Family Farm Divorce
Who gets the family farm?
There’s a lot of emotion and sentiment attached to a family farm, so when a couple who make their living from the land go through the divorce process, it can cause a lot of angst. But who gets the farm? The farmer who may have inherited the property or the spouse who married in? And are farming properties treated any differently from a normal property settlement?
The short answer is – No, under the Family Law Act (FLA) there are currently no separate rules relating to farms and family law property settlement.
Divorce Settlements – Farmers
Divorce settlements that involve a farm are approached no differently from other family law property matters or divorce settlement cases. There is no special treatment of farming families when a financial settlement is being established, despite how and when the farming property was added to the matrimonial asset pool.
It’s important to note that in order to make a just and equitable settlement the family court considers the financial and non-financial contributions of both the farmer, and the non-farmer spouse. Contributions made to the family home by a spouse as homemaker and parent and contributions of labour towards the farm can be viewed as being as valuable as financial contributions made by the farmer spouse.
The farmer may be asset rich but income poor meaning there may be little alternative but there being a sale of the farm to give the other party their property settlement entitlement. Unfortunately, this may mean land and other assets that had been handed down from previous generations are divided and lost in property settlement following farming divorces.
In farming family cases, couples who are separating should consider the following:
- Are there any complex corporate structures which need to be untangled?
- Is the farming business a partnership, company, trust, or a combination?
- How was the property acquired – inheritance or purchase?
- Is there a premarital binding financial agreement to consider?
- Do third parties, such as siblings, parents, adult children or other family members have an actual or potential interest?
- Is the farming enterprise viable?
- Who owns the stock, plant and machinery?
- Who holds or owns water rights?
- Who expects to retain the farming land/ farm assets?
- What real income is generated by the farm operation? What does the farm pay for?
- What contributions were made by each spouse to farming endeavours?
- Are there shares to consider – for example wheat board, co-ops etc?
- If sold, is there any capital gains tax or estate tax to consider?
Other challenges to farming divorce
Separating couples in a rural area have a number of other complex and challenging issues to face. One parent may want to relocate the children to another town, city or state. The ability for both parents to remain living within close proximity to the children following separation is more difficult 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.
Courts will consider the future earning capacity and financial resources of the non-farming spouse after separation. The Court will have to balance the farmer spouse’s desire to retain the farm to ensure their continued earning capacity whilst ensuring the non-farmer spouse receives a just and equitable outcome. Each family law case is unique.
How our experienced family lawyers can help
If you need to discuss issues regarding property settlements, binding financial agreements, 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]
