Farm Divorce Settlement
- What factors are considered in farm divorce settlements?
- Matrimonial and non-matrimonial assets
- What makes farm divorce settlement cases complicated?
- Why is it difficult to deal with a family home in farm divorce settlement cases?
- How are farms valued in farm divorce settlement cases?
- Will a farm be lost in farm divorce settlement cases?
- What can I do to protect my farm when divorcing a farmer?
- What happens in a farm divorce settlement where the farm is inherited?
- Will the courts ignore the fact that a farm is owned with other family members?
- Is proceeding through a court the only option when dealing with farm divorce settlement?
Our specialist discuss how a farm divorce settlement is considered. Divorce itself can be quite stressful and complicated. Further issues can arise where the divorce involves a farm business. Farming is usually a family affair, with farms pass through generations with family members attempting to continue the family farming business. What makes farm divorce settlements difficult is that your home is also your business and the thought of having to split your home and business could be very emotional as well as being financially damaging.
What factors are considered in farm divorce settlements?
The main factor considered in farm divorce settlement cases is the needs of the parties. There needs to be a consideration of what the parties needs are and how these needs can be met. The court is under a duty to ensure the factors set out in Section 25 of the Matrimonial Causes Act 1973 are considered. The factors include the needs, contributions, length of marriage, obligations, and resources of the parties. The courts usually apply these factors to ensure fairness is achieved when considering a divorce settlement.
As with all divorce settlement cases the initial starting point is to consider and identify what assets are available, unless an agreement can be reached mutually these assets will need to be disclosed to the court. Once the assets for settlement are agreed upon there is a question as to how these assets need to be shared.
The purpose of a farm divorce settlement through the courts is to achieve a fairness when the assets are divided between separating parties. However, one must remember that achieving fairness does not necessarily mean there will be an equal division of the assets. When divorcing a farmer, the courts may require additional considerations of how the farm is owned, whether the farm is a family business which is owned with siblings and parents and whether are enough assets to go around.
Matrimonial and non-matrimonial assets
As with all divorce cases, when divorcing a farmer there is a need to distinguish the matrimonial assets from the non-matrimonial assets. Matrimonial assets and property are acquired during the relationship. Non matrimonial assets are assets which were acquired prior to the marriage.
In farming cases the assets of a farm are usually inherited and may therefore be classified as non-matrimonial assets. However, when divorcing a farmer, it should be noted that the non-matrimonial assets are not automatically exempt from the farm divorce settlement, especially in cases where the needs of both partners cannot be met without the recourse to the non-matrimonial farming assets.
Where the needs of both partners cannot be met by the other assets, the farm may need to valued to see if it can provide for the parties needs and divided accordingly. You may need to provide evidence that the farm business or the land has not been intermingled into the marriage to avoid losing your farm business.
What makes farm divorce settlement cases complicated?
There are many factors which need to be considered in farm divorce settlement cases which make the matter extremely complicated. The main complication which arises is to determine how the farm is owned. The assets and resources of a farm may not be enjoyed by the couple or a partner personally. Farms are often passed through generations of family and other family members such as siblings or parents may also have a right and interest in the farm.
A farm business may be held through a limited company which may have several shareholders. These can be other family members or relatives. A farm could also pass through a will or be held in partnership with family members. In cases of non-farming divorce settlement cases, it may be easier to identify what assets are owned by each partner, however farm divorce settlement cases can be more challenging and complex. The key consideration for the courts is to reach an agreement as to how the needs of both partners and any children can be met without having to sell any of the assets.
With farm divorce settlements there are issues surrounding the liquidity of the business. Assets within a farm business may not be easily realisable and are tied up. A farm business may also have been inherited which may make it a non-matrimonial asset. Farms may also have tenancies, trust arrangements or corporate ownership which add to further complications.
Dealing with complex farming cases can often be stressful, difficult and time consuming. With over years of experience and with dealing with complex cases our family lawyers can assist you in understanding what is involved in your farm divorce settlement.
Why is it difficult to deal with a family home in farm divorce settlement cases?
In all divorced cases the courts consider the housing needs of the separating couple. The courts will decide whether the matrimonial home will be kept by one party or whether it should be sold and how the equity and proceeds of from the sale will be divided to ensure the housing needs of both parties are met. Most commonly one partner may retain the matrimonial home whilst the other receives a lump sum settlement.
The division of the matrimonial home can be more complex when divorcing a farmer. In farm divorce settlement cases the matrimonial home may be important to the farm business and is usually the asset from which the business is operating from. Therefore, when divorcing a farmer, it may be the case that the farming partner will retain the marital home which is central to the farming business and they may intend to continue with the business.
How are farms valued in farm divorce settlement cases?
A farm business is typically valued like any other businesses. All business when considering financial divorce settlements are valued on either a net asset basis or a profit earnings ratio business. A farm business will most likely be valued on a net asset basis given that many farmers own land, buildings, livestock, and machinery. These items will often hold a significantly high value but only produce a modest income.
