Michael Brady.
Agricultural Consultant and managing director at Brady Group: Agricultural Consultants & Land Agents. The Lodge, Lee Road, Cork.
Are you worried about how much money you leave in your will being published in the newspaper after you die?
I recently had an interesting conversation with a farmer client who told me that the publication of how much money they leave in their will was of importance to them. To say I was very surprised, is putting it mildly!
Over the years, I have done numerous consultations with farmers about succession and handing assets on to the next generation, but this was new to me.
In fact, it goes totally against the advice I’ve been giving for years, i.e. that it is best to die with zero.
The advice to die with zero comes as a shock to most farmers as they have spent all their lives improving the farm business and gathering even hoarding assets, thereby increasing their net worth i.e. how much they are worth after adding up everything you own and subtracting all the debts.
The usual reaction from clients is that I will surely need a roof over my head and a lump sum for future emergencies or what about if I end up in a nursing home? I understand this line of thinking, but todays Ireland is a first world country and people are dying with too many assets and too money in the bank.
We often hear the comment made about farmers who work all the hours God gave and are successful at buying a lot of land; ‘Sure they can’t take it with them’, referencing the fact that the said farmers spend every spare hour working to make more money to pay down bank debt or buy the next block of land. Its correct this is a sad way to live one’s life.
I admire farmers who work hard, build successful businesses and accumulate land or assets in their lifetimes, but there is an element of truth in the above saying in that it often comes with the sacrifice of denial of personal enjoyment/fulfilment i.e. living your life. Hard work can be addictive, the buzz of buying land can be very fulfilling for the buyer but at what cost to themselves, their family and to others.
Take the hypothetical example of a person who works all their life, lives very frugally and saves all their money into a bank deposit account. Let say they live to 90 years of age have no children and when they die they leave €5million in the bank. I think we would all agree that this person lived a very sad unfulfilling life. This example is the very reason one should consider dying with zero.
In Ireland we constantly underestimate the great strides our country has made over the last 50 years. To be fair working hard to build assets was necessary in the farming community over the last 50 years, as our farms were small and underdeveloped. We often hear the saying ‘there is no money around’, well this is the colloquial way of saying there is a lack of capital in a country, an economy or a specific industry. Well there is plenty money in today’s Ireland. It is now time to consider change.
Farmers who are 50 years of age plus, have acquired significant assets over their lifetimes. Many were reared in harder hard times and know how to ‘make the pounds and save the pennies’ however the children of these farmers in their 20’s and 30’s are finding it hard to get on the property ladder as salaries have not kept pace with the rate of house and asset inflation.
This is why the farmers who are 50 years plus must look at putting the plan in place to die with zero.
I am not for one minute suggesting that all these asset rich landowners develop a wild midlife crisis and go on a spending spree! However, I am recommending that they do the following:
- Transfer the farm business and assets to the next generation.
- Experience life outside of farming before they are too old to do so.
- Invest time and/or money in their community or in those less fortunate than them.
Of course, retain your house or a right to live in your house and calculate how much money you need until you die, with the aim to die with zero.
Previous generations did not have the assets or income to consider this type of succession plan, but not that we have arrived as first world country we can.
There are many benefits in such a plan:
- The younger generation who are well educated and full of energy can utilise the assets to drive on the business for their benefit in their lifetime. The best time in a farm business cycle is when young ambitious generation work with experienced older heads to take a business to the next level.
- Retirees experience the joy and pride in seeing the latest stage of progress of the family farm business, without all the risk or work burden.
- Retirees and parents are free to visit family members abroad or spend extended periods of time in other parts of the world.
- Retirees are free to get involved in other activities off farm.
- Retirees can invest time and or money in the community.
- Retirees can invest time and or money in those less fortunate or donate to charity.
There are just some of the benefits of transferring assets earlier and freeing up some time to experience the great big world out there. I genuinely believe a list of these experiences and achievements would read must better in the paper than the reporting of how much money you left in your will.