Potential interests held in farmland

Our Family Law team regularly act for individuals who have interests in a farm. Any interest the husband or wife may hold in a farm forms one of the assets to be considered for division on divorce.

Agricultural divorces are often complex and require expert attention. Unlike other businesses, farms are typically income light and capital heavy. Farms are often inherited and some have been in the family for many years. A farm which has been in the family for generations in the expectation that it will be handed down is an important factor which the court will take into consideration.

Marital asset of farmland

Whether the farm is deemed as a marital asset will impact on how assets are divided on divorce. Each case will turn on its facts and the outcome will depend on a wide range of factors. 

Farm ownership can also be complicated by tenancies, trusts and/or corporate structures, which can impact on whether the asset can indeed be divided in the event of divorce.

In some cases, farmland is rented by a farmer, rather than owned. This is common with cattle farmers, where large amounts of land are needed. In such cases, the farming business would need to be valued like any other business and an assessment made as to whether it is feasible to extract any cash from that business.

Both parties to a divorce have a duty of full and frank financial disclosure of all financial assets, liabilities and income. This will include valuations of the farming land, the business itself, the business accounts, bank accounts and evidence regarding any income stream. In addition, the farm owner may be party to a Stewardship Agreement, which provides an annual income. Many farmers also receive annual financial entitlements as part of the Basic Payment Scheme.  These financial incentives are a valuable source of income.  

Ensuring the needs of both parties

Therefore, it is important for both parties to ensure that specialist and professional experts are involved at an early stage for land valuations, valuations of entitlements, tax advice and business strategies. It is not unusual to involve agricultural surveyors, agricultural consultants and specialist accountants to provide advice in farming divorces.

The needs of both parties are considered in depth when negotiating a financial settlement. Often, the capital of the farm is tied up in the land and buildings, which in turn generates the income. Accurate and creative advice is needed, to ensure that money can be extracted to satisfy the financial needs of both parties. For example, just part of the farm could be sold or there could be allowance for capital payments over time. It is also possible for land to be transferred between husband and wife as part of the financial settlement. If there are other assets to a marriage which can be distributed to avoid a sale or part sale of a farm, that is also an option that will be explored.

The courts primary aim is to achieve fairness, and therefore, how the farm is dealt with on divorce will depend on the particular circumstances of each case.

Here to help

Agricultural divorces are in a field of their own. Our specialist family lawyers can use their experience to help you reach an amicable solution. If you have any more questions regarding agricultural divorce or if you would like further information on how we can help, please do not hesitate to contact a member of our family team on 0161 941 4000 or via email.