Divorce and farms – what you need to know

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In this month’s column, we hear from Niall McCavitt who is an expert advisor in divorce law at JPH Law. While it is a situation nobody would like to find themselves in, Niall considers the harsh reality of divorce and the legal implications, particularly on farming marriages.

Farming is unique in that it is not just a business but a way of life.

Unfortunately, if it should arise, this makes divorce for farmers particularly difficult. Their lifestyle, work, and assets are so innately intertwined that it is tricky to unravel upon a couple’s separation without damaging the business which, no doubt, has been so carefully crafted over time, and, in many cases, over generations.

White v White

The landmark case of White v White established the principle of fairness and the so-called “yardstick of equality” whereby all assets are taken into account in determining what is a fair financial outcome.

This means that, contrary to a common misconception among farmers and landowners, farming operations are not excluded from any divorce settlement.

In this case, Mr and Mrs White were married for over 30 years, they had three children, and carried on a dairy farming partnership together. On Mrs White’s appeal, which reached the House of Lords, her award increased from approximately one fifth of the total assets at first instance to almost fifty per cent by the end of the case when the fairness principle was applied.

Dangers

The dangers for farmers are clear. In funding a fair settlement, land, property or machinery that form an essential part of a farm may need to be sold: a potentially devastating blow to the business.

This is further complicated by the fact that, typically, farming cases involve a business based upon inherited land and capital assets, ownership structures that involve numerous family members, and a business which is, by nature, asset rich but cash poor.

While there is discretion for judges to stray from an equal division of assets if fairness dictates, this is very much the exception rather than the rule.

Solution

The idiom of the goose that laid the golden egg is often evoked when deciding how to achieve an equitable outcome in a divorce settlement without strangling the source of income.

Although it is clear that the damage caused to a farming business by a divorce, unless handled very carefully, can be irreparable, there are steps that can be taken to protect your assets, whether those are steps taken before, during or after the breakdown of the marriage.

But it is most important to appreciate that no two situations are the same. It takes creative, expert advice and an individual solution, particular to you, to best protect yourself and your business from the dangers of divorce.

JPH Law has four offices located in Portadown, Newry, Castlewellan and Dublin. For further information on JPH Law visit: www.jphlaw.co.uk or contact Niall on niallmccavitt@jphlaw.co.uk  Tel 028 38 333 333.