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GAZETTE
SEPTEMBER1981
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
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