Finding a fair divide in farming

The end of a year and the beginning of a new one is often a time for reflection and resolutions for change. For many couples, this can include deciding that their marriage has come to an end and it is time to separate and get a divorce. 

Indeed, the first working Monday of the new year is widely known in legal circles as ‘Divorce Day’, with lawyers seeing a large spike in divorce enquiries on this day as couples finally concede that their marriage has irretrievably broken down.

Divorce is always unsettling as couples decide how to divide their property, sort their financial affairs and make arrangements for their children, but can be particularly complex where agricultural assets are concerned.

So, what are the key things you need to know about a farming divorce? 

‘If you are considering divorce it is important to take expert legal advice before you start formal proceedings. A good family lawyer can explain your possible grounds for divorce and outline the rights and obligations of each party – such as the need to fully and frankly disclose your financial position – and how your assets may best be tallied up. They can also advise on tax issues, on whether you should make a holding will during divorce proceedings, and on whether spending limits should be placed on overdraft facilities, bank accounts and credit cards as the divorce is going through.’

The starting point for most divorce settlements will be a 50:50 split of all available assets where their value increased due to the efforts of both parties. When a farming couple divorce, however, matters are more complicated, given that ownership of agricultural assets is often split between the wider family, having been passed down through many generations.

The family farm may also be held in a number of different ways – such as in trust, or through a partnership or limited company – making it harder to assess who owns what. It also means that farms are often asset rich but cash poor, making it difficult to fulfil any financial settlement.

Usually when a couple divorces, the family home is the most valuable asset and will need to be sold off so a fair financial settlement can be reached, however, in farming families this is not always easily achievable. Apart from the farmhouse potentially being owned by numerous family members, it will also often be the operational centre of the farm. If it needs to be sold off, therefore, it could spell the end of the farming business altogether, which is in nobody’s interests.    

When assessing the financial settlement between a divorcing farming couple, courts will be loathed to order the forced sale of assets which might threaten the viability of a farming business. They may, however, be left with little choice in order to achieve a fair settlement.

For more information on divorce in farming families, please contact us today.