Keeping the farm going after divorce
Divorce is rarely straightforward, but it can be especially complicated when a farming business is involved. The main priority for farm owners will be to keep the farm running during the divorce process and securing its future viability. But this can be tricky when emotions are running high and livelihoods are at stake.
Juliet Walker, family lawyer and agricultural law specialist at Pearsons & Ward Solicitors in Malton explains some of the main challenges when a farming marriage comes to an end.
Preserving the business
Farms are traditionally handed down through generations, and usually the expectation when a farmer gets married is that the farm will stay in the family. This often means that the farm not only holds a commercial value, but also a strong emotional significance for the farming spouse, who may be keen to keep it post-separation to preserve the business for future generations. Yet, the non-farming spouse who may have made a significant contribution to the running of the farm, as well as the home and raising children, will be entitled to have their financial needs met on divorce.
The balance between providing financially for the non-farming spouse and maintaining the commercial viability of the farming business can be a difficult one to negotiate successfully. As generally most farm capital will be tied up in land, livestock and machinery, a lack of liquidity can make it difficult to raise cash to fund the purchase of a new home suitable for the spouse leaving the farm and possibly the children.
In a run of the mill, non-agricultural divorce with a family home, pension and savings to be divided, one of the guiding principles for the court is sharing. However, where a farm has been inherited it can often be categorised as a non-matrimonial asset, meaning it may not be subject to the usual sharing principle on divorce. So, there is a good chance the farm may not have to be divided equally between the separating couple. Instead, an alternative source of funding will need to be found to make financial provision for the non-farming spouse.
The family farm and its assets might be held in various forms of ownership, leading to potential complications when trying to agree a financial settlement. For example, the business might be held by a limited company with shareholders, by a partnership or by a trust. There is often wider ownership amongst siblings, parents and children which makes it even more difficult to divide the assets and extract capital to provide for someone financially. The ownership of the farm can be complicated even further by farming tenancies and contractual arrangements.
Protecting farm income
Where the farming business is the only source of income for the family, the court will be keen to preserve it and consider alternative ways of raising money. It may be necessary to sell off part of the farm or some of the assets, or to borrow against it. This may have a detrimental effect on the viability of the farm and the court is usually reluctant to force the sale of assets where it will affect livelihoods. The need to preserve assets which will be passed on to future generations may lead the court to make an order for a spouse to be paid maintenance over a number of years out of the farm income.
Farming divorces are complex and require expert advice from family lawyers who are experienced in dealing with farms and their assets. For more information on divorce within agricultural families, or any enquiries regarding family law, please contact Juliet Walker on 01653 692247 or email Juliet.Walker@pearslaw.co.uk to see how we can assist.