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Keeping Your Farm in the Family
Forward Thinking Business Blog –
The average age of a farmer in Northern Ireland is 58. For the average to be so high, there are clearly many older farmers within the overall population. Like most family business owners, farmers disadvantage themselves and their families when they postpone succession planning.
Change is inevitable
It is a fact of life that most businesses will face changes in family circumstances due to health, widowhood, marriage and divorce as well as changing family member expectations and needs.
Concerns about separation and divorce can cause particular anxiety for farm businesses where farmers often see themselves as custodians rather than owners of their holding. It is important to be aware that in cases of marital breakdown, there is rarely a 50/50 split of farm assets with matters such as intergenerational farms, financial viability and the spouse’s contribution to the farm all taken into consideration. Usually, a financial settlement is preferable to a farm sale or split in these circumstances, but the question then arises as to how to fund the settlement.
Planning ahead is vital if you want to hand over a sustainable farm business to the next generation, says Feargal McCormack.
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Farm structure
The structure of the farm business is another important consideration when thinking about succession. Partnerships are becoming more popular because of the advantages they provide in areas such as intergenerational involvement in the business. However, partnerships also involve certain risks and it is important that these are regularly reviewed and appropriate actions taken to mitigate against them.
Tax planning
Tax is another important area to look at. A sensible timetable must be in place for at least 5-10 years prior to retiring or handing over the family farm in order to take advantage of the available tax incentives.
