Eamon's dilemma. Who should he leave the farm to?

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Eamon's dilemma. Who should he leave the farm to?

Eamon is a widower aged 75 and has decided to make his will. He has three children John, Jack and Maura. He is trying to decide who should inherit the farm on his death.

He has been a farmer all of his life and has no intention of retiring.

Options to consider

John lives in Dublin and is an accountant and has no interest in farming. Jack lives nearby and has a successful business as the local dentist. Maura is a nurse living and working in London for the past 20 years. Having done some research he understands that there are a number of conditions to satisfy to get the 90% agricultural relief that is available against inheritance tax.

Financial test for agricultural relief

The financial test that must be satisfied is that the child he gives the property to must have 80% agricultural assets after getting the farm.

Farmer Activity test for agricultural relief

Maura will meet that financial test but Eamon's concern is that she has no interest in farming and has a family in London. He is aware that she will still get the tax relief if she leases out the land to a local active farmer for a six year period and the local farmer farms the land on a commercial basis for the 6 years.

However this will mean that a stranger will be farming his land and Eamon is uncomfortable with this happening.

He thinks that Jack is the most likely one of his children to hold onto the farm and keep it in the family name but Eamon is concerned at the amount of tax that Jack will have to pay if he gives him the farm.

If you would like some assistance with planning for the future please contact us to discuss your options.

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The material in this article is for general information purposes only and does not constitute legal or taxation advice. Specific legal and taxation advice should be sought before acting. All information and taxation rules are subject to change without notice.

No liability whatsoever is accepted by M. McLoughlin & Co. for any action taken in reliance on the information in this article

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