Farm succession is not a single event. It is a process that, when done well, takes place over years rather than months. The families who come out of the other side of a farm succession with the land intact, the tax bills manageable, and the family relationships undamaged are the ones who planned ahead - who had the conversations early, took the professional advice early, and put the structures in place before they were urgently needed.
The families who struggle are typically the ones who left it too late: the parent who waited until illness forced the issue, or the farm that transferred on death with no succession plan in place and a large CAT bill arriving at the worst possible moment.
This guide sets out the steps in a successful farm succession process.
Step 1: Have the Conversation
This sounds obvious. In practice, it is often the hardest step. Many farming families avoid the succession conversation for years - out of reluctance to confront mortality, concern about fairness between siblings, or simply the assumption that “it will sort itself out.”
It will not sort itself out. Land does not transfer automatically or optimally without deliberate decisions. The longer the conversation is delayed, the fewer options are available and the higher the potential tax cost.
The conversation needs to involve:
Who will take on the farm - one child, more than one, a combination of family and outside? What happens to the other children - do they receive other assets, cash, or an understanding that the farm successor will compensate them over time? What does the current farmer need for their retirement - income from the land, accommodation on the farm, or a clean break? What is the timeline - an immediate transfer, a gradual handover, or a transfer on death?
None of these questions has a single right answer. All of them need to be considered before the professional planning can begin.
Step 2: Get a Current Valuation of the Farm
You cannot plan a succession without knowing what the farm is worth. A qualified agricultural valuer can assess the current market value of the land, buildings, and relevant assets.
This valuation serves several purposes:
It establishes the potential CAT and CGT exposure if the farm transferred today. It informs the assessment of whether Agricultural Relief and Retirement Relief are fully available, partially available, or require planning to maximise. It provides a baseline for comparing different succession structures and their tax outcomes.
Farm values in County Louth have increased significantly over the past two decades. A farm that was worth 200,000 euro when you inherited it may now be worth 1.5 million euro. The unrealised gain on that farm is 1.3 million euro - at 33% CGT without reliefs, that is a potential liability of 429,000 euro. Understanding this figure clearly is the starting point for planning.
Step 3: Assess the Qualifying Conditions for Available Reliefs
The major reliefs available on a farm transfer - Retirement Relief for CGT, Agricultural Relief for CAT, and Young Trained Farmer stamp duty relief - each have specific conditions. An early assessment of which conditions are currently met and which are not yet satisfied is essential.
Retirement Relief conditions to check:
Is the farmer aged 55 or over? If not, when will they be 55, and does the planning timeline accommodate waiting? Have they owned and actively farmed the land for at least ten years? (This is usually met for established farmers, but needs to be confirmed.) Is the intended recipient their child? (The uncapped relief for transfers to children is dramatically more valuable than the capped relief for third-party transfers.)
Agricultural Relief conditions to check:
Will the recipient meet the 80% agricultural property test after the transfer? This requires a current assessment of the recipient’s total assets - property, savings, pension value, investments. What does the farm represent as a percentage of those total assets? If the recipient has significant non-agricultural assets, can the transfer be structured to bring them within the 80% threshold?
Will the recipient actively farm the land, or lease it on a qualifying basis, for at least six years? Is there any circumstance - career situation, geographic location, family situation - that makes this uncertain?
Young Trained Farmer conditions to check:
Is the intended recipient under 35? Do they hold or can they obtain a qualifying agricultural qualification before the transfer? These qualifications include the Green Certificate, various Teagasc courses, and agricultural degrees. If the recipient does not yet have a qualifying qualification, obtaining one before the transfer takes place is worth planning for.
Step 4: Address Any Qualification Gaps
Once the current position has been assessed against the qualifying conditions, any gaps need to be identified and addressed before the transfer takes place.
Common issues and their solutions:
The recipient has too much non-agricultural assets for the 80% test. Options include: structuring the transfer to include a larger amount of agricultural property; reducing the recipient’s non-agricultural assets before the transfer (e.g., using savings to pay down a mortgage); or phasing the transfer over time so that the 80% test can be met at each stage.
The farmer has not yet reached 55. The planning timeline simply needs to accommodate this. If the farmer is 52, there is a three-year window to complete preparation before the relief becomes available at 55.
The recipient does not have a qualifying agricultural qualification for stamp duty relief. Green Certificate and similar Teagasc qualifications can often be obtained within six to twelve months. If the recipient is interested in farming and the timeline permits, obtaining the qualification before the transfer is straightforward.
The Retirement Relief ten-year period is not yet complete. This is rare for established farmers but can arise where land was recently purchased. The ten-year clock runs from the acquisition of the specific asset.
Step 5: Choose the Transfer Structure
Once the reliefs are confirmed as available, the structure of the transfer itself needs to be determined. The main options are:
Lifetime gift. The farmer transfers the farm (or part of it) to the recipient during their lifetime. This crystallises the CGT position for the farmer at the date of transfer, allows both Retirement Relief and Agricultural Relief to apply at that date (subject to conditions), and gives certainty. The farmer loses ownership of the transferred assets.
Inheritance on death. The farm transfers on the farmer’s death under their will (or intestacy if there is no will). Retirement Relief does not apply after death (it applies only to disposals by living individuals). The recipient’s CAT position is assessed at the date of death. Without Retirement Relief for the farmer’s estate, the CGT position on death is more complex.
Gradual handover. Some families prefer to transfer the farm in stages over a number of years - a proportion each year, or defined assets at defined times. This can spread the tax events and allow a more managed transition of management control. It requires careful structuring to ensure each transfer stage is eligible for the available reliefs.
In most cases, a lifetime gift - with both Retirement Relief and Agricultural Relief applying simultaneously - produces the best overall tax outcome. The timing (which year, at what age) is the main variable to optimise.
Step 6: Prepare the Legal Documentation
A farm succession requires solicitor involvement for the legal transfer of title. The tax planning and the legal work need to be coordinated - a deed of transfer that does not correctly reflect the agreed structure can create tax problems.
Where a will is involved in the succession plan, the will needs to be consistent with the plan and updated if the plan changes.
Where there are multiple children and the farm is going to one of them, the treatment of the other children - in the will and in the overall family understanding - should be addressed in a formal and documented way to avoid future dispute.
Step 7: Review Regularly
A succession plan agreed today may not be appropriate in five years. Farm values change, family circumstances change, the intended successor’s situation changes, and tax law changes. An annual review with your accountant is the minimum - a full review every three to five years, or whenever there is a material change in circumstances, is advisable.
The best time to start this process is always now. If you have not yet had the succession conversation or the professional review for your farm, this is the article to act on.
Paddy Malone FCA AITI
Paddy is the principal of Malone & Co. Chartered Accountants in Dundalk. A Fellow of Chartered Accountants Ireland and a Chartered Tax Consultant with the Irish Tax Institute, he has been advising businesses across County Louth and the North-East for over 35 years.