The division of a farm during a divorce is often a highly intricate and delicate issue. The court face the challenge of ensuring the non-farming spouse is fairly provided for while preventing significant harm to the farming enterprise.
Jane Tenquist, head of Family Law at Myerson Solicitors (pictured) explains more:
Why are agricultural divorces so complex?
Agricultural divorces are laden with complexity for several reasons:
- Lack of Liquidity: Farms, though valuable, often have capital tied up in land and buildings.
- Income vs. Assets: The farm’s assets may be substantial, yet the income from farming might be minimal.
- Property Types: Farms often include both matrimonial and non-matrimonial property.
- Prenuptial Agreements: Prenuptial agreements may be in place to protect farming interests.
- Multiple Businesses: Farms might have several businesses, each generating different income streams.
- Third-Party Interests: Other family members may have stakes in the farm.
- Rented Farmland: The farmland itself may be leased.
- Generational Farms: Farms are often passed down through generations with an intent to continue this tradition.
- Complex Structures: Farms can operate as companies, partnerships, or sole traders, sometimes without formal agreements.
- Trusts: Farms may be part of a trust.
Income from the farm is often a result of contributions from both spouses, even if the
farming spouse inherited the farm. The farmhouse, frequently the marital home, can
be an asset.
One spouse may wish to stay but might only afford to buy out the other if they sell a
significant portion of the land.
Valuing farm assets, such as buildings, land, stock, and machinery, is complex and
usually requires a RICS surveyor appointed by both parties.
Potential solutions for dividing a farm on divorce
The court often needs to find creative solutions to address the division of a farm on
divorce. Some methods include:
- Order for Sale: A farm may need to be sold to meet both spouses’ needs.
- Partial Sale: Selling part of the farm, especially land with development
potential, can generate liquidity without harming the enterprise. This has been a preferred solution in several cases. - Sale and Leaseback: Selling a portion of land to the other spouse, who then leases it back to the farm, can be effective.
- Lump Sum Payments: Transferring farming land in exchange for lump sum payments over time, assuming the farm generates sufficient income.
- Nuptial Settlement Variations: When the farmhouse or other assets are held in trust, courts can vary nuptial settlements to provide access to capital. Variations can include selling or remortgaging property held in trust or freeing land from trust restrictions to access capital.
- Asset Division: One spouse retains the farming company while the other is awarded the farmhouse.
- Maintenance Payments: an order for substantial maintenance payments in exchange for a smaller lump sum.
- Family Assistance: Letting relatives help raise capital.
- Development Potential: Exploring development potential and developing independent business ventures.
- Shared Illiquid Assets: Transferring illiquid assets to both parties so each has a stake.
- Deferred Sale Order: Imposing a deferred order for the farm sale.
- Agricultural Loans: Inquiring with Agricultural Mortgages Corporation Plc for long-term agricultural secured loans.
- Tenancy Assignments: Exploring the potential of assigning tenancies. By considering these solutions, the court can balance the need to provide for both spouses while safeguarding the continuity and integrity of the farming enterprise.
For more legal advice regarding Agricultural Divorce contact the Family Lawyers at
Myerson Solicitors.
