Marrying things up to help your farm survive

Remarrying when you own or rent a farm can raise a number of issues that need to be addressed, particularly if your longer-term plan is to pass the farm onto your children or someone else within your immediate family.  In this article we explain the steps you can take to increase the likelihood of a farm surviving a second marriage.

Be clear on your new spouse’s involvement and rights

If your new spouse is likely to become involved in the farm business then it is important to make it clear in what capacity.  For example, will they be a paid employee with little or no input into the decision-making process or will they assume a more significant role entitling them to have their say and to share in the profits?

If you are already running the farm with family members but have not yet formally brought them into the business, it may be time to consider doing so, perhaps via the creation of a farm partnership or limited company.  Not only will this give your family an immediate stake in the farm, it might also help to reduce the likelihood of the farm being broken up if you subsequently decide to divorce as the family court tends to be reluctant to interfere in businesses involving third parties.    

If you farm under an Agricultural Holdings Act tenancy you need to take steps to ensure that a solid succession plan is in place which ensures that the farm continues to remain within your immediate family.  Your new spouse will be eligible to apply to succeed after you have died and if this is not what you want then it is important to address this with them at an early stage. 

Prenuptial agreement

As unromantic as it may sound, a prenuptial agreement can be of immense help in a second marriage where a farm is involved. While inherited farms will not typically be considered a matrimonial asset, subject to the usual sharing rule on divorce, there is always the possibility that farm buildings and land may have to be sold in any divorce situation where the capital and income needed to fund a financial settlement cannot be raised in any other way. 

By agreeing upfront what should happen if the marriage does not work out, it is more likely that you will be able to put in place arrangements to ring-fence the business or at least enough of it to ensure the farm’s continued survival.  This might include setting up some sort of trust structure.

Will

A will can help to ensure your new spouse is looked after if you die, but without putting the continued viability of the farm at risk.  For example, rather than leaving your spouse a share of the farm which they could decide to sell or pass onto their own children when they die, you could give them the right to continue living on the farm for their rest of their life, and perhaps receiving an income from it, but no more.  

You do, however, need to ensure that the provision you make for your new spouse is reasonable as it may be possible for them to challenge the terms of your will if you do not.

If you are a farmer about to remarry, or require help with any other family matter, please contact us through our online enquiry form.