Why can’t I leave my farm to my son in my will?

Question: I recently visited my solicitor to make my will. I wanted to leave my farm directly to my son who has been farming with me since he was a child. My solicitor told me that it wasn’t possible, that my wife would inherit it first and under her will she would have to leave it to our son. It does not make sense to me. Surely I can do what I like with my farm. My wife has said that she does not want the responsibility of owning it, so we are both in agreement for it to go straight to my son.

Answer: Many people incorrectly assume that if they are married, their spouse automatically owns half of what they own. That is not the case.

Unless property is legally transferred into both their names as co-owners, they have no automatic ownership rights. It is very easy to check ownership via landdirect.ie as to who is the current registered owner assuming the land is registered with Tailte Éireann. If the land is in the Registry of Deeds, a perusal of the title deeds or a search in the Registry of Deeds will establish the position.

If property is put into both names it can be held as either joint tenants or as tenants in common.

What is the difference?

In the case of joint tenancy which would be typical of how property is held between spouses, the property will automatically pass to the surviving spouse on the death of the other co-owner. The benefit of this is that it can avoid probate having to be taken out in the event of the death of one of the co-owners. The drawback is that if the co-owner intended the property to transfer to someone else such as leaving a farm to a son or daughter in a will, that will not take effect as the property would automatically go to the spouse.

In the case of tenants in common, which would be typically how siblings hold property, the property will not automatically pass to the other co-owners in the event of a death but would rather pass to whomever that person left their property to under their will.

So if you and your wife want your property to go directly to your son, I would suggest that your wife needs to transfer her interest in the property back to you, and then you would have to transfer it to your son either in your will or during your lifetime. From a tax perspective, transfers between spouses are generally tax exempt.

Herd numbers

If the land is in joint names, it is important to ensure that both owners are regarded as trading as farmers. This means asking your accountant to ensure that both spouses are registered for tax with Revenue as farmers and the farming income is returned in both names. This is especially important when it comes to succession and passing on the family farm to the next generation as the owners will have to be able to avail of Retirement Relief if they pass the assets while they are alive as opposed to under a will.

In order to avail of Retirement Relief, both owners need to be able to show that they have owned and farmed the land for 10 years prior to transfer. If both owners are not registered for tax as farmers, they might struggle to prove that they are farming for the requisite 10 years.

It would be important also to put the herd number into joint names and also the entitlements. A good time to do this is the start of the calendar year when the DAFM payments have already been made. Again, it’s something your agri advisor should be able to help with as part of the annual BISS application.

Legal right share

The law provides that your spouse or civil partner has a legal right to half of your estate where you have no children. If you have children, your spouse or civil partner is entitled to one-third of your estate.

However, a spouse can renounce their entitlement to claim their legal right share. Your spouse or civil partner also has a right to require that the family home and household contents be included in his/her share (and the share of children under the age of 18). Your children are not automatically entitled to any part of your estate but they may apply to court if they deem that you have failed in your moral duty to make proper provision for them in accordance with your means, taking into account their position in life.

Thus it is important to bear this in mind when drawing up your will.

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors and Tax Consultants does not accept responsibility for errors or omissions howsoever arising. E-mail aisling@agrisolicitors.ie