Divorce in the Farming Community

May 21, 2014

Divorce can happen to anyone and is usually an extremely stressful experience for the couple involved and their immediate families. Unfortunately, in 2012 in Northern Ireland, about 8500 marriages were registered, while almost 2,500 divorces were recorded in the same period. In terms of finances, divorce can be devastating let alone the emotional impact that separation will have on those involved. For farmers, this is especially so in light of the likely scenario that farms very often will have been associated with a particular family for generations. Most farmers will want to work on the farm on the assumption that one or more of their children will continue in the tradition and that there will be an assumption that the farm will continue to remain in tact and inherited by future generations.

This assumption can only be realised if the farm remains a viable business operation. Unfortunately the reality of divorce may mean that this assumption cannot be met.

It is important to note that the Court’s duty in dealing with the financial affairs upon divorce is to be fair to both parties, taking into account the particular needs of the parties. As a result of the case of Whyte v Whyte (which happens to be a farming case) the Courts assume an equal split of the matrimonial assets on divorce. In line with general principles which the Courts apply in dealing with financial division in divorce cases, all the assets will need to be identified and correctly valued, this  will include the land, stock, income and potential for future income. Consideration will then need to be given as to whether or not there is the potential to satisfy both parties’ needs out of the assets. If there is, it may allow one of the parties to try and retain and operate the farm, perhaps, for example, by raising a loan against the farm to raise sufficient capital to buy out the other parties’ financial interest in it. If this is not possible, then the Court may well order the sale of the land.

There has been much press and media publicity recently regarding pre-nuptial agreements and their validity, if challenged, in the event of marriage breakdown. The general public may view pre nuptials as being pertinent to wealthy individuals, there is however a growing realisation that pre-nuptial agreements can be extremely effective in securing and protecting family farms from the financial impact of a divorce.

Whilst there may be an understandable reluctance to raise the issue of a pre-nuptial agreement prior to marriage, there are very real benefits in doing so for both parties and children when a marriage breaks down. In a farming case, there can be agreement that the farm will remain in tact so as to provide an income which will help support the other spouse financially (and children) as well as securing a possible future income and security for the next generation. Each case of course will depend very much on its own circumstances and pre-nuptial agreements should not be considered in all cases. In addition, there is also the option of a post-nuptial agreement for certain cases in the event, for instance, children being born with a disability or further acquisition of assets post-marriage.

Prevention as they say is often better than the cure and farmers should seriously consider taking legal advice regarding pre-nuptial agreements allowing good time for proper disclosure and legal advice so as to provide the best security in the unhappy event of their marriage breaking down at a future time.

Please note: The content of this article is for information purposes only and further advice should be sought from a professional advisor before any action is taken.

Cleaver Fulton Rankin, 50 Bedford Street, Belfast, BT2 7FW
T: 028 9024 3141, Fax: 028 9024 9096, www.cfrlaw.co.uk
A legal alliance Matheson Ormsby Prentice, Dublin & Cleaver Fulton Rankin, Belfast