Farming Divorce

Experienced advisors helping to manage the complexities of farms and farming assets during divorce or separation.

Divorce in a farming family can have devastating consequences if not approached skilfully. The farm is not only a business but a home and a way of life.

Farms tend to be capital rich, with substantial  value tied up in buildings and land, yet income poor. This provides its own challenges and there can be added complications, with ownership being shared with parents and siblings meaning that it can be difficult to sell or raise capital as their interests must be considered.

Usually, the starting point for a settlement on divorce, particularly with a  long marriage, is an equal division of the assets. Often, the outcome in farming cases is different, focussing primarily on the housing needs of the departing spouse and any children of the family, rather than seeking to provide a specific percentage division of the assets. The reason for this is because frequently, farms are passed down through generations and so can be treated by the courts as non-matrimonial assets and hence not shared equally.

The aim is to achieve a solution which provides for both parties’ needs and this requires a careful and creative approach. A balancing exercise must be carried out and every effort will be made to ensure that a fair settlement is achieved without the farm being sold or its viability damaged. It will therefore be a case of seeing how capital can be raised by looking principally at development potential and borrowing.  The impact of changing subsidies will also need to be considered. Drawing on the services of other professionals such as an expert valuer, farming consultant and the farm accountant will be vital. The financial status quo should be maintained while a settlement is being reached with the farm running in the usual way.

An agreed settlement is always preferable and the collaborative law process is ideally suited to farming divorces. This is where the parties and their respective solicitors sign an Agreement committing to resolving the outstanding issues in meetings, rather than by correspondence or court. This increases the possibility of an amicable outcome and the flexible approach allows for the participation of the other professionals involved. 

Entering into a Pre-Nuptial Agreement before marrying can help to protect farming assets on a later divorce.  Although not automatically binding on the courts, recent case law has shown that they will carry decisive weight if dealt with correctly.

Whether you are a farmer or a farmer’s spouse, it is important to have specialist advice and at Ashfords, we can provide this as our team has extensive experience of dealing with farms on divorce. We are also able to draw on the expertise of the wider firm - for example, in relation to partnership issues, which can often go hand in hand in a situation such as this.

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