How does farm transfer affect pension entitlements? Put it on your checklist, writes
When a family farm is being transferred to a child or a relative, the parties involved in the transfer will need to plan and prepare in advance.
This is very important; the transferor and the transferee need to be aware of the implications of transferring the farm.
In this article, we will try to set out some of the practical considerations that the parties should consider before the transfer takes place.
It is advisable to involve all your children in the process and communicate to them your plans in respect of the transfer of the assets.
If one child or relative has been farming the land with you, it may make sense that the lands are transferred to them, but you may also need to provide for your remaining children, and you will need to look into the best way of doing this.
For instance, you may wish for sites to be left on the farm which are to be transferred to your other children.
You may wish to look into what conditions should be attached to the farm transfer.
It is very common in farm transfer that a right of maintenance or right of residence is a condition attached to the transfer of the farm.
This will allow you to remain in the farm house for the remainder of your life, and for you to be financially looked after by the transferee for the remainder of your life.
It is advisable to start making appointments with professionals as early as possible, such as an accountant, tax consultant and a solicitor.
You may also wish to take advice from an agricultural consultant.
It essential that both parties to the transfer get separate legal advice and separate tax advice.
If there is a mortgage, for which lands are held as security, you should contact the financial institution, to obtain their consent to the transfer.
This should be done as early as possible.
As farmers are self- employed, they should establish their position with the Department of Social Protection in relation to their PRSI contributions, and eligibility for the Contributory State Pension. Spouses of farmers should also make enquiries in this respect.
And it is absolutely imperative that you get advice from a tax consultant in this respect, before entering into a farm transfer. There are a number of reliefs that the parties to the transfer can potentially avail of. It is important to get tax advice at an early stage as to whether the parties will qualify for these reliefs.
There may be burdens on the title, such as rights of ways, which your solicitor will advise you on.
Certain burdens on the title can be potentially be removed, and it is advisable to deal with these well in advance of the transfer.
It would be advisable to obtain the accounts in respect of the business or the farm as you need to be certain, as to what liabilities and debts you are taking on once the transfer has been completed.
Poor communication between family members when a business is being taken over is common, and it is preferable that any potential issues are ironed out ahead of the transfer taking place.
In this respect, it is again of benefit to have instructed professionals at an early stage, in order that the transfer can proceed smoothly.
Preparation and planning are key, before a farm transfer takes place and it strongly recommended you take advice from a solicitor and a tax consultant at an early stage before proceeding with a farm transfer.