Frosty fields and frozen finances: Navigating farms and estates in family breakdowns

As family specialists here at Freeths, we often find ourselves advising our clients during divorce proceedings about the treatment of assets that one person views as their own, known as “non-marital” wealth. These can be estates, properties, land, businesses, bank accounts or inheritances. By contrast, jointly owned assets or those that have been treated that way are “marital” wealth.

For our Agricultural and Estates clients their assets are often their whole world, being their home, workplace and responsibility, which makes the arguments around the treatment of non-marital assets during any divorce critical.

What resources would a court view as non-marital?

The first step of any court is to work out which assets should be treated as marital and which are non-marital. The level of detail that the court goes into in any case will depend on its circumstances, as set out in the case of Hart v Hart (2019) 1 FLR 1283. For example, usually the family home will be just that, a family asset and so a marital asset. The fields that have been in the owner’s family for generations, so very much preceded the marriage, are more likely to be non-marital.

When looking at a farm in general, there may have been buildings and/or fields that one person owned before the marriage. There may have been inheritances or gifts from that person’s family of property, land, or equipment during the marriage. Often additional land may have been bought during the marriage, making who bought it, owned it and used it important. We also have to look at how the farming business itself is owned and operated to see whether it is non-marital or not..

What principles apply then?

The next step is to look at the appropriate sharing. Helpfully in Scatliffe v Scatliffe (2017) 2 FLR 933 the judge summarised that the starting point is that parties are ordinarily entitled to equal division of the marital assets and non-marital assets are ordinarily to be retained by the party to whom they belong in the absence of a good reason to the contrary. 

Crucially this is only a starting point. In most cases every marital asset isn’t strictly split 50/50 as a balancing exercise is needed. 

A “good reason to the contrary”, justifying a move away from all of the non-marital assets being kept by one person, is the other person’s reasonable financial needs. Sometimes this can be easily dismissed in the mind of the asset owner as well as their advisers, but in my experience this should not be so quickly overlooked.

An example in practice

We acted for the spouse of the landowner and the judge decided the financial settlement at a final hearing. We were successful in obtaining a lump sum payment from the landowner that was far higher than what had been offered previously. The higher lump sum was needed to meet our client’s reasonable needs, for example suitable housing. 

The landowner and his team had fallen into the trap of thinking that any farm is non-marital property, and the court will only be trying to make a token payment towards the other person’s minimum needs.

In having plenty of experience in representing both landowners and their spouses, our team will look at both sides of the case and provide the “bigger picture” advice that is needed. We can also draw on expertise from respected colleagues in other teams and from our network of professionals.

Early preparation and advice

Early preparation of the case taking that wider view into account is vital. For example, making a realistic evaluation about where would be reasonable for both parties to live after separation and the likely housing costs. This needs to be supported with decent, well considered evidence of available suitable properties with their particulars rather than just making throw away suggestions of properties that the person suggesting them would never look at living in themselves.

The courts are relatively keen to try to keep farming businesses running as they are sympathetic to the important connection that the owner has to them, but we need to get a clear idea early on about what the future of the farm looks like and how any lump sum payments can realistically be raised, taking into account what the business needs to continue to effectively operate. A key tip when representing the landowner is to push for a lump sum payment order in a final settlement that gives time to raise the necessary funds and so hold off any sale on default.

If you or someone you know would appreciate a no obligation initial chat about any of the points raised in this article or about farms, finances and divorce generally, please do contact the writer, Gemma Nicholls-Webber at gemma.nicholls-webber@freeths.co.uk or Alex Haworth at alex.haworth@freeths.co.uk .