Divorce and Agriculture

Divorce and the Farm

Often farming is a family business, with agricultural land and farming businesses having been passed down through generations. In consideration of the special nature of agricultural property special care must be taken when dealing with the financial arrangements in the event of a divorce in the family.

How is a divorce involving agricultural property different?

Whilst the broad rules relating to the distribution of property on the breakdown of a marriage, are the same in all cases, there are some particular matters that need to be taken into consideration when the court considers how to deal with agricultural property. The court will consider how any property is owned (including who else has an interest), how it has been brought into the marriage, the contributions made by any parties, the impact of property subject to a trust, the impact of any arrangements on business property etc.

It is critical, in all cases, that there is full and frank financial disclosure of both parties’ respective financial resources. In farming cases, in addition to the general level of disclosure, this also means the clarifying the following:-

  1. Details of the actual land owned by the farm and how each section is used. 

In clarifying this, it would be useful to see the Rural Payments Agency (RPA) Map of the farm to see which parts attract the payment criteria. 

In addition, it is essential to have the land registry title numbers (or deeds if unregistered) of the land in question, in order that all relevant office copies can be obtained. 

  1. Details of how various parts of the farm are owned. 

It is not uncommon for farms to have several forms of ownership, including farm partnerships, companies and trusts. We would need to see copies of the partnership or trust deeds, if any, together with details of any company ownership.

In addition, we would need to know whether any land is let under a Farming Business Tenancy (FBT) or let to a contract farmer or operated on a shared basis. 

Obviously, where there are third parties involved in the ownership and running of the farm, this will have a significant impact on the liquidity of farm assets.

Sometimes involvements are informal between family members, but this also needs to be clarified, if other family members are likely to wish to have their interests protected. 

Further, we will need to know if you have any remaining interest or option in land sold on.

  1. Details of borrowing. 

It will be essential to have full details of any unsecured/secured borrowing by way of HP agreements, loan agreements, settlement figures and redemption figures. In particular, if there are all monies loans, these should be registered against the title and up to date title deeds will have to be disclosed. It may be that this information can be provided by your accountant on your behalf if we have signed authorities. 

  1. Planning. 

We will need to know if there are any current or prospective planning applications underway. 

  1. Value of machinery, equipment and livestock etc. 

There will in the due course need to be a formal valuation not just of the land but of the equipment and stock. 

  1. History of the farm. 

This is very important in determining a way forward, in particular confirming when the land came into the family, whether wills have been fully implemented and so forth. 

Where possible it is useful to see copy Wills and Deeds of Variation, if any. 

  1. Trading Accounts. 

Given that the Courts are generally loathe to sell or otherwise interfere with the successful running of a farm, it is important not only to give the history but to demonstrate that the farm has been operating successfully. This is done by way of trading accounts. 

  1. Other professional advisors. 

As you will already have been receiving the support of other professional advisors, such as the farm accountant and land agent, it would be helpful for us to be able to liaise with these people too, in order to give you comprehensive advice.

We will be asking for signed authorities in regard.

What are the benefits of a nuptial agreement?

A nuptial agreement is a formal, written, agreement between two partners entered into during their marriage (a post-nup), or in contemplation of their marriage (a pre-nup). The agreement sets out the ownership of their respective belongings (including money, assets and property) and explains clearly how it will be divided in the event of the breakdown of their relationship.

The agreement can also deal with other issues, including financial provision for children, gifts and inheritance, and how to vary the agreement during the marriage. 

In cases involving land passed down through the family, or where one party brings greater wealth into the marriage, addressing how any property will be distributed/ringfenced in the event of the divorce can help to avoid a difficult, and costly, legal dispute should the marriage break down.