Over lockdown last year, ‘Clarksons’ Farm’ hit our screens, following infamous Top Gear presenter Jeremy Clarkson as he tried his hand at running a 1000 acre farm. Whatever your views on Clarkson as a person, the show gave a refreshingly honest view of just how hard (and expensive) it is to run a farm, particularly in the current climate. His experience is perhaps best summed up by his dubbing it “Diddly Squat” Farm due to the profit it generates.

The show shone a light on the reality of running a farm which, despite having a value on paper of several millions, translates to very little liquid wealth for those running it as the value and profits are tied up in the farm itself with the key priority being to keep it running.

Farming divorces

Spring is traditionally associated with new life and new starts and if your future may involve a separation then it is essential hat you take professional advice, especially if a farm is involved. The financial position of farming can present problems in the unfortunate event of a divorce within farming families, where the English Court look to divide assets of the marriage, farming assets included, and where possible ‘buy out’ the departing spouses’ interest so they can start afresh.

When doing so, their priority is ensuring all parties’ needs are met, including the needs of any children. Broadly speaking this means ensuring everyone has a roof over their head and sufficient income to meet their reasonable outgoings, bearing in mind the standard of living the parties enjoyed during the marriage.

They are mindful in doing so that the farm is often an inherited asset passed down from earlier generations and driven by a desire to carry on that legacy. This often means that as well as part of the value being ‘pre-matrimonial’ in nature, there is often sentimental value to consider. Equally, it often serves not only as an income for the family, but also as the family home and sole pension provision for the owners.

Simply put, the family farm cannot simply be sold and the overall proceeds divided.

So what can be done?

Careful thought and creative solutions are required on both sides to release one parties’ interest and ensure their needs (and the needs of any children of the family) are met, while ensuring the farm can continue to run into the future.

To do this using farm assets, steps can include:

  • Selling assets including land to generate capital;
  • Transferring land or properties to the other party (sometimes with an agreement that they will let the land back to the farmer to provide an income);
  • Providing the departing spouse with a shareholding in the farm as a business;
  • Providing the departing spouse with an income by way of spousal maintenance and/or allowing them to remain in the family home;
  • Looking at diversification options which might allow additional capital or income to be raised.

What factors do I need to consider?

When looking at such issues, expert opinions should be obtained to ensure an accurate valuation is given and a fair settlement reached while preserving the farm assets as much as possible, taking into account:

  • Land and property values (taking into account the type/quality of land);
  • Any development or planning potential;
  • Diversification options;
  • Any grants or funding initiatives available to the farm;
  • Value of live/dead stock and machinery;
  • How and when certain pieces of land were acquired;
  • Whether any other family members own a share/have an interest;
  • Any farm tenancies, trust arrangements or corporate ownerships exist;
  • Any partnerships or contractual obligations;
  • Any agreements/rights of way/easements/covenants on the land;
  • The impact on income if certain assets are sold/transferred.

While there is a cost associated with such advice, funding options are available and the benefits in considering these complex matters carefully and properly with expert assistance at an early stage will far outweigh the long term damage which may otherwise be caused if corners are cut.

With offices in Northallerton and Darlington, we have been serving the rural communities of County Durham and North Yorkshire for over 50 years and have a wealth of experience in family law, including those involving the family farm. We are firm believers in reaching an agreement outside of the court as far as possible and we take a collaborative approach to minimise conflict, reduce costs and ease the transition into your new life. We are also one of the few firms to include trained mediators to support other law firms to avoid conflict.

If you believe your marriage has broken down, you are considering whether to start divorce proceedings or have been served with divorce papers, then speak to us about your options. Please contact a member of our family team at your local office on Darlington 01325 281111 or Northallerton 01609 765765 or email family@clarkwillis.co.uk.