Protecting your farming assets during a divorce

With farms often handed down through generations and multiple family members having stakes, a divorce involving a farm can be more challenging to resolve, particularly if the family home is located where the running of the farm takes place. 

Today, as farmers continue to diversify, there are often additional income streams or assets to consider, such as glamping sites or renewable energy production. 

As such, for farmers going through divorce proceedings, there can be added complexities and challenges that come into play, alongside unique emotional ties to a farm and the associated way of life. 

By Henry Venables, director at Maguire Family Law 

What factors does the court consider? 

When dealing with financial matters after the breakdown of a farming marriage, several factors are considered in reaching a settlement. The first is whether the farm is a matrimonial asset or a non-matrimonial asset, in simple terms, whether it was acquired before or during marriage.

If the farm was acquired by one spouse before marriage, there is a stronger argument to say that the farm is a non-matrimonial asset and, as such, should be treated differently when it comes to sharing the value of the asset than if the farm had been acquired during the marriage. Often, the situation is not ‘black or white’ in that the origins of the farm may have stemmed from previous generations, but there could be additional elements of the farming business that have been acquired during the marriage.

Other factors considered are the value of the farm and its financial state, which would also include all income streams and the value of land, livestock, plant and machinery. The family court will also look at risk, whether there are third parties involved, such as other family members, and inheritance and trust issues, to establish where the farm came from and how it is presently owned.

It’s rare, but not out of the question, that a court would order a farm to be sold. With many farms remaining in the same family for generations, it’s understandable that this is a concern for farmers. Usually, the starting point in any divorce is to divide assets equally, however, some assets are riskier than others; a farm could be asset rich but income poor or subject to complex agricultural ties or planning restrictions. Additionally, the income from the farm may be needed to pay for outgoings, such as school fees, which can impact the settlement. 

Protecting your assets during a divorce

Often it is possible to come to a settlement without needing the court’s intervention. It can be advisable to address the complexities of a farm and reach a flexible resolution through negotiations, mediation or other alternative dispute resolution options. 

Once an agreement has been reached, this would then be incorporated into a Consent Order which sets out what has been decided upon and how it is to be implemented. This is presented to the court and if it is satisfied that the agreement reached is fair, then it becomes a legally binding settlement. This can help to protect the future of the farm if it’s been agreed that it will stay in one party’s possession and remove the risk of any agreement being retracted in the future. 

A family lawyer can help to ensure that you have the necessary documents in place for agreements to be made legally binding, thus protecting your financial settlement as well as future wealth. 

A pre- or post-nuptial agreement which sets out how assets would be divided in the event of a divorce, is one way to protect your future interests ahead of time. Whilst not currently legally binding, these agreements are likely to be upheld by the family court providing they meet the required conditions. Creating a nuptial agreement can help to encourage a conversation around what would happen to the farm if a couple were to separate, and it can also prevent lengthy, costly court proceedings and legal negotiations later down the line. 

In summary, whilst divorce proceedings are never easy, for farming families, it can be especially difficult due to the added layer of complexity around the origins of the farm and how it is currently owned. As a result, specialist legal support is strongly advised to guide farmers (whether that be the farmer or their non-farming spouse) through the divorce process, alongside expert tax advice, to ensure the best possible outcome of preserving the legacy and securing a fair settlement.