Agricultural succession
The The continued existence of agricultural holdings Nowadays, more than ever, this requires the business acumen of the business owner. This includes a forward-looking succession strategy. We can assist you in all aspects of this – thanks to our firm’s structure, which takes a comprehensive approach that takes full account of all matters relating to inheritance law, tax law and company law.
Once a suitable successor has been found, tax and legal issues need to be clarified. There is no one-size-fits-all solution for a successful farm handover. Every farm and every family situation requires individual solutions. For example, a handover within the family where there is only one child must be organised differently from a handover to an outsider when there is no successor within the family.
At the same time, the position of relinquishing heirs must be taken into account. The provisions of the Farm Regulations (HöfeO) may need to be observed. Other relevant issues include providing for the spouse. In modern blended families, it should also be clarified whether and how the agricultural and commercial business assets are to be retained within the family line.
We support our clients with an interdisciplinary approach to the following issues:
A smooth handover of the farm
If the generational gap within the family is small, the successor is already waiting in the wings, even though the farm owner is still of working age. To offer the successor prospects for the future, they should be involved in the farm from an early stage. There are various approaches that can be taken here:
- Transfer subject to a right of usufruct
- Leasing to the successor
- Parent-Child Civil Law Partnership
Transfer of a farm free of charge as part of an anticipated succession
To ensure a successful farm succession under an anticipated succession arrangement, it is important to take into account not only interpersonal considerations but, above all, tax and legal issues. The following topics are of particular importance:
- Will hidden reserves be disclosed, and might this result in an income tax liability?
- What is the best way to utilise existing reserves under Section 6b of the Income Tax Act (EStG)?
- Does the transfer trigger VAT?
- How should agricultural and forestry assets be valued?
- Does the transfer of a farm trigger inheritance tax?
- Does the farm fall within the scope of the Farm Regulations? Is it possible to opt out of them?
- How can heirs who have waived their claims be fairly compensated?
- How can the transferor’s retirement income be safeguarded? Should a retirement allowance be agreed?
Farm succession by inheritance
It is not always possible to plan farm succession well in advance. It is therefore reassuring when the farm owner has made provisions in a will. This spares the heirs a great deal of uncertainty and dispute. If there is no will, the advice of a specialist solicitor ensures that the rights of those involved are protected. We can provide expert advice on the following matters:
- Drafting of Wills
- Determining the farm’s value
- Calculation of severance pay entitlements and supplementary severance pay entitlements
- Claims for statutory shares and supplementary statutory shares
Transfer of a farm to a third party – usually for a fee
If there is no successor to the farm within the family, a number of issues – primarily tax-related, but also financial – need to be resolved. Our experts are on hand to assist you with the following matters:
- Does the audit result in the identification of hidden reserves and income tax liability?
- How can the disclosure of hidden reserves be avoided?
- What should be taken into account when leasing out the farm?
Pension provision and matrimonial property law / prenuptial agreements:
Even the best estate planning can go wrong if the underlying circumstances are not right. That is why we also provide expert advice on the following matters:
- Living will
- Enduring Power of Attorney
- Prenuptial agreement