Rural families in family law settlements
When a relationship breakdown occurs in a farming family, the consequences can extend far beyond the couple and present complex and challenging issues for those involved. If that is you or someone you know, there are particular issues that you need to be aware of. Let’s look at some.
The complications
Severing the emotional and financial dependance of another person is crucial yet often difficult part of a family law property settlement, particularly in matters involving a family farm. In these matters of the physical, financial and emotional links and dependence are deeply entwined and have been made over many years, they can appear impossible to separate. This is particularly dauting when often there is an apparent conflict between the “farmer” being asset-rich but income-poor and the spouse needing a property settlement that may leave little alternative but the sale of the farm.
Still a Property Settlement
The law is very clear in saying that divorce settlements that involve a farm are to be approached no differently from other family law property matters. There is no “special treatment” of the farm, despite how and when it was acquired.
It’s important to note that the court considers the contributions of both the farmer, and the non-farmer spouse. The court views contributions of the spouse – such as homemaking, parenting, and even working on the farm – just as importantly as the financial contributions of the farmer.
Courts also consider the future earning capacity of the wife after separation and the earning capacity of the husband which in many cases may be his need to retain the farm, as well as ensuring a just and equitable outcome in each unique matter.
Farming couples who are separating should consider the following:
- Is the farm a partnership, company, trust, or a combination?
- How was the property acquired – inheritance or purchase?
- Any actual or potential third party interests such as siblings, parents or adult children
- Is the farm viable?
- Who owns the stock, plant and machinery?
- Who holds or owns water rights?
- Who expects to retain the farm?
- Determine real income – what does the farm pay for?
- Contributions by the spouse to farming endeavours
- Are there shares to consider – for example wheat board, co-ops etc?
Things to think about
As a prompt sheet to assist you better understand what sort of questions we will ask you and the direction that our enquiries will take, we have set out below a list of questions and considerations for you. As we have mentioned, unless this information is easily available, we request that you not make any proactive steps on your own to collate this information until you have spoken to us.
Ownership – What is ‘the farm’ and who ‘owns’ it currently?
- Check the setup of the farm. Is it a partnership, company or trust or a combination?
- Details regarding the acquisition of property. How (gift, inheritance etc) and when was it acquired?
- Undertake Title searches, historical searches and mortgage searches etc
- Understand and determine any actual or potential third party interests i.e. siblings, parents or adult children.
Value – What is the value of the farm?
- Request early access to the farms accountants.
- Is the farm viable? Historic tax returns.
- Who owns the stock, plant and machinery? Consider whether crop ‘property’ or ‘income’?
- Who holds and/or owns water rights?
- What are the zoning issues (if any)? – Is the land about to become the next ‘big’ subdivision?
- Review relevant insurance policies –
- Life insurance of the farmer is usual and may be old/early policies.
- Crop insurance – is the crop insured?
- Share farming – is there a written agreement?
- Ensure expert valuer consulted early and appoint where possible a fully qualified i.e local stock agent with knowledge of the area, single expert to value plant and machinery and stock (are stock pregnant?) and/or crops (harvested/growing crops).
The future – What are each party’s expectations and why?
- Who expects to retain the farm?
- Determine real income – what does the farm pay for?
Other crucial information that is likely to be relevant
- Contributions by spouse to farming endeavours.
- Review records e.g. rainfall, stock sales.
- Request and review farm deposit accounts.
- Are there shares to consider i.e. wheat board, co-ops, rice?
- Is there a SMSF?
Other Issues
Couples in a rural area who get divorced have a number of other complex and challenging issues to face. One parent will often want to relocate the children to another town, city or state. But the ability for both parents to remain living within close proximity to the children following separation is less likely in regional areas than in metropolitan areas.
Regional areas often lack the population, employment opportunities, housing and services required to enable both parties to remain in the area and support themselves financially.
Get advice
If you have separated or think you might, it is essential you get family law advice specific to your situation – everyone is different!
Do not delay
If you have made the decision to seek family law advice, you may be unsure whether you need any other information for your first appointment. We understand that clients feel daunted prior to the first meeting and want to be prepared but… Do not delay having your first appointment with your family lawyer. Quite often the quest to collate documents and a belief that you need to be totally prepared can delay you getting critical advice.
Seek advice and seek it early
If you have easy access to any letters, emails or documents received from your spouse or their solicitor or if you have any tax returns, credit card, bank account or superannuation statements, sure – bring these with you to your first appointment. However, the important message is to seek advice and seek it early. Usually, having these documents is not required for an initial appointment.
Your first appointment
At your first appointment your family lawyer will provide you with advice about your situation, as well as advice about financial and other documents that will be required in due course. This advice will also consider the need for any valuations but we strongly recommend you not get any asset valuations until you have spoken to your family lawyer.
If you need to discuss issues regarding property settlement, or any other family law matter, get in touch with Michael Lynch Family Lawyers. Our family law experts can give you advice tailored to your situation. Call our office on: (07) 3221 4300 or email: [email protected]
