Farming Legal Advice: Inheritance tax changes for farmers in care explained

Wed, 05 Jan, 2022 - 12:29

Karen Walsh

Dear Karen,

My father wants to transfer the farm to me. I am farming at home with my father since I left college. His health is ailing and we as a family are concerned that he may have to be cared for in a nursing home in the foreseeable future and obviously are concerned about the cost. I have heard that there have been some changes to the Fair Deals Scheme but am not sure if we as a family qualify to avail of the positive changes. Can you explain whether they would be applicable to our circumstances and what would we need to do?

Dear Reader,

Under the Nursing Home Support Scheme Act 2009 (the scheme is known by many as the Fair Deal scheme), farming assets which were transferred within a five-year period before the application is made for State support or ancillary State support will be considered for the purpose of calculating the applicant’s means.

An eligible applicant must provide 80% of assessed income and 7.5% of assessed assets each year. There is a three-year cap on payments.

This means that, 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 means that the farm is included in the assessment of assets unless it was transferred to you by your father more than five years ago.

However, there was a new change to the Fair Deal Scheme in relation to farms and indeed all businesses introduced on October 20, 2021, whereby the three-year cap also applies to such assets if certain conditions are satisfied.

The conditions are:

You must apply to appoint your farm successor who must run the farm for at least six years. The successor must be at least 18 years of age and be a child, nephew, niece, grandchild, brother, step-brother, uncle, aunt, son or daughter-in-law or parent or step-parent. A successor cannot be appointed until the applicant (the person needing care) is in care. An application should be submitted as soon as possible so the six-year period can commence running.
Your farm must be run by you, your partner or your proposed family successor for at least three of the last five years. A legal charge must be placed on your title to your farm.

You need to make an application to the HSE if you wish for the farm to be capped to the three-year period. The HSE can review your application and check that you comply with the conditions during the six-year period.

You must prove that the farm has been actively worked by you or your farm successor. You will need to produce evidence from DAFM, such as a registered herd number with herd owner status for each year since the family successor was appointed or a sheep flock number.

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Other proofs may include evidence that you are producing and delivering milk to a registered milk purchaser and certified farm accounts and documentation of sales of hay and silage. You should ensure that you keep records for every year.

This is a welcome development after years of lobbying by the IFA and other bodies. Farmers who are currently in nursing homes before the new law came into effect can still apply to cap the farm to three years and need to make the application before April 20, 2022, and should do so as soon as possible.

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.

- Email: info@walshandpartners.ie - Web: www.walshandpartners.ie

While every care is taken to ensure accuracy of information contained in this article, solicitor Karen Walsh does not accept responsibility for errors or omissions howsoever arising, and you should seek legal advice in relation to your particular circumstances at the earliest possible time.