Traditionally, farmers have been quite hesitant when it comes to making a will. And this has major consequences in terms of planning for succession within their businesses.
This was a key message delivered by Omagh-based accountant Seamus McCaffrey, courtesy of his presentation to the recent Young Farmers’ Clubs of Ulster (YFCU) agri conference. The event, which was sponsored by Massey Ferguson and the Ulster Farmers’ Union, was held in the La Mon House on the outskirts of Belfast. It attracted a tremendous turnout of delegates.
“Thankfully, more people are making wills than was previously the case,” said Seamus, who added: “But more must be done to encourage farm families to openly discuss how succession can be managed in the most open and transparent manner.
“Active succession planning should be considered as an extremely positive development within every farming operation. At a very fundamental level, it will help ensure that the skills developed within the business can be successfully passed-on to the next generation.
“Active succession planning goes to the very heart of farming sustainability in Northern Ireland.”
Where wills are concerned Seamus confirmed that two executors should be appointed, one of whom should have a good knowledge of technical farming issues.
“Appointing a power of attorney within a family is also advisable in the event of the farm owner taking ill at short notice or occasions arising when decisions relating to the running of the farm cannot be taken by the owner, for whatever reason.”
Seamus then discussed in detail the potential impact of Inheritance Tax and Capital Gains Tax on succession planning arrangements. He stressed the need for families to get regular legal and accountancy advice on these matters.
The Omagh-based accountant also highlighted the impact of these taxes within farm businesses that had actively diversified their operations.
“The objective in all cases is to minimise the tax burden on the business,” he stressed.
The highly successful ‘Land Mobility’ programme, co-ordinated by the YFCU in tandem with the Ulster Farmers’ Union (UFU) was also highlighted as an important vehicle to help drive forward the challenge of succession on local farms.
Project manager John McCallister confirmed to the conference that 48% of farmers aged 50 had not identified a successor for their business.
“The average age of a farmer in Northern Ireland is currently 58 years,” he said. “The age profile of the industry is far too old. And this state-of-affairs must be changed if the industry is to progress.”
He added: “Young people must be given an opportunity to secure a sustainable future within agriculture. And the Land Mobility programme can play a key role in this regard.”
The new service acts to partner older landowners with young people, committed to a future in farming.
“At its heart is a recognition of the need to encourage longer term land leasing arrangements,” John explained.
“This can take many forms, the development of farm partnerships being one.”
The YFCU representative confirmed that tax changes introduced in the Republic of Ireland a couple of years ago had acted to encourage the forging of longer-term land leasing arrangements in that part of the world.
“It would be very pertinent for the Inland Revenue to take a similar approach on this matter here in Northern Ireland. I am aware that both the Young Farmers’ Clubs of Ulster and the Ulster Farmers’ Union are actively lobbying on this matter at the present time,” he said.
“I currently have 200 people on my database and 20 succession planning arrangements already put in place. The data base is split 50:50 between those wishing to lease land and younger people wanting to develop a sustainable career within agriculture. This is a very encouraging starting point from which to work during the period ahead.”