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31 Jul, 2020

Succession planning continues to be neglected on Irish farms

Have you thought about Succession? A key message for all farmers is that while you may have an idea of what you want to happen to your business when you retire or pass, this will have no impact on what eventually happens unless you document your succession plan and make a Will.

Succession planning continues to be neglected on Irish farms. Among sole traders, who account for almost 70% of survey respondents this year, only 10% have a clear succession plan in place while more than a third (37%) say succession planning is not on their agenda.

Around 4 in 10 sole traders are concerned that their farm is not viable and would not encourage the next generation to take it on. While these farmers may be ‘cash poor’, their farms are a valuable asset. Passing a farm on to the next generation without appropriate planning can lead to substantial tax bills.

The picture is somewhat better when it comes to partnerships. This is not surprising as succession is usually among the issues discussed when entering into this type of business structure. Nevertheless, even among farmers in partnerships, 20% say succession planning is not on their agenda while a further 26% have identified a successor but not yet formalised a succession plan. While these farmers may have a plan in their head, unless this is properly documented, they risk creating legal and tax problems for their successors.

In recent years, more farms have opted to become limited companies. Our survey shows that 27% of limited companies have not tied down a successor and that a similar percentage admit they have haven’t put much thought into succession planning. Only 14% of limited companies have a clear succession plan in place.

A key message for all farmers is that while you may have an idea of what you want to happen to your business when you retire or die, this will have no impact on what eventually happens unless you document your succession plan and make a Will.

Questions to consider when succession planning:

  • Do you have a successor and if so, will your successor farm full-time or part time?

  • Do you still want to be involved in the farm and, if so, at what level?

  • Will you need to take money out of the business to provide for other family members or do you have other independent resources?

  • If there is no successor, will the business continue?

To read our full Irish Farm Report click here