Divorce within a farming family
To the outside world a divorce within a farming family may appear the same as any other divorce, but in reality property and assets in a family farm are often intrinsically linked and owned not only by the couple but also the extended farming family.
Farms are often passed down through generations with assets owned by other family members, a partnership, a family trust or even a limited company with various shareholders. Parents often pass farm properties to their children or allow them to live in farming properties to ensure that the needs of the family and the needs of the farm can be met.
When families separate, the courts start from the position that there should be an equal share of all assets accumulated during the marriage. However, often in farming cases the courts have to balance the ongoing viability of the farming business against a fair divorce settlement. An equal division of farming assets may not always be achievable but it is important that the parties’ financial needs and the needs of any children are met.
Where an adult child has received financial support or housing from a parent during the marriage, the court is able to make an order against the child forcing them to prevail upon parents or the extended family, to provide funds to pay a financial settlement. Therefore, it is important that those in farming communities exercise caution when deciding whether to financially assist children during their marriages. This is particularly relevant where a family’s wealth has been built through the farming generations, and the family want to prevent the farming business being broken up during divorce proceedings.
Trusts can play a key role in protecting family wealth on divorce and can provide a means to assist adult children without risking farm assets. However, trusts should always be considered as part of a long-term strategy to protect family wealth, as a trust set up when a marriage is on the verge of breakdown is unlikely to withstand the scrutiny of the courts.
Those in a farming family should always consider pre-emptive action, such as entering into a cohabitation agreement or a pre-nuptial agreement, as a considered and fair agreement entered into at the outset of a relationship can leave families secure and give everyone peace of mind. All family farms operate differently and there is no ‘typical farming divorce’ but whatever the situation, it is essential to take early legal advice and know your rights.
This article first appeared in County Life, 5th November 2016
Josephine Hayes is a solicitor in the Family department at Barker Gotelee Solicitors.
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