Challenges with the Family Farm Divorce Process

Why is Farming Divorce so Complicated?

Family farm divorce cases are often complex because they involve a multitude of assets and intricate corporate structures to be considered. Farms are also incredibly valuable assets, upon which many livelihoods may depend.

Perhaps the main cause of complications when it comes to agricultural divorce is the fact that farms are usually passed down from generation to generation as either part of a succession strategy or in a trust. There is therefore a great deal of sentimental value attached to these businesses, with keeping hold of the farm being a core objective for many.  

Common Challenges with Family Farm Divorce

Family farm divorces bring with them a totally unique set of challenges that will require careful consideration. The intricate nature of juggling both personal and business interests at the same time can make the process daunting. 

When navigating a farming divorce, the associated complex elements will require those involved to address several vital questions. Understanding these common questions is pivotal to achieving as equitable and amicable resolution as possible. Common challenges include: 

– Is the Farm a Matrimonial Asset?

One of the first things to be considered is whether the farm can be classified as a matrimonial asset. Even if the business was previously owned by one spouse before marriage, it is possible that both parties subsequently invested in additional agricultural property or land in order to expand operations.

The non-farming party may also have contributed financially, or have worked on the farm or in the business, meaning their involvement will need to be addressed during divorce proceedings. This question of how much input the non-farming spouse had with the runnings of the farm is crucial to determining whether it can be classified as a matrimonial asset or not. 

– How Much Income is Generated?

Farms are typically referred to as ‘lifestyle businesses’. This is because the income generated by the company is regularly used to provide a home, utility, vehicles etc. as well as being put back into the firm. As a result, the amount of money left over once all of the above deductions have taken place can be extremely modest.

Large amounts of money are also tied up in items such as livestock, crops, and machinery — which has a serious impact on the liquidity of the business. The effect this has on family farm divorce cases is that it can be quite difficult to extract a lump sum from the business while still preserving its status as a source of income. 

It is therefore recommended to consult an independent business valuation expert to determine exactly how much the farm is worth. 

– Who Owns the Farm?

Farming businesses are usually owned by multiple people in the same family, often in the form of a limited company or, most commonly, a partnership. It is also possible that all of the assets are owned by the parents of a divorcing spouse, adding another layer of complexity into proceedings. 

Complex succession planning will usually have taken place to ensure the business is kept within the same family. Indeed, it has been known for some farm owners to skip a generation entirely and bequeath the land to their grandchildren instead. 

All of this can make the division of assets and achieving a financial settlement which benefits all parties extremely challenging. 

– What if the Farm was Inherited?

In cases where farms have been inherited or included as part of a robust trust and tax strategy, this will have been done with the expectation that the business will continue to be handed down for generations to come. If the farmland has indeed been kept within the same family for an extended period of time, a court may view it as a non-matrimonial asset and ring-fence it.

This is not always the case, as there are other factors to consider such as the length of the marriage and whether there are any children which need to be taken into account. If both parties jointly purchased additional land during the course of the marriage, whether from business income or commercial finance, this will also need to be included in the divorce settlement — whether the farm was inherited or not.   

– Who Else has an Interest in the Farm?

Due to farms often being a family-run business, it’s common for third parties to have a vested interest in the company beyond merely owning it. For example, the farmhouse could be home to multiple spousal couples, or several different family members may count on the firm for employment and income. 

Given that family farm divorce cases regularly extend further than the divorcing couple themselves, the needs of everyone involved should be taken into account when working towards a fair settlement.  

Protecting the Family Farm from Divorce

The most common concern with family farm divorce cases is keeping hold of the business and preserving it for future generations. There will be no desire to sell the company and any attempts to do so would likely be met with fierce resistance. 

A post-nuptial agreement is a good way to ring fence the farm. As long as the contents of this agreement are deemed to be fair, there should be no reason for it to be challenged. Another way to protect the business is via a separation agreement or financial order by consent. These amicable resolutions can be achieved without needing to go to court and can save all parties a great deal of stress.

Whether an amicable solution can be found or not, seeking advice from a specialist farming divorce solicitor is crucial to achieving a satisfactory conclusion. Using their in-depth knowledge of the industry and farming families, they will work tirelessly to get the right result for their client and enhance their chances of success.

With a wealth of experience in handling family farm divorce cases, Thursfields has an unrivalled level of expertise regarding the intricacies involved in the process. We will work closely with you to establish your goals and put together a proactive and bespoke solution with the sole purpose of achieving your objectives.

As a full-service law firm, we are able to call upon the expertise of a multitude of departments to provide a holistic service you can rely upon. From family law to corporate and commercial guidance, we will take care of everything for you.  
To find out more about how our team can help, get in touch today.