the brothers.

wrangler

Bentlee Kind Teapot wrote: »

The horse has most likely bolted at this stage as they have now suggested it but it's a terrible decision by the parents. 20 acres is only going to cost you money, at least with 80 you could make some money on it (once you weren't servicing debt).

I would personally not want to see the farm split up even if I was not interested in farming it so I would opt out of a share if I was one of the brothers.

I was involved in a messy will years ago, trying to be a referee.
One thing I was surprised at was the fact if one brother opted out in favour of another, For Capital Aquisition Tax purposes it would be treated as a brother to brother gift and the allowance is only 325000 worth of land, I can't remember what the allowances were then but the guy taking it over had to pay €100000 at the time.
I don't know how it finished but it didn't go to the courts which is what it was looking like for a while.

On another note
What amuses me is that the childless couples, bachelors, spinsters are all prone to leaving big farms to people that have loads of land already, a friend with 300 acres has just got over 100 acres and others seem to be queueing up to be giving him theirs

skooterblue2

wrangler wrote: »

What amuses me is that the childless couples, bachelors, spinsters are all prone to leaving big farms to people that have loads of land already, a friend with 300 acres has just got over 100 acres and others seem to be queueing up to be giving him theirs

"Success is the father of many children". You wouldnt give your most precious possession to a complete loser?

[Deleted User]

wrangler wrote: »

I was involved in a messy will years ago, trying to be a referee.
One thing I was surprised at was the fact if one brother opted out in favour of another, For Capital Aquisition Tax purposes it would be treated as a brother to brother gift and the allowance is only 325000 worth of land, I can't remember what the allowances were then but the guy taking it over had to pay €100000 at the time.
I don't know how it finished but it didn't go to the courts which is what it was looking like for a while.

I cant see how that would be the case as I have a fairly good understanding of CAT and that does not align well with how it works. The brother would never have taken possession so it could not be considered anything other than from the parents to their child. In fact CAT specifically watches out for things that are gifted/inherited and then immediately regifted/inherited and if there isnt considerable time between the second gifting they consider it as being from the original person to the final person. i.e. if A gifts to B and a few weeks later B gifts to C, revenue consider that a gift from A to C.

Also farms should not be left to inheritance they should be transferred while everyone is living so that would remove any doubt if someone wanted to opt out.

wrangler

Bentlee Kind Teapot wrote: »

I cant see how that would be the case as I have a fairly good understanding of CAT and that does not align well with how it works. The brother would never have taken possession so it could not be considered anything other than from the parents to their child. In fact CAT specifically watches out for things that are gifted/inherited and then immediately regifted/inherited and if there isnt considerable time between the second gifting they consider it as being from the original person to the final person. i.e. if A gifts to B and a few weeks later B gifts to C, revenue consider that a gift from A to C.

Also farms should not be left to inheritance they should be transferred while everyone is living so that would remove any doubt if someone wanted to opt out.

As I said I don't know how it finished, we got them together, which took over a year, and after a lot of hours wrote it down and let them off to the solicitors.
That was mentioned in the row though

wrangler

skooterblue2 wrote: »

"Success is the father of many children". You wouldnt give your most precious possession to a complete loser?

He's older than I am, plenty of younger farmers would've appreciated it

skooterblue2

wrangler wrote: »

He's older than I am, plenty of younger farmers would've appreciated it

I am sure they would.

Who2

wrangler wrote: »

He's older than I am, plenty of younger farmers would've appreciated it

Some would others would run a mile with the tax bill they would end up with.

wrangler

Who2 wrote: »

Some would others would run a mile with the tax bill they would end up with.

Sell enough to pay the tax, you'd still have 70% of it

doc22

Who2 wrote: »

Some would others would run a mile with the tax bill they would end up with.

