Farming Divorces - are they a “Special case”?

In the first instance no they are not! The law in England and Wales concerning dividing assets and liabilities on divorce is exactly the same whether the respective spouses are living in suburbia or the countryside. The starting point or “yardstick” is equality with consideration given to a number of factors in order to help in determining what is “fair”.

It is however when applying the “fairness” criteria that farming has its own particular differences and complexities which include the following:

• Farms are often inherited having been in a family for several generations and with the intention that children and grandchildren will in due course carry on working on and in the farm and therefore potentially not “matrimonial assets” available for equal sharing.
• Farmland and assets may have been accumulated in different ways: some inherited, some purchased during the marriage and some owned by other family members perhaps even as part of a Trust.
• The value of the property land and assets may be very significant but liquidity can be problematic if a sale is to be avoided directly affecting as it may do not only the profitability of the farm as a business in the future but also others outside of the immediate divorcing couple.
• As well as being often capital rich and income modest farming is nevertheless a way of life and the benefits of that “lifestyle” are intrinsically part of what the departing spouse will lose but can be difficult to quantify and provide outside of the farming environment.
• The husband and wife may have both made substantial contributions to the farm as well as assisting in bringing up any children- not only financial but in running the farm perhaps as equal partners and how can that be resolved fairly when one spouse has to leave when the marriage ends.
• One spouse may have given up their own inheritance prospects from a family farm in which they were brought up in favour of other siblings when marrying “into” another farming family.
• Last but not least there are particularly emotional ties to farms and land which have been in a family for generations which is completely separate from the commercial values.

Must there be a sale?

Courts do their best in farming divorces to find solutions which are fair to both spouses and which do not necessitate a sale. However this requires firstly a full valuation of all the assets including obviously the farm but also assets not immediately related to the farmhouse and land such as other savings investments and pensions. Of significance is consideration of the needs of the spouse leaving the farm (usually-but not always-the wife) including their housing needs and whether or not those “reasonable needs” can be met in all the circumstances without a sale of some or all of the farming assets. It is important to bear in mind that in a longer marriage those needs will be assessed generously and a sale may be required in order to achieve a fair outcome.

The wish for the remaining farmer to preserve the farm for future generations whilst entirely understandable will not of itself prevent a sale although full consideration will be given to their ability not only to raise money but also realistically to pay back any additional borrowings. In other words is a “buy out” realistic or would it lead inevitably to a sale in the future given the profitability of the farm overall?

Claire Rutter comments: "As with the sale of any family business on divorce it is vital to take into account the viability and integrity of that business following separation and the inevitable consequences of divorce including careful consideration of tax consequences.

"In summary however it cannot be assumed that a farm is “protected” nor that it will be “preserved” for the remaining farming spouse – it will depend on many factors and advice and assistance from specialists in farming divorce is essential."

At Ramsdens, we are accredited members of Resolution and expert family law specialists. if you would like more information on the issues raised in this article or any aspect of Family Law please do not hesitate to contact one of our friendly family law team to arrange a free 30 minute consultation. Call us free on 08000 147720, send us an email or text LAW to 67777 to book a free information session at any of our offices. We also offer early morning and late evening appointments across our offices.