Farming divorces are complex because assets may not be owned personally
1. Alternatives to the courts
Court is not the only option.
Alternative dispute resolutions such as mediation, collaboration and arbitration should be explored.
Court should always be the last resort.
There should be a determination by both parties to keep things amicable, especially if there are young children involved.
This will assist in reaching an agreement speedily and economically.
The Court process tends to take longer and be more expensive.
While there is no typical farming divorce, most settle within a year.
An uncontested divorce can be settled within six months, whilst a complex contested divorce can easily take 18 months to two years, and sometimes longer.
2. Who owns what?
Farming divorces are complex.
The assets and resources enjoyed directly by a couple and used by their family may not be owned by them personally.
A farm may have been held for generations and in diverse forms of ownership, for example, the assets and business may be held through a limited company, and with numerous shareholders (often other family members), or through a will trust or family partnership.
In non-farming cases, it is typically easier to establish which spouse owns what.
The challenge for the farming divorce solicitor lies in working out how both spouses, and the children, can be provided for upon separation, without forcing the sale of any of the farming assets.
3. Preserving assets
Equal is not necessarily fair.
An equal division of the assets and wealth accumulated through marriage is considered a fair divorce outcome.
This may not always be achievable for farmers, because of the need to preserve assets that were owned long before the marriage; but fairness still requires financial needs to be met.
Judges will bend over backwards not to force the sale of assets which might in turn threaten the viability of a farming business, for example, a judge may make an order that a spouse be paid out over a number of years.
Judges are reluctant to force the sale of a farm, especially if a farm is viable and the income from the farm is being used to provide for children of the marriage.
Full financial disclosure from both parties is crucial.
In all divorce cases, both parties must give full disclosure of their respective financial positions.
In a farming case, this will range from information such as how assets are held, to the disclosure of the latest farming management accounts, or review of income generation and spending.
Provide as much information as early as possible to advisers, to avoid protracted arguments, court applications and mistrust between the parties.
5. Protect and preserve
If there is a suspicion that divorce proceedings may be imminent, it may be sensible to limit overdraft facilities, and put in spending limits on bank accounts and credit cards.
6. Online access
Be technically proficient.
It is unlawful to view and take another person’s private documents and information by accessing their computer.
Consider applying new passwords to e-mail accounts.
Also avoid the temptation to vent emotions via social media.
Better still, take down all social media accounts.
7. Get sound advice
Assemble a good team.
Sound advice from professionals, such as accountants, auctioneers and agricultural advisers is essential.
Watch out for the tax ramifications of separating, selling and dividing property to achieve a divorce settlement, especially where land and buildings are held in light of tax advice given over a long period.
Check that there are no conflicts in advisers continuing to act for one party.
An accountant who acted for a family farming partnership may continue to act for the partnership, but should not act for an individual member of that partnership involved in divorce proceedings with another member of the same partnership.
8. Update your will
Consider making a holding will during divorce proceedings, especially if third parties are involved and assets are held as “joint tenants” (where the interests of one party passes automatically to the other on death).
Consider the tax planning aspects, if you have named your spouse as a beneficiary, or executor, in your will.
These provisions will cease to have effect, upon divorce.
9. Legal costs
Keep an eye on legal costs.
Divorce is expensive, and generally each party pays its own costs. To keep these down, co-operate, and provide as much information and paperwork as early as possible.
Ask for cost estimates, and ensure that the right level of solicitor is working on the case; day to day drafting can be done by more junior members of the team.
Ensure costs are updated monthly, or weekly if necessary, so you can know what has been done and how much it cost.
Next time, remember that pre-nuptial and post-nuptial agreements are increasingly popular!
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