Farming Divorce Lawyers
Farms and Divorce
If you have a farm and are divorcing, you are likely to be very concerned about the impact this will have on your farm.
The farm may have been in your family for several generations, with other members of your family being involved in the farm. Alternatively, it may be your spouse that owns the farm and you are concerned about losing your home and your source of income if you divorce.
Farms are treated the same as other businesses when a couple divorces. The value of the spouse’s interest in the farm will need to be valued and included as a matrimonial asset unless there are good legal arguments for not including some or all of its value.
Why a Prenuptial Agreement May Be Beneficial for Farms
A pre-nuptial agreement is an agreement that a couple signs before their wedding that outlines how they wish their assets to be divided in the event of divorce or separation.
It can also cover the expected use of matrimonial finances during the marriage.
If you are entering a marriage where part – or all family income and assets – stem from agriculture, it may be worth considering a pre-nuptial agreement.
The existence of a farm, farmland, and agricultural businesses often raises a series of complex issues on divorce.
Let’s Not Forget About Postnuptial Agreements
Even if a son or daughter is already married (perhaps with children of their own) then it is not too late to take steps to protect family wealth, particularly if plans are being made to hand down that wealth.
A postnuptial agreement is just as effective as a prenuptial agreement.
They are less commonly used because someone is less likely to sign such an agreement once they are married and have certain rights.
However, the person handing down the wealth can make it a condition of any gift or inheritance that the recipient’s spouse signs such an agreement.
The recipient and their spouse (if happily married) can sign the agreement, knowing that the asset will then come to them/their side of the family and can be passed to their children if they do not divorce.
FAQs on Farms and Divorce
How Are Farms Valued on Divorce?
Farms are valued like other businesses on a net asset basis or a profit-earnings ratio basis, whichever gives the higher value. Many farms are valued on a net asset basis as many own:
- Land
- Buildings
- Livestock
- Dead stock (machinery)
All of which often have a significant value but produce a relatively modest income by comparison.
An agricultural expert is usually instructed jointly by husband and wife as a ‘single joint expert’ to value the farm’s assets. An accountant, also instructed as a single joint expert, will also need to be instructed to value the spouse’s interest in the farm, how much money, if any, the spouse can raise through the farm, and the tax consequences of this.
What Income Does the Farm Produce?
Farms are sometimes referred to as lifestyle businesses, with the business providing a home, funding utility bills, and other costs, such as the provision of motor vehicles, with the actual income paid to the farmer being relatively modest.
The income and benefits that the farmer receives from the farm can be looked at by the single joint expert accountant. This will be particularly relevant in cases where the non-farming spouse is seeking spousal maintenance.
Will the Court Order the Sale of a Farm as Part of a Divorce Settlement?
It would be very unusual for a court to order the sale of a farm as part of a divorce settlement. Selling the farm would take away the farm owner’s source of income and often also their home. If other members of the family also own the farm, a sale of the spouse’s interest would impact them and therefore it is highly unlikely to be considered appropriate by the court.
If you or your spouse have an interest in a farm and are about to divorce, it is very important that you obtain advice from a solicitor who has experience dealing with farming divorces. Fiona Wood, a partner at McAlister Family Law, has acted for both farmers and their spouses.
In particular, she acted for the wife in the reported High Court case of D V D(2010) EWHC138 which involved a farm, part of which the husband had inherited.
What Happens to an Inherited Farm on Divorce?
Often farms are passed from one generation to the next.
If part or all of the farm has been inherited by one spouse, it is likely that that part of the farm will not be subject to the sharing principle should there be a divorce. However, the needs of both spouses and the children of the family will still need to be considered.
If a Farm Is in Trust Can It Be Protected on a Divorce?
Where the farm is part of a trust, if it is a “dynastic trust” that passes the farm down from generation to generation, the divorce court is likely to respect the trust, essentially ring-fencing the farm from the divorce when looking at how to divide the assets.
With other trusts, the spouse’s interest under the trust will need to be determined, with previous distributions to the spouse by the trust often being a relevant factor when considering how the farm is dealt with within the divorce.
What if the Farm Is Owned by Other Family Members?
Often a spouse will own a farm with other family members, or the spouse will own part of the farm and other family members will own other parts of the farm.
In either scenario, the court cannot ignore the impact that a divorce settlement may have on them. It may be necessary for these family members to intervene in the divorce proceedings to put forward their concerns regarding the impact upon them of any financial orders the non-farm-owning spouse asks the court to make.
Get in Touch with Our Expert Lawyers in Farms and Divorce
If you’re unsure where to begin with your divorce proceedings, we can help. Our experts have years of experience in farms and divorce so no matter what your situation is, our team is here to help.
To speak with one of our lawyers, call us on 0333 202 6433 or email us at [email protected].
