All farmers know that life is stressful and that there is rarely enough time or money to achieve all you want. Add that to the everyday stresses of married life and it is no surprise that farming families are particularly susceptible to divorce. But what can you do to protect yourself and your farm should things go wrong?
Why are Farming Divorces Different?
Farming life is complex, often with a background mix of inherited assets, close family involvements, capital-rich but income-poor, family trusts, tenancies, inheritance etc… need I go on? It can sometimes even be tricky to identify who owns what as property finds its way into annual business accounts. The challenge for any farming divorce is that the business relies upon the most valuable asset; the land. How then can the needs of spouses and children be provided for without irreparably damaging the business or forcing a sale?
‘A Fair Share’ – what does that mean?
Since 2000 the law has leaned towards fairness, meaning that equality is only departed from where there is good reason. Farms, often passing down through many generations, are not automatically ring-fenced in divorce proceedings. Therefore if capital is needed to provide a wife or husband with cash then the Court has the power to order a sale. Is a sale inevitable then? Not necessarily. A forced sale will usually be the very last resort. The Court will normally start by looking at the source and nature of the key assets to identify if there is a good reason to depart from the principle of equality, so that the integrity of the farming business is maintained.
Can Trusts be Trusted?
That depends on the type of trust! A dynastic trust which is designed to preserve the farm for future generations will generally be respected. However, if a trust has power to transfer land and property to beneficiaries absolutely and raise money for their benefit then it is likely to be a ‘nuptial trust’ and the Court can treat it as a financial resource and make provision for the departing spouse.
Consider ‘No Court’ Options
Divorce does not inevitably mean Court. Collaborative Law in particular involves advice from accountants and valuers and working together to find solutions that you can both live with. It gives you control over your future and avoids the inevitable stress and costs of litigation.
Prevention is Better Than Cure
Pre-Nuptial Agreements do carry great weight in the event of a divorce. If you intend to spend the rest of your life with somebody is it not crucial that you both understand the other’s attitude to money as an essential part of planning your life together? Pre-nups are a practical and pragmatic business tool. They may not be romantic but they are highly preferable to a tangled and messy divorce against a farming background.
Carmelita Ardren is a partner, head of Raworths’ Family Law, a collaborative lawyer and an advanced member of the Law Society Family Law Panel. To contact Raworths telephone 01423 566666 or visit our offices at Eton House, 89 Station Parade, Harrogate, HG1 1HF. Alternatively, you can email Carmelia at email Carmelita.email@example.com.