Divorce and the family farm
How divorce can affect farming families
Farming is invariably a family affair. Many farms pass through several generations with members of the family devoting years of their lives to working hard for commensurately little reward. What many farming families are benefiting from, however, is the fact that land values have soared in recent years, increasing the asset value of their farms.
Divorce or separation is a tumultuous time for any family; however if you are part of a farming family, your home is also your business and therefore the division of assets can be especially devastating not only from a financial perspective but also an emotional one.
Divorce and the division of assets
If a couple cannot agree between themselves or their solicitors as to how assets should be divided on a divorce, it falls to the court to decide. When deciding on the division of assets, the court considers what is fair. The starting point is equal sharing, meaning that all assets owned either in spouses’ joint names or sole names are split equally between the parties, subject to needs.
In farming divorce settlements there are usually additional complicating factors due to there being inherited land which has passed through many generations. While inherited assets could potentially be considered ‘non-marital’ and therefore excluded from equal sharing; this is unlikely to be the case for the matrimonial home, which is always considered a marital asset, even if inherited as part of an agricultural holding. The parties’ needs and the needs of any children of the family take precedence over anything else, and so if inherited assets need to be divided in order to meet the parties’ needs, those assets are not protected.
There may be more complex business or trust structures in place, which may provide some protection on divorce or separation, but the court has ultimate discretion in determining how assets (including trust and business assets) are divided on separation or divorce, resulting in a great deal of uncertainty and unpredictability.
Protecting your farm in divorce
Protecting your interest by entering into a marital agreement (a pre or post nuptial agreement) can help avoid costly court proceedings if things do not go to plan.
A pre-nuptial agreement is recommended for couples who are planning to marry, to help protect inherited or pre-owned assets and avoid costly court proceedings in the event of a separation. Although not currently strictly legally binding in the UK; the courts are becoming more and more inclined to follow the terms of nuptial agreements, provided that:
- Both parties have received independent legal advice;
- Both parties have engaged in full and frank financial disclosure;
- The agreement is properly drafted (and well in advance of the nuptials); and
- That the agreement reached is deemed ‘fair’ in that it meets the needs of the family following separation.
If parties are already married, a post-nuptial agreement can be used in the same way.
Individuals who live together but do not plan to marry can enter into a cohabitation agreement to record what should happen should they decide to separate. In the event of there not being an agreement in place, the claims for unmarried couples are not the same as for married couples. However, if an unmarried partner has contributed towards mortgage repayments or made other contributions to property owned in the sole name of their partner for instance then he or she may be able to make a claim for an interest in the property.
If you have already separated but are not yet ready to divorce, a separation agreement can be used to record an agreement about how assets are divided.
In many cases, it takes a major life event like separation or divorce to prompt individuals to think about the merits of putting in place an agreement, by which point it is too late.
It may not be a particularly romantic topic and a difficult one to broach, but having a discussion at an early stage, and getting an agreement drawn up by an expert family law solicitor can go a long way towards avoiding stressful and costly court proceedings later down the line.
- When divorce gets complicated
- Dividing your home contents and personal belongings
- Company assets on divorce
- How pre and post nuptial agreements can help farming families
Contact a divorce and farming solicitor
The family law team at Clarke Willmott was established in 1888 so we have longstanding experience of dealing with farming divorce and the implications arising from it.
As one of the largest specialist private client and family law teams in the UK, our experts are close at hand to assist you. Our Family, Private Capital and Corporate teams work closely together to ensure that proper consideration and advice is provided in complex matters including trusts and business assets.
Call us now on 0800 422 0123 or contact us online. We offer a free and confidential initial consultation. We have family law specialists in London, Manchester, Bristol, Cardiff, Birmingham, Southampton and Taunton.