A family farm is a complex asset. The 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 with numerous shareholders, who are often other family members. It may be held through a will trust or family partnership. This may mean that the assets and resources enjoyed directly by a couple and used by their family may not be owned by them personally. This leads to difficulties for the Court in achieving proper provision for both parties of a divorce.
Transferring the farm
The 2020 Teagasc National Farm Survey reported that the average age of farmers in Ireland was 59.2 years. The Irish Farmers Association believe that an important factor contributing to the low rate of transfers to the next generation is due to the concern by senior farmers of the implications of a possible marriage breakdown in the case of the young farmer, and subsequent legal judgments affecting the family farm assets.
The notion that a woman who marries a farmer walks up the aisle with a bunch of flowers and walks down again with half the farm in her pocket is one that has terrified Ireland’s farmers ever since divorce was legalised in 1996. Despite numerous incentives for an early transfer of the farm such as stamp duty relief for young trained farmers, this fear has led to delays in senior farmers transferring the farming business to young farmers.
However, there is a misconception that a spouse is automatically entitled to half of the farm in the event of marital breakdown. While this might be the case in some situations, it is not the case in all.
The Supreme Court has stated that inherited assets should not necessarily be considered to be assets of the marriage. The date when the assets were inherited is also a factor – if the inheritance was received a long time ago it is more likely to be included in the assets to be divided between the parties.
The outcome of family law proceedings depends on the particular circumstances of each case. Judges will take into consideration how long the couple have been married, or whether the non-inheriting spouse has carried out any work on or invested any money in the family farm. The Courts are also cognisant of and recognise the contribution a non-inheriting spouse makes by looking after the home or caring for the family. It also recognises the impact that assuming all the childcare duties can have on a career.
Should the Court take the view that the inherited assets are not matrimonial property the Court will nonetheless take their existence into consideration. If a Court is satisfied that proper provision can be made for the non-inheriting spouse with other marital assets that the parties hold, the inherited farm will remain with the inheriting spouse.
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 dependent children of the marriage. The sale of the farm is often unsuitable particularly where the farm is a small-holding, as it can often be the main source of income for both spouses, and to do so, in order to make proper provision for the wife and their children, would also end the employment and income of the farmer.
The Family Home
A major issue for some farms is the fact that the family home is embedded in the agricultural farmland. If there are dependent children, the Court may allow the non-inheriting spouse to remain in the family home with the dependent children for a certain period of time. This could, in-turn, have a knock-on effect on the farmer as they may have to rent a property away from the farm, several miles from cows calving and sheep lambing, which is also not a practical solution.
A vital addition to any farming divorce would be the intervention of an agricultural consultant and valuer. They will be in a position to advise the parties on the possible solutions in terms of the operation of the farm. It is never desirable to force the sale of assets which might in turn threaten the viability of a farming business. Having to dispose of a part of the grazing platform, in the case of a dairy farm, may render that enterprise non or marginally viable whereas the enterprise may have been capable of servicing a loan that could have financed the proper provision required for the non-inheriting spouse.
The expert’s report will be crucial in this regard as it will offer a number of suggestions as to how a financial lump sum might be funded thereby making the judge aware that a sale of land is not the only available option. The report will also highlight any farm structure or access issues that may render a sale difficult, impractical or downright impossible.
Pre-Nuptial Agreements are not recognised in Ireland and are not binding on the family law Court. The Irish Farmers Association has long campaigned for the introduction of Pre-Nuptial Agreements in Irish Family Law. They insist that the asset value of a farm should be ringfenced because, unless that farm is kept intact, its income-generating potential is destroyed.
While they have an arguable point, the difficulty that arises with Pre-Nups is that they are made before marriage, but may not be applied until many years later. A couple, in particular a young couple’s circumstances may and likely will have completely changed. It would be a fair assumption that a young couple would go on to have children and the pre-nup cannot possibly determine how the future will pan out. An agreement that was originally reasonable could now be completely unfair.
The Court will not agree to have its “discretion” fettered by an Agreement that came into existence long before the circumstance existing at the time of the Court proceedings.
The breakdown of a relationship is always a difficult and traumatic time in people’s lives. When a business and other factors become involved it becomes increasingly more challenging. Positive and workable solutions are always achievable.
Wolfe & Co LLP are an invaluable support to you to help you and will assist you through this difficult chapter.
By Aislinn Collins Solicitor
This article is for general information purposes/general overview only and does not constitute legal or other professional advice. We recommend seeking legal advice to interpret and advise on any aspect of the law.
March 2023 Wolfe & Co. LLP Solicitors