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A guide to divorce for farmers - what you need to know

View profile for Emma Roberts
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Health and safety for farm and agricultural workers

Is divorce different for farmers? The short answer is yes!

Divorce can already be an emotive and challenging time. The addition of a farm or land being added, results in an extra layer of complexity both from a legal perspective but also a emotional one. Often the very likelihood of the family depends on the farm’s successful future and therefore it is imperative that there is a very particular attention to detail.

Below we will explore what you need to know about divorce in England and Wales where there is a farm involved.

Why are agricultural/farming divorce cases complicated?

Primarily this is due to the nature of the assets and the emotional attachment to the land and property. 

Farms can include complex business structures that need to be considered, for example partnerships or limited companies.  There may also need to be consideration to inheritance or trusts that make farming divorces different from other divorces. 

Farms, unlike other businesses, tend to be income light and capital rich and therefore require sensitive handling.

The most significant issue however for many in farming divorces centres around the unique emotional connection to the farm in question.  It is not uncommon for a farm to have been owned by a family for generations and for the whole family’s livelihood to depends on it, including in some cases extended family members and relatives outside the family unit subject to the divorce.

The key factors to be considered in farming divorce cases

When dealing with a farming divorce case, there are some important initial factors that need to be considered, these include:

  • An accurate and fair valuation of assets, including the farm, land, and any business structures
  • Who owns what assets in relation to the farm and land
  • Whether the assets are subject to any trusts or inheritance
  • Where there is any pre / post nuptial agreement in place surrounding the farm
  • The contributions of the parties to the farm
  • The income derived from the farm and the other income of the parties
  • The needs of any children and the parties’
  • Any tax implications of any settlement

Some of the above factors may require third party specialist, for example a qualified expert to value the farm and land.

How is a farm valued in a divorce?

It is important to consider all assets contained with the farm during the valuation process.  This should include all land, buildings, machinery, livestock and any business structures.  There may also be intangible assets, for example farming subsidies and grants, that can form part of the overall value of a farm.

It is imperative that a professional valuation report from an experienced expert should be obtained.  This will ensure that all assets are accurately valued. This can be done by agreement or directed by a court.

How is a farm divided in a divorce?

As within every divorce, the financial needs of both parties and any children need to be considered, amongst other factors under Section 25 Matrimonial Causes Act 1973.  Farming divorces however have many unique aspects when it comes to determining the terms of the settlement.  

Usually, the farm’s capital is tied up within the land and buildings, which in turn generates the income.  It is often therefore the case that creative solutions need to be considered from the early stages to ensure capital can be released to satisfy the financial needs of both parties, whilst maintaining income to meet the needs of the parties.

There are several options when considering how to settle matters, including:

  • One party buying out the share of the other either for a cash payment (including payments by instalments) or offsetting against other assets of the marriage or a combination of the two
  • Selling the farm and splitting the proceeds
  • Selling part of the farm to release capital
  • A transfer of ownership of part of the land with an agreement that it is let back to the other so the farm can continue to derive the same income for the future benefit of the family
  • The creation of a partnership or limited company to manage the farm and its assets jointly

The aim is to reach a fair and reasonable settlement. Fair however does not mean equal. Often it can be assumed that to be fair means everything must be divided equally, especially in a farming divorce this may not be the case.  

Due to the need to try and preserve assets that were owned long before the marriage or fundamentally form the basis of the parties’ income, an equal division of assets and wealth accumulated throughout the marriage cannot always be achieved with farmers because of the need to preserve assets that.

The element of fairness typically refers to the financial needs of both parties being met and will usually avoid the forced sale of assets, which could threaten the viability of the farming business.  For example an order that a spouse be paid out over a number of years, rather than all at once.

What happens if the farmland is rented?

It is common with cattle farmers that they rent the land as opposed to own the same as vast amounts of land are needed for the cattle. In those cases, the farming business will still need to be valued like any other business and an assessment made as to whether it is feasible to extract any cash from that business.

What income does the farm produce?

Having a career as a family is sometimes referred to as a ‘lifestyle business’. A lifestyle business is a type of business that has a typical business structure but also provides a home and funds utility bills and other costs, for example, the provision of cars or other vehicles.  Due to this the actual income paid to a farmer is invariably modest, given most of the income needs are covered above.  It is therefore important that the income and the benefits received by a farmer are investigated.  This is particularly the case if a non-farming spouse is requesting spousal maintenance.

Can I protect my farm in the event of a divorce?

There are several ways to try and protect your farm including:

  • Entering into a pre-nuptial or post-nuptial agreement to protect your assets (although the court is not under an obligation to adhere to the same if it would not meet the needs of a party)
  • Ensuring inheritance or trusts are ring-fenced and not considered marital assets
  • Keeping accurate records of any contributions made to the farming business
  • Seeking legal advice to ensure that all assets are adequately protected

The division of assets within divorce proceedings is however always subject to the criteria set out within S25 of the Matrimonial Causes Act 1973.

Is it relevant if the farm is inherited or part of a Trust?

If this is the case, it may be possible to ring-fence these assets and ensure they are not considered marital assets. Legal advice is essential in this situation.

What if the farm is owned by other family members?

As you may expect this often complicates proceedings and they can sometimes need to intervene (join in) to any proceedings.  Third party ownership may result in it being necessary to enter a partnership or limited company to manage the farm jointly.

As part of the divorce process, it will be necessary to consider what was owned before the marriage, who has contributed to the farm and how as well as what is necessary for each member to remain financially stable.  The courts aim is to try and find a financial settlement that can take into account these factors whilst not leaving a party financially struggling. 

Do I need to go to court for a divorce settlement?

As with any divorce, it is possible to settle without going to court.  If a settlement cannot be reached, it may be necessary to ask the court to intervene to determine how the assets, including a farm should be split.

What rights does a spouse have who is divorcing a farmer?

The same rights as anyone else getting a divorce, namely a settlement that is fair and reasonable.  Where at all possible it is usual for the settlement to try and ensure the farm business is kept afloat, but this is not always possible.  To achieve this and avoid an order forcing an immediate sale, the settlement could include the payment of a lump sum by instalments over a number of payments or offset against other capital held by the parties.

What are the alternatives to contested court proceedings?

There various alternative dispute resolution options available are mediation, collaboration and arbitration.  As within any divorce, the parties will be encouraged to reach settlement outside of the court arena, if possible. Trying to keep matters as amicable as possible will help in reaching an agreement quickly and more cost-effectively.

Contested court proceedings usually take much longer and cost a considerable amount more.

Full financial disclosure is required

Both parties have an obligation and must give full disclosure of their financial positions. This is the case for all divorce settlements. In the case of a farming divorce, this will include information as to how assets are held, to full access to the latest managing accounts, as well as a review of income generation and spending.  It is recommended that this takes place early on to avoid protracted arguments and mistrust between the parties that may cause issues down the line.