The Gazette 1981

SEPTEMBER1981

GAZETTE

BOOK REVIEWS Farm Family Partnerships, produced and published by Macra na Feirme and The Incorporated Law Society of Ireland. Production and publication sponsored by The Agricultural Credit Corporation. Price £2.00 including VAT — Paperback only. For years, by reason of ever-increasing (until lately) land values and the consequent impact of gift and inheritance taxes, the legal practitioner has been worried almost as much as his client by the problem of how the family farm can best be organised in order to minimise whatever form of fiscal impost will necessarily attend the passing of the family farm from one generation to the next. The all-too-obvious fact that a combination of current recession and the logical culmination of the great EEC bonanza have, between them, resulted in a near disastrous decline in farm and, in consequence, land values, has made the present time particularly propitious for the handing over of farming land, in terms of Capital Acquisitions Tax and Capital Gains Tax. Given a farmer prepared to relinquish the reins in favour of his offspring or, in certain circumstances, his nephews, a great deal of land can be passed on at today's values without giving rise to any charge of Acquisitions or Gains taxes. The avowed intent of the present Government to abolish the tapering rates of Capital Gains Tax could well have a significant impact on this position but, hopefully, indexation relief would still remove much of the chargeable gain from agricultural land. But matters are not always as simple as this. A great many farming proprietors, for a great many reasons — mostly bound up with their own personal security — feel unable or unwilling to pass on their land — and, with it, their personal security and, indeed, standing in the community. This reservation has, demonstrably, resulted in the next generation acquiring land too late to realise its best potential and, in many cases, too late to make matrimony economically viable — the old adage that two can live as cheaply as one is as untrue in farming circles as anywhere else! In recent years an acceptable "halfway house" has been gaining favour in certain agricultural communities; in France and New Zealand and, nearer home, in Northern Ireland, forms of Farm Partnership are being evolved which retain for the senior generation a valuable (and interest-preserving) stake in the family farm, while admitting the younger generation to a proprietory slice of the action. How a farm family partnership should be tailored is a matter for the circumstances of each case, tempered by the prevailing social mores of the community but, in the Republic of Ireland, the concept has been given a hefty shove forward by the publication by Macra na Feirmc and the Incorporated Law Society of a pioneering work under the title "Farm Family Partnerships". On the very excellent principle of putting one's money where one's mouth is, it should be added, with all possible praise and no disrespect, that the production and publication has been sponsored by the Agricultural Credit Corporation. Let more such institutions take note and follow suit. It would be invidious to mention only some of the

names involved in the truly vast endeavour that has gone into this book from both Macra na Feirme and the Law Society. Certain credits are given in the book itself but. clearly, more industrious souls have given of their labours than could ever be listed. Suffice it to say that their turns has not been in aisce and that they have pioneered a work which we can only hope will see many later editions, incorporating the many practical and legal developments and refinements that will inevitably flow from this first endeavour. The book is presented as much as a guide to the farmer and his family as for Lawyers and Accountants and. by reason of its "middle of the road" approach, must serve more as a stimulus to social reform than as a practical textbook. Nevertheless, a great deal of thought has gone into the fiscal and legal implications of the use of the partnership agreement and a precedent is offered which, at one and the some time, brings about a true working partnership from day one and, in addition, leads to a gradual increasing proprietorial stake for the young participant, culminating in total ownership for the son (or daughter) after an appropriate period. The book considers all the necessary elements of a farming partnership — management, property, banking, accounts, income tax and periodic drawings and contains useful case^histories of some typical family farming situations illustrating how partnerships have successfully been utilised to create a stake in the land for the younger generation without consigning the older generation to the County Home. It should be emphasised that this is not merely an exercise for ranchers or bloodstock breeders. The examples contained in the book, as well as those offered at the recent Law Society/Macra Symposium at which the book was launched, are those of the smaller farmer, faced with the all-too-real problem of accommodating the child lately graduated from agricultural college, in the context of a number of other children for whom the one modest family farm cannot hope to provide a living. Indeed, it was made encouragingly clear at the Symposium that a family farm partnership could actually increase profitability making it possible for two — or even three — families to live reasonably well off the one farm or group of farms. Arguably the technical sections of the book must go beyond the ordinary capability of the average farmer and are intended as a guide to his advisers. Those advisers must be warned, however, that the techincal comments and the precedents offered are no more than that — a mere guide. Under no circumstances should the precedent Partnership Agreement set out in Chapter 9 be used without the closest possible scrutiny, nor without the closest possible consideration of the individual family circumstances. By way of example only, mention should be made of the precedent provision for Spouse Consent under the Family Home Protection Act, at pages 83 and 84. It must be doubtful whether such Consent could amount to a waiver of a Spouse's legal right share under the Succession Act 1965 and the legal adviser should be careful to consider, in the circumstances of each case, whether such a waiver should also be procured. Also by way of example, the drafters of the precedent Partnership Agreement have not — indeed, they arguably could not — make any special provision for the

253