Farming and Divorce

How is a farm treated on divorce?

• • Many farms stay in families for generations with multiple family members often having stakes, for example, through a family trust or partnership or a limited company. It’s also common for farming families to transfer property and assets to the next generation to reduce liability for Inheritance Tax. These complex methods of ownership can make divorces in farming families difficult to resolve and this is why specialise legal advice is needed from a family law solicitor.

• • A divorce involving a farm can also be challenging particularly if the family home is located where the day to day running of the farm takes place.

• • The court will look at whether a farm is a matrimonial asset or non-matrimonial asset. The starting point is to look at the nature of the farm and where it came from. A matrimonial asset is more likely to be shared during a divorce whereas a non-matrimonial asset is more likely to be ringfenced unless it is needed to meet ”needs” for example for housing and income.

• However, despite being different the farm will still be an asset that needs to be taken into account and please see further information.

What factors are important on a farming divorce settlement?

• • Value – It is important to know what the value of the farm is and whether the farm is financially healthy. This could include the capital value (to include the land but also livestock and machinery) and also to look at the income.

• • Liquidity – the farm may not be able to be realised and this needs to be factored in.

• • Risk – the farm might be asset rich but income poor. As with any business, there is always an element of risk. The farm might also be subject to complex agricultural ties which are registered on the land or there may be planning restrictions.

• • Third parties – the farm is often run as a partnership with other family members. This can add its own layer of complexity to the divorce. Those family members may live on the farm and will have their own rights. On occasions they may need to intervene in the divorce case as they will have beneficial interests in the farm.

• • Inheritance and trust – ownership and the source of the farm need to be properly considered on divorce. Arguably, if the farm was inherited then it could be described as ‘non matrimonial’ property but each case is dependent on it’s own facts and all the circumstances need to be taken into account.

• Tax – this is always an important considered and need to be taken into account with specialist tax advice on divorce.