How Is A Family Farm Divided In A Divorce?

Year Published: 2016

In any divorce it can be difficult to divide the assets, but especially when the main asset is a farm. Dividing a large asset such as a family farm can become very complex if the correct legal advice is not available.

Before any of the family farm assets can be divided it is key to identify, understand and value all of the assets and incomes. It is also important to understand the history of the family farm and how it works on a day to day basis. Often the farm supports more than one family and financial arrangements can be complicated.

The first steps in identifying and understanding the assets of any family farm would be:

  1. Identify what live and dead stock there is and arrange for this to be listed in an agreed document. It is then clear what stock is to be valued by a specialist. Although with the constant sale and purchase of animals/crops/stock this can sometimes prove to be a “moving target”.
  1. Identify what properties are owned and if there are any tenancies or agricultural ties affecting the properties. It is also important to understand how the value of the properties might be affected and who might be entitled to live in them?
  1. Identify if there is any other land which is farmed/rented and if so who owns that land? Often land is owned by one partner but farmed by the partnership without payment of formal rent.
  1. Understand what, if any, subsidies are available and what value they may have? For example, the Single Farm Payment is currently undergoing some change. It is important to have an awareness of current farming issues.
  1. Understand what the terms of any partnership agreement are and what capital and current accounts do they show for each of the partners? Sometimes the reality of what happens is not represented fully in the accounts.
  1. Identify how the income from the farm is dealt with and understand if there have been any profits left in the partnership. These may have led to marital investment of money which would otherwise have been available within the marriage.
  1. Understand what borrowings/leases/overdrafts the partnership has, how they are serviced and on what terms? Farmers usually have a close working relationship with their bankers.

Once we have the assets clearly identified a specialist can then value them and we can gain a full value for the whole farming business. Once valued, liquidity is then considered as to whether the land could be sold to meet the financial claims which may arise in divorce or whether the bank will lend further money if cash is not readily available.

These are just a few of the issues a solicitor needs to consider in any divorce which involves a family farm. Without these issues being fully considered, it is inevitable that one spouse is likely to get the wrong outcome in their financial claims.

For more information on divorce involving a farm or any other agricultural business, please contact our Family Law team on 0161 475 7676.

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