Farms are often seen as lifestyle business which provide a home and fund the running of a home such as paying for the utility bills and other family costs, but the actual income generated from a farm business is often lower when compared to other businesses.
Will a farm be lost in farm divorce settlement cases?
In normal divorce settlement cases the courts will seek to divide assets based on the needs of the parties and will consider whether is any surplus of assets. The courts will consider what contributions are made by the parties and whether the assets were owned prior to the marriage or inherited. In such cases the courts have the power to depart from the principle of an equal division of assets.
If one partner is a partner in a farm but the actual land and buildings are not owned by the farming partner, then it is unlikely that the farm will be lost. The courts will not make assets which do not belong to the farming partner as being included within the farm divorce settlement.
This is a similar approach which the courts may take where the assets from a farm may belong to a farming partner but where these were not acquired during the marriage and these assets were never vested into the other partners name. The courts are unlikely to damage the farm business. The farming partner may consider providing settlement to the other partner by either selling assets which are not core to the farming business or by borrowing money to fulfil the settlement.
On the other hand, there is a possibility that a farm may be lost in cases of long marriages. This is usually where the non-farming partner has sacrificed their own career to help the family. The farm may also be lost where joint matrimonial assets have been utilised to fund the purchase or running of the farm and especially where the assets are held in joint names.
What can I do to protect my farm when divorcing a farmer?
Many farmers will want to protect their farm in the event of their marriage not working out or failing. Farmers have the option of entering into nuptial agreements. These can be either pre-nuptial agreements or post nuptial agreements.
Pre-nuptial agreements are agreements between partners entered into prior to the marriage taking place. Despite pre-nuptial agreements not being binding in England, they will be considered along with other factors by the court when dealing with farm divorce settlements. Providing there is no duress when entering into prenuptial agreements and the agreement is entered into freely, the court is likely to respect the agreement and the parties decisions.
Post nuptial agreements are effectively the same as pre-nuptial agreements however these are entered into following the marriage. Quite often couples may enter into post nuptial agreements when they realise their marriage is in turmoil and is done so to protect their assets in the case of a divorce or separation. Like pre-nuptial agreements, post nuptial agreements are not legally binding however the courts do take these into consideration when dealing with divorce financial settlement claims.
Both prenuptial and post nuptial agreements can save time and money in the future. They can assist in avoiding long contested hearings in relation to the farm divorce settlement and allow the courts to see how the separating couple had agreed to separate their financial assets.
What happens in a farm divorce settlement where the farm is inherited?
Quite often as mentioned farms are passed from generations and are a family business. Where a farm or part of it has been inherited, it is highly likely that the farm will not be an asset available to share when divorcing a farmer. However, the courts will need to consider the needs of both partners as well as any children and if the needs cannot be met through alternative means then a court may consider utilising a farm even where it is inherited.
Where a farm is part of a trust which passes down from generation to generation the court is likely to respect this trust. This is done by ring-fencing the trust when considering how to divide the assets. The courts will determine the partners interest under the trust when considering the division of the farm.
Will the courts ignore the fact that a farm is owned with other family members?
When divorcing a farmer, it is necessary to establish whether you or your partner owns the farm alone or with other family members. Quite often with farms being a family run business, your spouse may own a farm with other family members such as siblings and parents or will only own a part of farm, where the other family members will own the remainder.
In such cases the courts will consider the impact that a farm divorce settlement is likely to have on these other family members who have an interested in the farm. The family members associated with the farm may need to intervene in the divorce to protect their rights. This is done by providing the court with their concerns in relation to the impact on them of any orders the courts may consider making in favour of the non-farming partner.
Is proceeding through a court the only option when dealing with farm divorce settlement?
Proceeding through a court is not the only option when dealing with farm divorce settlement. If separating parties can amicably and mutually reach an agreement there are other non-court options which are available. Quite commonly mediation is a form of dealing with a farm divorce settlement. Mediators are independent from the court and can assist you in reaching a quicker and cheaper way to deal with your farm divorce settlement.
Our divorce law specialists are aware that the court process can be quite expensive and time consuming. Our family lawyers can act as mediators in trying to assist you in reaching an amicable agreement.
Contact Kabir Family today for an initial telephone consultation and for advice on Farm divorce settlements.
At Kabir Family Law we deal with all types of family and child law matters. Our divorce law specialists have experience in dealing with all types of divorces including farm divorce settlements. Should you be the owner of a farm and are looking to get divorced or if you are a partner divorcing a farmer, contact our divorce law specialists today.
Farm divorce settlements can be very complex and complicated. We can assist you and provide you with more advice and information on farm divorce settlement. We can also assist you in preparing your divorce petition or assisting you in defending your farm divorce. Contact us today on 0330 094 5880 to discuss your options or let us call you back. Our family lawyers in Newcastle as well across York, Manchester, Northampton, Oxford & London work around the clock and will be able to provide you with the advice and you need at a time to suit your needs.