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What happens when there is a breakdown in a farming relationship? Farming divorces are often far more complex in nature than the typical ‘urban’ or “suburban” divorce. There are often many more dimensions to a farming divorce beyond a commercial viewpoint which make it difficult to quantify the fairness of any financial settlement.
The starting point for all when dividing assets and liabilities in matrimonial finance is the ‘yardstick of equality’ which is exactly that- a benchmark – but consideration must always be given to a range of other factors and most particularly the income and housing needs of both separating parties and the first consideration is always the needs of any dependent children to ensure the overriding principle of fairness is met.
Often farming spouses and partners have built the farming business and their local commercial reputation together. Diversification is now a significant part of the traditional farm- for example Farm shops which can be a major part of the overall operation. An order for sale of property and assets, made in many non-farming divorces, can be fraught with difficulty. However it may be problematic to avoid where there are not enough liquid assets to ‘buy-out’ the departing spouse and to ensure fairness across the board.
Many farming families are asset rich but “ready” capital is not available to facilitate a buy-out agreement. Farming divorces have very specific considerations for legal representatives when considering the continuity of the business against achieving fairness for both parties. It is also important to bear in mind that a longer marriage requires a more generous assessment of needs than does a short marriage which may again point towards a sale of some at least of the farming assets.
Aside from a commercial viewpoint, the farming business is usually not just a place of work -it is the family home and, in most farming marriages, an inter-generational asset. It may well have been inherited by one spouse but thereafter invested in and maintained by both. A balance must therefore be achieved between inherited assets and contributions. Regardless, these factors will only be considered when the needs of both parties are met in the first instance.
In some cases the farm is “tied up” in a Trust or Partnership where other family members are involved and those additional farm owners often have plans for the inheritance of the business. It can be problematic to preserve these intentions upon divorce where the departing spouse must be given a fair settlement.
Ultimately, one should never assume that the farming business and the matrimonial home is ‘preserved’ or ‘protected’ for either spouse or for later generations. However we work hard at Ramsdens Solicitors to balance these competing needs and to achieve a fair and reasonable financial settlement whilst doing all possible to take into account the inherent uniqueness of the farming industry.
Claire Rutter, a Partner and Solicitor in our Family team, specialises in farming and business divorces and is part of a very experienced team who are able to advise on a range of matrimonial matters. Whether you are considering negotiation, collaboration or Court proceedings we have Solicitors who can help. Give us a call and ask to speak to Claire on 01904 655442 for a 30-minute free consultation and further guidance on your matter.