I have specialised in negotiating financial settlements within divorce for over 25 years. To say that I have seen and heard ‘a lot’ is probably an understatement, but what certainly isn’t is that divorces involving farms are probably the most challenging cases to deal with.

There are important practical and emotional aspects to consider. On the practical side:

• Ownership of farm assets is not always clear. Particularly in multi-generational farm businesses, a farm may be owned by a number of different family members, not just the divorcing couple, all of whom have their own interests to protect.
• Farm businesses can involve complex business structures including corporate entities, partnership agreements and sometimes simple verbal agreements and understandings – the latter usually throwing up the most challenges.
• State support and subsidies can form a significant aspect of financial viability and the uncertainty following Brexit creates a difficult information void when looking to see how a financial settlement can be best scoped for the future.
• The weather! Revenue is hugely impacted year on year by this and the unpredictable nature of future farm business performance creates challenges with future financial planning.
• Succession. This is a major concern for many farming families when a family member is facing divorce. The prospect of a multi-generational farm having to be broken up to finance a divorce financial settlement will not only be heartbreaking but likely to deprive future generations of an established living and way of life.
• Tax. This can be hugely complex in farming cases with myriad considerations around inheritance tax, capital gains tax and various ‘reliefs’ and ‘exemptions’ based on agricultural and business status including business asset disposal relief, entrepreneurs’ relief, and hold-over relief. The structure of a divorce financial settlement can impact massively on the extent of the tax liabilities arising from it.
• Lifestyle. Many, but obviously not all, farm businesses could be described as lifestyle in nature. The farm business provides a home, a car, pays the household bills (and often food) but not actually a significant business ‘profit’ in that sense. A wider view needs to be taken than just the bottom line in a set of annual accounts.
• Liquidity. Very often, farms are worth a lot of money on a bare asset valuation basis. However, the income stream can be modest by comparison. The ability to raise finances to fund a divorce financial settlement can be quite limited.

These practical issues run alongside hugely important emotional ones too. A farmer’s attachment to his land (and way of life) is legendary with many electing to continue to work at some level until their passing. The wish to retain a multi-generational farm ‘in specie’ and see it passed onto future generations is hugely significant too. Many of such farming clients have described themselves to me as mere ‘custodians’ of the farm with a very real responsibility to make sure it is passed onto future generations.

The hard edge of a formal legal divorce process, and what is actually a very ‘blunt instrument’ in terms of the Court’s powers do not lend themselves well at all to properly recognising and catering for these practical and emotional intricacies. Very broadly, all the Court can do is order a sale of assets or a transfer to one of the couple (not their family, unless they have been ‘joined’ in the proceedings).

That doesn’t help with finding creative solutions which provide the best possible outcome for the family. This is where a process called ‘Collaborative Family Law’ can make all the difference. It is an ‘out of Court’ dispute resolution process in which the couple each have their own specially trained collaborative family lawyer and agree a financial settlement in face-to-face meetings which meets their own priorities and aspirations rather than the outcome having to be squeezed into a tight legal framework.

This facilitates really creative legal solutions, sometimes very different from what a Court might do. Where a Court may well order a sale of a farm, it can be agreed that will not happen and a different solution can be accommodated.

Importantly, the collaborative process also recognises that divorce is not just a legal process. It is an emotional process with legal and financial consequences. As such, other appropriately qualified family law professionals can be involved in the process such as financial advisers, accountants, and emotional support coaches.

Judges at Court will do their best within the constraints of the law, but I am afraid that the usual outcome in a judicially determined settlement is a future that neither party wants, and which has come at huge expense in legal fees. The under resourcing of the Court service also brings with it huge delays and even the very real risk that a financial settlement will be decided by a judge who knows very little about family law, let alone having any insight into the practical and emotional intricacies discussed above. Hence the opening quote which I think sums it all up very succinctly.

DISCLAIMER: The information and opinions expressed in this article does not address individual requirements and is for informational purposes only. It does not constitute any form of legal advice and should not be relied on or treated as a substitute for specific advice relevant to your particular circumstances.