Dear Karen: beware of complications in reversing a farm transfer
Dear Karen,
I transferred my farm to my son a few years ago. Since then, we have had a huge falling out.
I want the farm transferred back to me.
He has indicated on a few occasions that he would be happy to hand the farm over to me and walk away from farming entirely.
On top of that, I have suspicions his marriage is not going too well, and I am afraid that if they get divorced, she will get half the farm.
Can I change my mind and reverse the farm transfer, if my son is in agreement to do so?
Dear Reader,
This is most unfortunate.
Any family members falling out with one another is extremely sad.
I note you said that the farm had been transferred to your son, and that you and your son have now fallen out, and relations are not good.
Your query is whether you can now change your mind, and reverse the transfer to your son, if your son is now in agreement to do so.
You are also concerned that he may get divorced.
Firstly, unless you signed a deed of transfer with a power of revocation, you cannot now change your mind or force the reverse of the transfer.
A deed with a power of revocation is very uncommon.
A power of revocation is where a person gives a gift, such as in this case, the farm, but has a right to take it back.
You should consult with the solicitor who acted on your behalf in respect of the transfer of the property to your son, to see what exactly was included in the deed of transfer that was signed.
An alternative is for your son to voluntarily transfer the farm back to you, but this transfer will trigger several tax implications for both you and your son.
For example, if your son claimed agricultural relief or young trained farmer relief, or any other kind of relief on the transfer of the farm, disposing of the asset so quickly could trigger a claw back of the tax relief he claimed.
Transferring the property from your son back to you is not without its difficulties, and you would have to obtain specific and very detailed legal and taxation advice before considering this option.
The option of your son transferring the farm to you also creates a difficulty in that if a judicial separation or a divorce occurs for your son in the near future, this transfer of the property to you could be seen as his attempt to try and dispose of his assets before any family law proceedings commence.
Your daughter-in-law could make an application to court to have any such transfer set aside, on the basis it was done in an attempt to put the assets out of her reach, pending family law proceedings.
In the likely event that such a transfer cannot take place, you should be aware that the courts are in fact reluctant to divide a farm that has been in a family for generations, and has been inherited or gifted to a successor.
The courts also tend to treat inherited property differently to property which has been obtained by both spouses during their marriage, once proper provision has been made for your daughter in law.
There is very little you can do to change the situation, if your son is facing a divorce.
