Divorce is rarely straightforward, but when a family farm is involved, the process can become significantly more complex. Unlike many other businesses, a farm is not just an asset to be divided – it is often a home, a livelihood, and multi-generational in nature. This makes farming divorces particularly challenging, with courts required to balance fairness between spouses while protecting the continuity of the farm.
Farms are often asset-rich but cash-poor
Farms typically consist of high-value land, machinery, and buildings but do not always generate a large cash flow. In divorce settlements, courts need to assess the value of the farm to determine how financial claims can be met. This creates difficulties because:
- The farm’s value may be tied up in land and cannot be easily liquidated without selling core parts of the business.
- A sale of land or property could threaten the farm’s viability, potentially ending the family business.
This differs from other asset divisions (like splitting bank accounts or shares) where liquidated assets can be accessed more readily.
Inherited and multi-generational assets
Farms often span multiple generations, with land and property inherited over time. While courts in England and Wales distinguish between “matrimonial” and “non-matrimonial” assets, inherited property can still be considered for division in a divorce if it is required to meet the financial needs of both parties.
This can cause disputes over:
- Whether inherited land should be treated as part of the marital pot.
- The intention of the original owner (e.g., the parents or grandparents) who wanted the farm to pass through the generations.
The timing of when an individual receives an asset during the marriage can also have an impact on the court’s treatment of the asset in divorce.
The Farmhouse – family home
In many farming families, the family home is part of the working farm and often situated within the middle of the land on the farm. This complicates matters because:
- The family home is always shareable by nature.
- Dividing property may mean carving out part of the farmhouse or associated land, which could impact the day-to-day operation of the farm.
Courts must consider the housing needs of both parties, especially if there are children, which could mean allocating farm assets or creating alternative housing solutions.
The farm business and family
Many farms operate as family businesses, with multiple family members (such as siblings or parents) having interests in the land or business structure. A divorce can therefore impact not just the couple, but also other family members and business partners.
Issues that arise include:
- The role of family partnerships and who legally owns the land, livestock, deadstock and machinery.
- Whether assets are owned by a company or partnership rather than the individual.
- Protecting the interests of other family members who are not part of the divorce.
Where multiple family members are involved in a farming partnership or where families pool their resources across neighbouring farm businesses, one of the first steps in a farming divorce is to ascertain who owns what.
Requirements for additional expert advice
The lawyer is just one part of what is likely to be a team of professionals a farming couple may need to resolve all the issues they are facing. Advice from other specialists may be required to consider:
- Capital Gains Tax (CGT): Transferring or selling land during divorce can trigger CGT liabilities.
- Inheritance Tax (IHT): Agricultural property relief (APR) or business property relief (BPR) may be lost if the farm structure is altered.
- Valuation disputes: Determining the true value of agricultural land, farm business tenancies, livestock, deadstock and machinery.
At Stephens Scown, we have a wealth of experts we regularly work with to consider these issues and work alongside your team of professionals to help you reach resolution.
Farming lifestyles and non-farming spouses
The courts also take into account the lifestyle of the non-farming spouse during the marriage. For example:
- A spouse who worked on the farm without pay may argue they made a significant contribution.
- The non-farming spouse may have become financially dependent on the farm’s income without an income stream independent of the farm.
Courts aim to achieve a fair settlement, which may include a share of the farm’s value or a lump sum to rehouse the spouse. This is a balancing act where the court expects the parties to consider how to implement a fair settlement whilst keeping the farm a viable business.
Court approach in farming divorces
Although courts strive to preserve the viability of a family farm, the overriding principle is fairness and meeting the needs of both parties, particularly where children are involved.
Judges have discretion to:
- Avoid breaking up farms unnecessarily, often preferring to instead look at offsetting assets or deferred payments.
- Allow the farmer to retain the farm but compensate the other spouse with alternative assets, cash, or structured payments.
However, if the farm is the only asset, the court may have little choice but to order the sale of part of it.
Protecting the farm
Many farming families now take proactive steps to safeguard assets, such as:
- Prenuptial or Postnuptial Agreements: These are not legally binding but are increasingly upheld by courts if fair and properly executed.
- Partnership or Shareholder Agreements: Clearly defining ownership shares and control of the farm.
- Trusts or corporate structures: To separate personal ownership from business assets.
- Succession planning: Passing assets to the next generation carefully to minimise risk.
Conclusion – Farming divorces
Farming divorces are different because they involve far more than splitting assets – they involve multi-generational assets, business continuity, valuations and complex tax considerations. Taking into account the above points, we look at creative solutions that still achieve a fair settlement between the divorcing couple but maintain the viability of the farm. Our aim is to find an outcome that is both fair for the parties involved and that will keep the farming business together.
We always recommend taking early advice when you are going through the divorce process, in our experience this helps minimise expensive and lengthy disputes and can encourage a more amicable separation.
We also offer a Resolution Together service where parties can work together to reach a consensual decision about the outcome of their separation. Please do contact our Family Law team if you need any advice in respect of your family law issues, or indeed to discuss the full range on Non-Court Dispute Resolution options with us.