The Farmers Mart Oct-Nov 2017 - Issue 53 | Page 26

Farm News
How divorce can affect
farming families
» » FARMING IS A STRESSFUL BUSINESS
and often a family business - and this can
put an immense strain on marriages. Victor
Collins, partner and solicitor at Nelsons
Solicitors, explains how complex divorce on
a family farm can be.
The breakdown of a marriage in any
family is an upsetting and emotional
experience for those involved. The
ramifications and financial upheaval can,
however, be considerable and far reaching
where a divorce affects a family farm.
There are few other occupations where
home and work are so interrelated – the
farm is not just a home and business, but a
way of life. A farm can involve close family
involvement and vested interests and can
often be a capital rich, but income light,
asset.
WHY ARE THERE COMPLICATIONS
IN THESE CIRCUMSTANCES?
A farm may have been in the family
for a number of generations, resulting in
parents and siblings inheriting and sharing
the agricultural business. This complex
ownership means in the event of a divorce,
resolving the family farm as a matrimonial
asset can be a very difficult process
involving special consideration.
HOW DO THE COURTS DECIDE
WHO GETS WHAT?
Where a couple divorces, all assets are
taken into account regardless of where
they came from. Since the case of White
v White 2001, the law has leaned towards
fairness when dividing the matrimonial
assets and courts will only depart from
equality where there is good reason to do
so.
An equal division of assets and wealth
accumulated during a marriage is not,
however, always achievable for farmers.
This is because of the need to preserve
assets that were inherited or owned long
before the marriage.
White v White happened to be a case
where the parties ran a farm in a farming
partnership. Prior to this case, financial
cases tended to be settled based upon
26 Oct/Nov 2017 www.farmers-mart.co.uk
Victor Collins
a ‘reasonable needs’ basis. This meant
that in farming cases it was a lot easier
to protect pre-matrimonial assets such as
the farm from being sold to fund a divorce
settlement.
But White v White established the
principle of fairness. The court ruled that
the ‘yardstick of equality’ should be applied
so the contribution of both parties to the
marriage, and its length, should be taken
into account. This means the financially
weaker party should not be disadvantaged
and discriminated against when making a
divorce settlement.
When a divorce takes place in these
circumstances, it is first necessary to
ascertain the make-up of the farming
business. This includes legal ownership
of the land, family trusts and tenancies.
The next stage is to value the farm. In this
respect, a specialist valuer is required. It is
essential to ensure all aspects of the farm
are valued, including land, buildings, farm
machinery, livestock and subsidies. Finally,
it is time to divide the farm and the other
matrimonial assets.
HOW ARE THE FARM AND OTHER
MATRIMONIAL ASSETS DIVIDED?
Barron J, in her judgement in the Y v Y
2012 case, gave seven factors as a useful
guideline and checklist in farming cases
relevant to the principle of sharing:
1. the nature of the assets (e.g. land/
property, art, antiques, jewellery on
the one hand, and cash or realisable
securities on the other);
2. whether the inherited assets have been
preserved in specie or converted in
to different assets, realised or even
spent;
3. how long they have been ‘in the
family’;
4. the established or accepted intentions
of both the previous holders of the
assets and the spouse who has
inherited them;
5. whether they have been ‘mingled’
(for example by being put into joint
names of the spouses, or by being
mixed with assets generated during the
marriage);
6. the length of the marriage and therefore
the period over which they have been
‘enjoyed’ by the other spouse;
7. whether the other spouse has directly
contributed to the improvement or
preservation of the inherited wealth.”
PROTECTING YOUR ASSETS
A common mistake and misconception
made by farmers and land owners is that a
farming asset or business is ‘ring-fenced’
and, therefore, excluded from any divorce
settlement. This is not the case.
The principle of equality established
in White v White means that all assets,
including the farm, must be taken into
account when determining a divorce
settlement based upon the requirement of
fairness. A trial judge does, however, have
the discretion to depart from this basic
principle if it becomes clear that an equal
division of assets is not fair.
This is particularly the case if such a
division is likely to damage the farm and
business irrevocably. For these reasons,
farming cases can present a number of
complex challenges which require an
experienced family solicitor specialising in
farming cases for their resolution.
For more information visit
www.nelsonslaw.co.uk