Dividing the farm assets
Farms come in a multitude of shapes and sizes, but are often the product of successive generations of industry, in the ownership of more than one family member and provide an income for several households. The starting point for a settlement on divorce is for the court to apply the yardstick of equality when dividing the marital assets. It is not surprising then that a farmer’s divorce can shake a family’s foundations to the core. Complex issues fiscal and emotional issues arise. For example:-
The marital home is very often the farmhouse, which will usually be located within the curtilage of the farm. Consideration needs to be given to how both parties to the divorce are to be housed going forward, the farming spouse will inevitably want to remain at the farmhouse. The basis upon which the property is occupied needs to be examined. Who owns the property and what part of its value falls within the marital pot? Who else will have to be consulted about and agree to a sale? Could it and should it be sold to release capital to buy one party a home elsewhere? Is there an agricultural tenancy and if so, pre– or post-1995? What is the security of tenure and will that reduce the value of the freehold? How will that impact on the capital available for housing the outgoing spouse elsewhere?
Farmers are often said to be asset rich and cash poor. Vast tracts of farmland may brush the horizon, however consideration must be given to actual liquidity. What capital can the farmer actually raise and what would it be fair and reasonable for him to raise? Farm assets often derive from inheritance or trusts. A farmer may have no outright entitlement to an asset and farmers usually view themselves as caretakers of land for successive generations, rather than as landowners. Is it fair for land that has been passed from generation to generation to be transferred to an outgoing spouse or sold to raise capital? How will a sale of farmland impact upon the income generated by the farm? Very few farmers have much cash in the bank, often relying on overdrafts to see them through to harvest, whereupon they return to credit only to bounce back into overdraft as the investment in seeds, fertilisers, and labour needs to be made once again. Borrowing money is not always straightforward. AMC lending rules have tightened and other family members may need to consent to borrowings being secured against their land.
Farmers should seek legal advice and representation in the divorce process at the earliest stage and from solicitors with specialist knowledge of farms.
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