Why farmers should put their affairs in order

Solicitor Karen Walsh says the most frequent questions from farming clients are on farm property transfers, collaborative farming arrangements, making wills, rights of way, and pre-nuptial agreements.
Why farmers should put their affairs in order

Karen Walsh works in a general legal practice in Macroom, Co Cork. She has compiled the following list of frequently asked questions which come from clients from farming backgrounds.

This week’s questions are on collaborative farming arrangements, making wills, rights of way, and pre-nuptial agreements.

Q. Why is it important to have a written agreement in relation to contract-rearing of heifers, cow leasing, farm partnerships, etc?

A. It is critical that there is a written agreement, because it is important that each party knows their obligations and responsibilities under the agreement. It is a lot easier to work out the details before the agreement is signed than to work out a termination agreement after an emergency or disagreement occurs. Cow leases and contract rearing of heifers are business relationships that require a significant level of trust. This trust can get a significant jump start with clear communication on relevant issues between the parties.

Q. How many executors should you appoint in your will?

A. It is a personal choice. Most people have one or two, but you can have more. However, you need to consider the necessity and practicalities of having more than two or three executors. It is best practice to have at least two executors, in the event that one dies.

Q. Why is it necessary to insert a residue clause in your will?

A. If you do not give away all of your assets in a will, and there are remaining assets, for example, you inherit land or you win the Lotto, and you do not have a residue clause in your will, those assets will be divided according to the rules of intestacy — that is, they will be distributed as if you died leaving no will, and they may pass to persons who you would never intend them to pass to. It is critical to have a residue clause in your will.

Q. Is it expensive to make a will?

A. No it is not. It represents great value for money. Careful will drafting can have a significant impact on the level of inheritance tax which will be paid. It provides an opportunity to assess the position and consider what steps can be taken to minimise the inheritance tax liability. You should also review your will regularly, as tax regimes change. The small cost of making a will can represent excellent value when compared to the tax savings that can be made.

Q. I want to transfer the farm to my daughter. Can the same solicitors’ firm act for both me and my daughter?

A. No. The Solicitors (Professional Practice, Conduct and Discipline — Conveyancing Conflict of Interest) Regulation 2012 which came into force on January 1, 2013, prohibits solicitors from acting on both sides of any conveyancing transaction.

Q. I enjoy the benefit of a right of way to gain access to my lands? Do I need to register it?

A. The application to register a right of way will depend on three things. Firstly, whether the applicant was claiming the right prior to December 1, 2009. Secondly, which of the three methods of acquiring rights by prescription is being claimed, and lastly, whether the application is being contested.

The use and enjoyment must be for a period of at least 20 years, depending on which of the three methods of prescription are being claimed, and must be for a continuous period. A claim for rights acquired by prescription under the law prior to December 1, 2009, or in the process of being acquired, can be established up until November 30, 2021.

It is advisable to contact your solicitor, who will advise you in relation to the circumstances of your specific claim.

Q. Does a judge have to take a pre-nuptial agreement into account, in the event of a divorce?

A. A pre-nuptial agreement is an agreement that details each party’s rights and expectations in the event of a divorce. Prenuptial agreements are not recognised in Ireland at present. However, this may not always be the case. Although they are not legally enforceable, a judge can take them into consideration in relation to divorce proceedings. If you are thinking of drawing up a pre-nuptial agreement, it is important that they are well drafted, and you should consult a solicitor. It is also important that both parties receive independent legal advice, to reduce the chance of one party claiming that they didn’t understand the agreement, or didn’t know what they were signing. Ensure that you review your pre-nuptial agreement periodically, especially after you have children.

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