One of the most interesting aspects of farming divorce cases is that whilst there can be many of the same disputes as in other divorces, both parties sometimes want the family entity to survive and prosper for the benefit of the children and the farm.
How are farming divorces different to other divorces? In many farming divorce cases, it is not simply a situation where you up and sell the property. This gives rise to a change to find some really creative solutions which have to be negotiated between the couple, because in terms of the orders the Court can make, there are very limited options available.
This article looks at some example solutions we’ve found.
Creative solutions for farming divorce cases
Case #1
I was involved in a case where a farm had both a dairy and a cereal element. We agreed which of the parties was to have each part and split the farm up accordingly. We also managed to arrange for some very effective tax planning, keeping both adult children happy.
One of the two parts was transferred to the father and one son and the other part to the wife and the other son. We had some tough negotiations over valuations, the split of equipment and balancing payments, but got there in the end. It was a few years ago and both elements of the business continue to prosper. The children work well together.
The terms we agreed for the family could not have been made as an order by a Judge.
Case #2
In this case, a deal was made where the children were involved. Here, the wife received nothing of the farm assets directly but was able to continue living in one of the properties.
Firstly, the husband bought the three children into the farming business with agreed shares. Secondly, the wife had a right for life to occupy a house on the farm, external maintenance and outgoings and Council tax free, together with a small lump sum.
There were several advantages to this:
- The children received shares in the business;
- The house for the mother would never leave the farm ownership;
- The lump sum to be paid to the wife was far smaller, meaning nothing had to be sold to achieve the result; and
- The house for the wife was far enough away from the main farmhouse and farmyard that they could avoid friction should either of the parents form new relationships.
The farm business did have to take an increased loan, but all the children were happy to be partly responsible for this, where they were getting a share in the business.
It was the creative thinking of the lawyers involved and the support of the bank that made this result possible. And it was a far better solution for all involved than the alternatives.
Where there is a will to do so, solutions can be found that are fair to all parties and address the needs and wider requirements of the whole family (and their shared business).
For more information on farming divorces, please read our previous articles on what happens on divorce if the farm was inherited, pre-nuptial and post-nuptial agreements for farming families and what can happen to the farming partnership on divorce. Or alternatively, please feel free to get in touch with one of our experts.