Family Farms and Separation

Farms are more than just businesses; they often carry deep emotional and family significance, built through years of hard work. This can make separating finances involving farms more complex. However, with the right approach, and an experienced family lawyer that understands farms to guide you, solutions can be found that balance fairness with the farm's future viability.

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When determining what is a fair way to divide assets, including a farm, the steps taken in family law are still the same. Under the Family Law Act 1975, the Courts consider:

1. The assets, liabilities and financial resources of the relationship, including their value;
2. The contributions of both parties, including financial and non-financial contributions made pre, during and post the relationship;
3. The future needs of both parties, made by assessing the health, age, and earning capacity of the parties; and
4. What division of property will be just and equitable in all the circumstances.

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If you have a farm, we know that key considerations will also include:

1. Ownership Structures: Farms are frequently owned through family trusts, partnerships, or companies.
2. Third-Party and Family Interests: Other family members or third parties may have claims on the farm, such as shared ownership or loans. These interests can be addressed with careful negotiation and planning.
3. Generational Ownership: Family farms often incorporate the added emotion of history, having been passed down through generations. This legacy can be preserved with thoughtful consideration of financial entitlements.
4. Valuation: professional valuers can provide clarity, even for assets with fluctuating market values.
5. Permanent Fixtures: Some assets, like houses, fences, or silos, are fixed to the farm and cannot be easily separated or sold without affecting the farm's productivity.  Understanding this, and the impact upon values is important.
   
6. Mixed Use of Assets: Farm equipment, vehicles, animals, and housing often serve both personal and business purposes. Clear documentation and expert advice can help untangle these overlaps.
7. Irregular Income: Farmers can face unpredictable income due to seasonal and market factors. This can be managed by taking a long-term view of financial assessments.
8. Future Income: Predicting the value of future crops or livestock growth may seem uncertain, but can be important when determining future needs, and potential loan repayment capacity.
9. Contracts: Existing commercial agreements may affect how farm assets are divided.

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Will you have to sell the family farm?

If you want to retain the farm, we will work with you to look at every solution possible to hopefully retain it.  Where possible, Courts generally aim to preserve productive assets like farms, recognising their importance to families and communities. However, the reality of being "asset-rich but cash-poor" can sometimes make it challenging to buy out a partner’s share.

To try to avoid a sale, we can explore alternatives such as:

• Refinancing to enable one party to "buy out" the other’s share.
• Dividing farming and non-farming assets to balance entitlements.
• Payments over time, if agreed by both parties.

If you have separated, and there is a farm involved, make sure that you seek advice from family lawyers that also understand the needs of farmers. Contact Wakefield Lawyers on (03)56235166 to make a appointment at our Warragul or Drouin offices.

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Disclaimer: The information in this post is general in nature. This does not constitute legal advice and should not be relied on as such. Please contact one of our Lawyers if you are seeking advice about a specific legal matter.