The hidden consequences of divorce on farming families

A marriage break up in any family is upsetting, but when divorce strikes in a farming family the consequences can have long term repercussions on future generations of the business.

Farming businesses can sometimes be in a family for generations with many different members of the family hierarchy having a share in the farming enterprise. This complex ownership means that dividing up assets on divorce can be extremely challenging. In a worst-case scenario, divorce could spell the dissolution of the business and a sale of land to meet the housing and other needs of a spouse.

It is quite common for farming families to transfer property and other assets to the next farming generation to minimise their exposure to inheritance tax on death. These transfers are a common feature, based on expert advice from tax planning lawyers. However, families should consider what happens to those transferred assets if that next generation marries and then some time later that marriage fails.

When a family court in England and Wales considers how to divide the assets of a divorcing couple, it is unlikely that any assets given to one party before the marriage through a lifetime gift or inheritance can be completely protected and “ring-fenced” from division.

The court has to consider the needs of both parties and any children. There is no set formula for dividing assets including property, land and finances and the division of assets depends very much on the particular circumstances of the case.

When considering housing needs of both parties, the court is likely to decide whether the family home should be sold and how equity will be divided to ensure that the housing needs of both people are met. The housing needs of minor children will be of paramount consideration by the court. In a farming case, the family home is often central to the agricultural enterprise and the premises from which the business operates.

It is important for anyone who is involved in the family farming enterprise and planning to marry that they consider entering into a pre-nuptial agreement. This is an effective way of legally protecting the agricultural business, together with property and money acquired before the marriage. Entering into such a agreement before marriage allows a couple to plan how they will divide current and future assets should they ever divorce.

This article first appeared in the East Anglian Daily Times on 3rd March 2018.

Amanda Erskine is a solicitor in the Family department at Barker Gotelee Solicitors.

Suffolk Family Solicitors – for more information on our range of legal services, please call the team on 01473 611211 or email [email protected]