Divorce can be complex at the best of times, but when a family farm is involved, the emotional and financial stakes are even higher. For many farming families, the land is not just a business asset, it’s a legacy passed down through generations. As experienced family law solicitors we often see that separating farm assets during divorce proceedings can be one of the most challenging aspects of a financial settlement. The farm is typically both the family home and the source of income, which makes dividing it fairly far from straightforward.
Dividing Assets on Divorce
Although a farmer may be able to trace their family heritage back through several generations, the Court may not always give weight to how the land was originally acquired. The main difficulty in farming divorce cases is the lack of liquidity as the farm, home, and business are often intertwined and difficult to divide.
In contested farming cases, the approach taken by each divorce solicitor will depend on which party they represent. Farmers should gather as much financial and ownership information as possible early in the process to minimise disputes and legal costs.
It’s also important for farmers to understand that the Court considers all contributions to the marriage or partnership, including those made through the management and running of the farm or by supporting it through domestic duties.
Because the farm is usually the family’s only source of income, the Court will consider all options to try to preserve it where possible. The starting point is to establish how the farm is held, commonly through a partnership. While partnership accounts are often prepared for tax efficiency, they do not always reflect true legal ownership. Third-party claims may also arise, as it is not unusual for others to intervene in proceedings to assert an interest in the farm or business.
Considerations When Dividing Assets in a Farming Divorce Case
Farming divorce cases have certain unique features that distinguish them from standard financial remedy cases. The Court will take into account a number of factors when determining how to distribute assets, including:
1. Value of the land
Parties should be realistic about valuation. If the land is subject to a tenancy in favour of the farm partnership, a valuer may reduce the farmer’s interest accordingly. The potential for enhanced or alternative use value should also be assessed.
2. Plant and machinery
These depreciate over time, and both live and dead stock must be valued. Prepare a full inventory and clarify whether all plant and machinery appear on the balance sheet, and whether they are subject to finance arrangements.
3. Crops
Crops remain on the balance sheet until sold, albeit often at a lower value.
4. Accounts and asset base
Farm accounts are often 12 months old, meaning the asset base may have changed. Consider whether an updated inventory or viability assessment for subsidiary businesses is required.
5. Buildings and alternative use
If there are agricultural buildings, consider whether they have potential for alternative use or development.
To ensure fairness and accuracy, expert valuations of land, buildings, livestock, and equipment will be required. It’s also recommended you seek advice from an accountant to confirm the tax implications, including inheritance tax and capital gains tax considerations.
Although financial accounts and tax returns form part of the evidence, they often only tell part of the story. Every farming case is unique and requires careful analysis by specialists familiar with agricultural assets and the family law framework.
Finding the Right Solicitor To Handle Your Divorce
Navigating divorce proceedings involving a family farm requires both sensitivity and specialist legal expertise. At Consilia Legal, our team of experienced family law and divorce solicitors understand the distinctive challenges that farming families face when separating assets. We work closely with clients, valuers and accountants to protect your livelihood and secure a fair outcome.
If you’re facing a divorce involving farm or agricultural assets, contact Consilia Legal today to speak with our expert solicitor Kelly Walters for confidential advice and practical guidance at k.walters@consilialegal.co.uk or on 0113 322 9222.