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The effect of divorce on a farm

15 May 2019

The law recognises a distinction between assets that one party had at the time of the marriage, or inherited or received by gift during the marriage (non-matrimonial) as opposed to assets acquired by the labours or endeavours of one or both parties during the marriage (matrimonial assets). However there is no automatic disregard of non-matrimonial assets. Instead the court decides what weight to attach to them, having regard to the nature and value of the assets, when and how they were acquired. The outcome of cases involving this issue are highly dependent on the facts of each case and judges have a very wide discretion when deciding the outcome.

In many instances, fairness suggests that the party who owns the non-matrimonial assets should be allowed to keep them, but this is subject to whether the non-owning spouse’s needs can be met from assets acquired during the marriage.

In the case of P v P in 2004, the parties had spent 19 years farming the family farm in the north east of England, which the husband had inherited from his family. The farming business was held in joint names, but the land, which had been in the husband’s family for four generations, had always remained in the husband’s sole name. There was little dispute between the parties and both wished to avoid the sale of the farm. The wife sought either a lump sum of £938,000, on the basis that she was entitled to 40 per cent of the assets, or a lump sum of £770,000, representing £422,000 for housing and £348,000 to meet her future expenditure. The husband submitted that as almost all the assets were inherited by him, the proper approach was to look at the wife’s reasonable needs for accommodation and income, rather than giving her a percentage of the assets.

The effect of divorce on a farm

The court agreed with the husband, taking into account that the bulk of the family’s assets were the farm that had been in H’s family for generations and was brought into the marriage with an expectation that it would be retained. The husband was ordered to pay the wife the sum of £400,000, for a new property, together with a further sum of £175,000, which was based on an annual sum of £10,000 for her future expenditure.

Consideration should be given to entering into a pre-nuptial agreement before marriage or a post-nuptial agreement during the marriage, for added protection. At this moment in time these agreements are not completely legally binding, but are taken into account as one of the circumstances of the case, if, when divorcing, either party applies to the court for a different settlement than that set out in the pre/post-nuptial agreement. If you wish to preserve assets that have been inherited or gifted by family it is far better to have a pre/post-nuptial agreement to bring into the equation, than not.

For more information on any of the above, or how we can help you, please contact Nicola Matthews, or call 0191 232 8345.