The rapid decline in the Government’s finances as a result of the Covid-19 pandemic crisis has raised the prospect of tax-raising measures in the upcoming budget.
While Finance Minister Paschal Donohoe has ruled out increases to income tax and other big tax categories, such as VAT, the likelihood that certain tax reliefs might be reduced, scrapped, or altered remains a possibility.
One area that may be examined is gift or inheritance tax, which is paid by someone who receives a gift or inherits property or funds from a person.
The UK is considering a hike in inheritance tax, as a way of paying part of the coronavirus bill.
It is possible that certain reliefs, for example, young trained farmer relief, agricultural relief, and business relief, will be examined closely, which may have an effect on farm transfers to the next generation, and on succession planning.
I am beginning to sound like a broken record, as I keep saying this over and over again, but the best piece of advice I can give to anyone intending to transfer a farming business or farmland to the next generation is not to leave it until the last minute.
Adequate time needs to be given to obtaining tax advice, valuations, and forming a plan that most suits your circumstances and how to structure it.
In addition, an engineer may need to be instructed to mark maps.
Every farm transfer is unique.
One of the relatively recent requirements in place in order to qualify for young trained farmer relief is the transferee to have a business plan in place, approved and certified by Teagasc.
This is an example of one such thing that can take time.
There is work to be done on both the side of the transferor and transferee.
If a farm transfer is left too late, for example, too close to a 35th birthday, rash decisions may be made that you may regret at a later date.
Make appointments with professionals as early as possible.
Speak with your accountant or tax consultant.
Consult your solicitor well in advance.
You will need to contact your bank, in order to obtain their consent to the transfer, if that particular property is mortgaged, and this can sometimes take a few months.
People who are self- employed should check with the Department of Social Protection about PRSI contributions and the pension.
Check that you qualify for a medical card or GP Visit Card.
Ensure that you will be financially secure after the succession plan has been implemented. Once, you transfer property, you will no longer be the owner of such a valuable asset.
Give yourself time to explore the options and discuss the options with your solicitor to ensure you are comfortable for the rest of your life after the succession transfer.
Do you keep a right of residence for the rest of your life? Perhaps you do not wish to transfer the family home now, and would prefer to leave it pass in your will?
Do you require a right of maintenance out of the property?
While it is your wish to transfer to the next generation it is important also to ensure that you are financially secure, once assets are transferred.
Make a will or review your existing will.
While you are deciding what to do, ensure you have a valid up-to-date will in place, in the event of an unforeseen premature death.
If you do not make a will, your estate will pass according to the rules of intestacy, and your estate may pass to those you would never have intended to inherit it.
If you have a successor in mind, ensure you have a will in place giving it to that particular person, until such time as you are ready to transfer the business and land.
* Karen Walsh, from a farming background, is a solicitor practicing in Walsh & Partners, Solicitors, 17, South Mall, Cork (021-4270200), and author of ‘Farming and the Law’. Walsh & Partners also specialises in personal injury claims, conveyancing, probate and family law.
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