– by Richard Baker, Head of Family law at Porter Dodson Solicitors & Advisors
Whilst the breakdown of a marriage is always painful, the impact upon the farming community can be particularly challenging and may jeopardise the viability of the family farm.
This risk is heightened in circumstances where the farm is owned on an inter-generational basis, which usually means that the effect is felt not only by those whose marriage has broken down, but also by others with a financial interest in the business.
The impact of the family breakdown will often depend upon whether plans have been put in place to deal with such a scenario, as well as upon the assets available to meet the needs of the divorcing family.
In the event of divorce, the Courts have wide reaching powers to order the sale of land or property, payments of lump sums and to divide pension assets. How those powers are applied is determined by a number of factors laid down by Section 25 of the Matrimonial Causes Act 1973.
Often applicable for those in farming communities is the issue of contribution, so account can be taken of the fact that a farm may have passed down through a number of generations to one party to the marriage who has, effectively, contributed all of the capital held by the family.
However, a marriage gives rights to the non-contributing spouse to pursue claims, irrespective of whether they have made any financial contribution to the resources of the household. The shorter the marriage the less those rights might be, but if, for example, where there are young children, a Court will look at the “needs” of all, irrespective of contribution and length of the marriage.
This often results in it being necessary to identify the means of funding the provision of accommodation for those not remaining within the farm, as well as ensuring they have an income. Arguably, the greater the resources the less negative the impact upon the commercial viability of the farm, but where the assets are comparatively limited, this can be a real challenge.
It is essential that those who are considering bringing the younger generation into the business give consideration to this “what if” scenario. Whilst the terms of the partnership are important, it may be appropriate for the younger generation to consider entering into that is called a pre or a post-nuptial agreement.
Effectively, this allows those getting married, or who are already married, to negotiate the terms of a contract which would regulate what would happen to their assets in the event of a subsequent family breakdown.
Although not necessarily an easy subject to raise, prior planning can avoid considerable uncertainty, heartache and expense and, as it continues to be the case that almost one in two marriages lead to divorce, it is arguably a commercially sensible step to consider.
In any event, it is vital that those who farm on an inter-generational basis consider what they want to happen in the event of death and so discussions about this may also facilitate discussion about pre or post-marriage planning.
There are few who wish to find themselves in a scenario where a Judge, effectively, tells them what resources they may keep and which they have to make available to a departing spouse. With the prevalence of family breakdown, and its often substantial and damaging impact, the lesser evil may well be to put more palatable plans in place.
It is vital that those considering such a move get expert guidance to ensure that the various hoops and hurdles the courts have demanded, if such agreements are to be binding, are met.
Richard Baker is Head of the Family law team at Porter Dodson which has offices in Bridport, Dorchester, Sherborne, Sturminster Newton (by appointment only), Taunton, Wellington and Yeovil. If you require further information or advice, please contact a member of the team.