Tax of less than a 30th of the market value, they'd come out alright from it

wrangler

doc22 wrote: »

Tax of less than a 30th of the market value, they'd come out alright from it

Forgot that it'd be only valued at 10% of it's value

JeffKenna

Bentlee Kind Teapot wrote: »

I cant see how that would be the case as I have a fairly good understanding of CAT and that does not align well with how it works. The brother would never have taken possession so it could not be considered anything other than from the parents to their child. In fact CAT specifically watches out for things that are gifted/inherited and then immediately regifted/inherited and if there isnt considerable time between the second gifting they consider it as being from the original person to the final person. i.e. if A gifts to B and a few weeks later B gifts to C, revenue consider that a gift from A to C.

Also farms should not be left to inheritance they should be transferred while everyone is living so that would remove any doubt if someone wanted to opt out.

I don't think you can opt out of inheritance but stipulate it needs to go to someone else which seems to have happened. You can opt out but it goes back into the initial pot. If there were 3 brothers and one brother gave up his inheritance in favour of another then it would be a gift between those two brothers. If the brother gave up his inheritance with no stipulations then his share would go from the parents to the other two brothers.

Bass Reeves

JeffKenna wrote: »

I don't think you can opt out of inheritance but stipulate it needs to go to someone else which seems to have happened. You can opt out but it goes back into the initial pot. If there were 3 brothers and one brother gave up his inheritance in favour of another then it would be a gift between those two brothers. If the brother gave up his inheritance with no stipulations then his share would go from the parents to the other two brothers.

If you stipulate it's a seen as a gift, you can however decline an inheritance or part of it and then it is put back into the will and is dealt within the framework of the will

K.G.

The longer im going im going the more i think we have too many hangups about selling land.unless there is a clear successor who invested in the business (by that i mean
time and commitment ) and the keeping it intact is fundamental to it continuing,sale and division is the best way of dealing with the situation .there may be places that have been in family names for years but there s only one thing sure sooner or later its going to change.

wrangler

K.G. wrote: »

The longer im going im going the more i think we have too many hangups about selling land.unless there is a clear successor who invested in the business (by that i mean
time and commitment ) and the keeping it intact is fundamental to it continuing,sale and division is the best way of dealing with the situation .there may be places that have been in family names for years but there s only one thing sure sooner or later its going to change.

I've really no near relatives and I'd be keen to give it to the tenants at the time to help to make them more viable, The OH, on the other hand, has loads of near relatives and ........
So I suppose it'll depend on who is last person standing . It doesn't really worry me either way.

Who2

wrangler wrote: »

Forgot that it'd be only valued at 10% of it's value

Not if he’s not a spouse

wrangler

Who2 wrote: »

Not if he’s not a spouse

I was sure that land was always valued at 10% of it's value if farmed on for six years,
Is money allowed to be valued at 10% if it's specified in the will to be spent on land

[Deleted User]

Who2 wrote: »

Not if he’s not a spouse

If you meet the criteria of agri relief its valued at 10% (green cert, you have to farm the land for 6 years, 80% of your assets including cash have to be considered agri assets etc). I was under the impression myself that this was for parents to their children only but on reading again it does not appear to specific any relationship criteria.

Spouses are totally exempt from CAT, you could hand your spouse a billion euro and they would pay no tax on it.

K.G.

wrangler wrote: »

I've really no near relatives and I'd be keen to give it to the tenants at the time to help to make them more viable, The OH, on the other hand, has loads of near relatives and ........
So I suppose it'll depend on who is last person standing . It doesn't really worry me either way.

There was a man near us used to say"a penny left after you is bad management ".maybe you should just blow it

Buford T. Justice XIX

K.G. wrote: »

There was a man near us used to say"a penny left after you is bad management ".maybe you should just blow it

I think that's the difference between both sides.

One side is focused on building up and providing an increased security and base to develop for the next generation.

The other side seems, to me, to be focused on providing security and assets for today.

I don't see myself owning land, all I have is a chance to provide a living for today and try to develop what's there to provide a better chance for the next generation to do the same. The land is just in trust with me.

kevthegaff

I think if I started with zero and bought a farm I would have a different perspective than inheriting a farm from my parents. When inheriting I believe there is alot of unspoken rules you should try to keep. Why has your pare ts given it to u instead of spending it, their hoping it will be kept safe and passed along the generations as best as can