If you work in the farming and agricultural sector you are likely to have heard of or know farming families who have been affected by divorce. This article looks at the benefits of pre-nuptial and post-nuptial agreements and is part of a series of articles looking at divorce within farming families.
The depth of emotional and financial investment that a farming family can often require means that if there is a divorce a great amount of effort is sometimes needed to disentangle complications that wouldn’t ordinarily arise for a non-farming family.
Why can farming divorces be so complicated?
The overlap of personal and business assets can lead to competing interests between personal divorce claims and maintaining a viable farm. Resolving those tensions can sometimes be extremely difficult when emotions are heightened through the divorce process. This can lead to protracted divorce proceedings and significant legal costs, which can themselves erode the very assets the couple are looking to share.
It is often this type of farming divorce that gets most exposure and which generates the greatest amount of discussion in farming circles. More senior farming family members will have heard lots of examples of this over the years and, rightly or wrongly, it can have a bearing when making decisions about how arrangements in your own farming family should be dealt with. It can prevent important succession provisions from being made that make sense in almost every other respect, however why transfer a son an interest in a farming business if half of it is only going to be transferred away if the son divorces? You can read more about how farming divorces are different to typical divorces here and how inherited farms are often dealt with on divorce here.
More basic than this is the situation where a farmer wishes to marry but has concerns over the impact a divorce might have on his family’s livelihood.
Both are conundrums faced by many farming families in my experience. They are, however, situations that can be assisted through the use of a pre-nuptial or post nuptial agreement.
What are the benefits of pre-nuptial and post-nuptial agreements for farming families?
What is a pre-nuptial agreement?
A pre-nuptial agreement is the better known of these two ‘nuptial’ agreements and is entered into if the couple are not already married but plan to do so.
What is a post-nuptial agreement?
The post-nuptial agreement is the same, but entered into if the couple are already married.
How can pre-nuptial and post-nuptial agreements help protect your farm?
Both agreements record how the couple will hold the assets whilst they are married. Crucially however, they also sets out how the couple agree the assets and claims should be dealt with in the event that they divorce.
Such agreements can carry significant persuasive weight in the English Courts. The weight that is attached to them will be at its greatest if the couple have each been advised by different solicitors and have each provided financial disclosure. The agreement also needs to be fair and adequately provide for the reasonable needs of both parties.
A farmer looking to transfer assets to other family members can request that family member and his spouse or fiancé to enter into a pre-nuptial or post-nuptial agreement as a condition of that transfer. If the couple agree to it (both the husband and wife would need to agree) then the agreement can be drawn up and signed before the transfer takes place. If the couple don’t agree then it might be that the transfer doesn’t take place. More often than not in my experience the agreement is drawn up as the couple know they will not benefit from the asset if they don’t agree to sign it.
If you are looking to marry yourself but have concerns about the impact a divorce might have on your family farm then pre-nuptial or post-nuptial agreements can almost certainly offer a solution.
Please do contact us and we would be happy to speak to you about whether such an agreement would be appropriate to your situation.