Is divorce different for farmers?

Dealing with a farm during a divorce can be complex, particularly when the farm has been in the same family for generations and may be the primary source of income.

In this article, Vivienne Middleton, partner in Lodders’ Family Law team, shares some key considerations in farming divorce cases and offers guidance for those navigating this situation.

Why farming divorces are different

Divorces involving farms are often more complex than other cases, largely because of the nature of the assets involved. Farms often have significant capital value tied up in land, buildings, machinery, and live and deadstock, but relatively low income compared to other businesses.

Ownership structures can be complicated too. A farm might be run as a family partnership, a limited company, or involve third-party ownership or trusts. Inheritance is also a common factor to consider in farming divorces, especially when land or property has been passed down through the family. The court must take all of this into account when reaching a fair settlement.

Valuing a farm in divorce

No two farming divorces are the same, but there are common issues that tend to arise early on, including the need to involve experts to provide  valuation reports.  In most cases, single joint expert professional valuations will be necessary to assess the farm’s worth, consider liquidity and taxation.

Farms often have substantial asset value, but generate modest income, which can make valuations particularly sensitive. It is essential to consider the full picture – not just the land and buildings, but also machinery, stock, subsidies, grants, and any business interests.

Other considerations

With farming divorces, it is also essential to address:

• The needs of any children, as well as the financial needs of both parties;
• The origin of the farm;
• How the farm is owned and whether there are any existing business structures in place, such as partnerships or limited companies;
• Potential tax implications of any proposed settlement;
• Any trusts or inherited assets;
• The existence of any pre- or post-nuptial agreements;
• The contributions each party has made to both the farming business, the family home and to the marriage;
• Income produced by the farm and any additional income streams.

Will we have to sell the farm? 

Because farms are often passed on through the generations, the court will have regard to the origin of the wealth and assess the extent, if any, of the “marital” nature of the farm. There are emotional and financial factors to consider. There is often a shared desire  to preserve the farm and land for future generations. The focus in those cases is to find a way to raise cash to meet the departing spouse’s financial needs and entitlement without having to sell the farm on divorce, to preserve its legacy for the future.

The needs of any children of the marriage are always the court’s first priority. For more information on succession planning, check out our popular farm succession health check.

The court has broad, wide ranging powers upon divorce to divide the assets between the parties to reach a fair outcome.  This may include the sale or transfer of property and shares and other assets, including the farm. Those powers can be utilised creatively to  retain all or part of the farm intact, while still ensuring that a fair and balanced outcome is reached for everyone involved.

Joined-up advice you can rely on

Lodders offers a comprehensive service for business owners, with dedicated teams across key areas of law. Our specialist agricultural lawyers work closely with our experienced Family Law team to provide joined-up, practical advice tailored to your circumstances.

Whether you’re navigating a farming divorce, managing a family business, or planning for the future, we’re here to support you every step of the way. Please get in touch with our friendly team to find out more.