A family farm will often have been passed down for generations, and have provided a home and an income for a number of members of the same family over a period of years, but as the farmhouse will also usually be the marital home owned jointly between husbands and wives, its value has to be taken into account when dealing with financial issues on the breakdown of a marriage.
Family heirlooms and inheritance are not normally considered to be matrimonial assets, but divorces involving farms can often be more complicated, particularly when you also consider the impact divorce can have on other family members who may live on the land as well or run it together.
Whereas in the past selling off farmland may not have unduly affected the business, modern farming methods have increased the acreage needed to sustain the farm, so any land sales might negatively affect viability of the farm for the next generation. As the price of farmland has jumped dramatically, it can mean that any settlement awarded by the courts is worth more than would be expected.
Farmers who worry about having to sell farmland or borrow money against their farm to finance any divorce settlement, particularly of the younger generation who may only recently have been passed the farm by their parents, or may expect to receive it in the future, are now considering signing pre- or post-nuptial agreements to protect their wealth from enlarged divorce payouts to their spouses, and enable them to still be able to pass it on to future generations.
This is even more the case since a landmark court ruling in 2010 which means that courts can now take pre-nuptial agreements into account when deciding financial settlements on divorce.
It should still be emphasised that the courts will take other relevant factors into account as well, such as the needs and resources of the parties, so the terms of a pre-nuptial agreement may not always be followed if this would lead to unfairness between the parties, but provided the document is properly drawn up and both parties are advised on its effect, it would hopefully be the starting point for the courts when resolving financial issues.
Therefore, farming families should consider pre- and post-nuptial agreements as an active part of wealth protection.
If you would like further advice, please contact Katherine Wright for a confidential discussion on 01297 32345 or katherine.wright@scottrowe.co.uk.
