Karen Walsh: Farmers’ assets do not reflect their ability to pay in Fair Deal Scheme
As farmers’ residences are often located on the farm, it can make the remainder of the farm difficult to sell, and could force a sale of the entire farm assets.
The Government is due to publish a cross-departmental review in respect of the State’s nursing home Fair Deal support package, and there is increasing pressure to exempt a large percentage of farmer’s assets, when considering the contribution paid by farmer applicants under the scheme.
The nursing home support scheme provides state financial support to people in need of long term nursing care.
The scheme looks to balance the personal cost of nursing home care, and financial support from the State.
The level of state support that an individual is entitled to under the scheme is based on an assessment of their means, which takes into consideration the assets held by the person and their income earned. Under the scheme, the State will cover people who cannot afford to pay for nursing care, but those who can afford it are expected to pay.
Under the Nursing Home Support Scheme Act 2009, assets considered for the purpose of calculating the applicant’s means include assets which have been transferred within a five-year period before the application is made for State support or ancillary State support.
Accordingly, if a farmer is transferring his farm to a relative, they must ensure a five-year period elapses between the time of the transfer and the first application for State support.
Many farmers are now choosing to transfer their farms earlier than they would have intended, to avoid nursing home fees reducing the value of their farms.
Under the Scheme, a person can pay nursing home fees upfront, or they can be collected after death by the state.
The calculation for payment used is 80% of a person’s annual income such as pay entitlements or pension, and 7.5 % of the value of the assets such as your farm or principal private residence.
In respect of the principal private residence, the maximum contribution that can apply is 7.5% of the value of the residence for the first three years of care.
This also applies to a farm in certain circumstances, where a farmer has been involved in the day-to-day management of the farm, suffers disability or illness which requires nursing home care, and a family successor certifies that they will continue to manage the farm.
Under the Fair Deal Scheme, farmers need to plan ahead from a financial and tax perspective, should they wish to maximise state support towards their nursing home care, and it may be worth their while to consider transferring assets to their relatives earlier rather than later.
Many other factors have to be considered, when voluntarily transferring a farm, but farmers are advised to obtain financial and legal advice at an early stage, to maximise the benefits for their successors.
If farm assets were to be exempted in Fair Deal, this would ease a considerable financial burden on those inheriting farms from relatives, and would lead to a smoother farm transition process.
Many farmers in Ireland struggle to obtain a viable income from farming, and it often the case that farmers are asset rich but income poor.
They are concerned that their children will be burdened with considerable nursing home bills after their death.
Ultimately, the existing Fair Deal scheme in most cases does not accurately reflect a farmer’s ability to pay nursing home fees, and if a part of the farm is forced to be sold to repay nursing home fees, it can render the remainder of the farm unviable, and can force a sale of the entire holding.
In addition, the fact that an applicant can be assessed on an asset that had been transferred a few years previously is causing huge difficulty and hardship.
Traditionally, farms are often held in the same family for generations, and farms are either transferred to other family members on death or during the lifetime of the existing owner of the land.
But there are real concerns that the viability of some farms are being undermined or lost while trying to meet the cost of care.
