What Happens To A Farming Business On Divorce?

A farming business and divorce can present particular challenges when a marriage breaks down. Unlike other businesses, a farm may be the family home, the main source of income and a multi-generational family enterprise, with significant wealth tied up in land, livestock, machinery and other assets.

The court will consider the value of the farming business and the needs of both spouses, but the lack of liquidity in many farms can make it difficult to meet a financial settlement without disrupting the viability of the business.

In this article, Head of Family Law Simon Magner Mawdsley, explores what can happen to a farming business on divorce, including how farms are valued, whether a farm has to be sold, how one spouse may buy out the other and the options available to help protect the future of a viable farming business.

What happens to a farming business when its owners divorce?

Farms are treated the same as other businesses when a couple divorces. The value of the spouse’s interest in the farm will need to be valued and included as a matrimonial asset unless there are good legal arguments for not including some or all of its value.

There are no separate “farming divorce” rules.

The court applies the relevant statutory factors in section 25 of the Matrimonial Causes Act 1973 and looks at all the circumstances, including the parties’ housing and income needs, the welfare of any children, the value and liquidity of the assets, the length of the marriage, contributions and the source of wealth.

In practice, a farm is often more than an asset on a balance sheet. It may be the family home, the main source of income, a partnership or company asset, and a multi-generational family enterprise. The court’s task is to achieve fairness while being realistic about what can be extracted from the business without destroying it.

Does divorce mean the farm has to be sold?

There is often a lack of liquidity in farming businesses and so it is difficult to realise funds to meet parties’ needs on divorce, without having an adverse effect on the farming business.

Selling the farm would take away the farm owner’s source of income and often also their home. The focus of the Court tends to be on trying to achieve a fair outcome for the parties without negatively impacting on the future of the farm and related succession planning.

However, the court can order a sale if that is the only fair way to meet the parties’ needs. The more common starting point is to explore whether the non-farming spouse’s claims can be met through other assets that does not undermine the working farm.

Will the court try to keep a viable farming business operating?

Yes, where possible. The court has a wide range of powers on divorce, which includes the power to order a sale or transfer of assets, to include the farm and farmland, even if it disrupts the business.

However, the court will be very mindful of trying not to disrupt the business if there are other options available to ensure the parties’ reasonable needs and the needs of any minor children are sufficiently met.

For some families, collaborative divorce can offer a structured and cooperative approach to reaching an agreement while minimising disruption to the farming business. 

Which parts of the farming operation may be considered in the divorce settlement?

Potentially all parts of the farming operation may need to be disclosed and considered, even if not all will ultimately be divided. This can include the farmhouse, agricultural land, buildings, plant and machinery, livestock, debts, tax liabilities, any trust or third-party interests etc.

The key question is not simply “what exists?”, but who owns it, what it is worth, whether it is matrimonial or non-matrimonial, and whether it is needed to meet the parties’ reasonable needs.

Does it matter what the ownership model of the farm is?

In a farming partnership, there would need to be careful consideration of any partnership agreement (or the implied partnership terms if there is no written partnership agreement). It is important to understand which farming assets may be held as partnership assets or personal assets and how those assets may be treated on any dissolution of the partnership.

A limited company makes it clear what may be business assets or personal assets. Establishing the value of the spouse’s shares will be crucial as the shares will form part of the asset base on divorce.

You can learn more about farming partnership agreements in our guide.

How is a working farming business valued on divorce?

The settlement often turns on accurate valuations and understanding how assets are held (personally, in partnership, or within a company). Independent experts are commonly required to value land, livestock, machinery and business interests

Farming business assets would need to be valued by a professional expert to include land, buildings, equipment, livestock, farm subsidies, grants as well as the business good will. Tax liabilities will affect the overall value. The effects of implementing any potential divorce settlement, such as sale or transfer of any property will also need to be factored in.

The income produced by the farm would be assessed and the seasonal nature of that income would be considered as part of an overall settlement, particularly if the non-farming spouse is seeking spousal maintenance.

Agricultural subsidies and grants would need to be valued by a professional expert, to form part of the overall value of the farm.

Is the market value of the land the same as the amount that can realistically be used in a settlement?

No. The market value of the land is only one part of the analysis. A farm may have a high market value but little accessible cash. The court is interested in realisable value, net of tax and costs, and in what resources can sensibly be used to meet claims.

For tailored advice, our specialist farming divorce team can help farming families navigate the legal, financial and practical issues involved in reaching a fair settlement.

What happens when the farm is asset-rich but cash-poor?

This is one of the central difficulties in farming divorces. The balance sheet may show significant wealth, but the money may be tied up in land, buildings, stock and machinery. Selling land, livestock or machinery may undermine the business, so courts can be mindful of the impact of making such orders.

Can one spouse keep the farm and buy out the other?

Yes, if the figures work. A buy-out may be achieved by refinancing, using savings or investments, selling surplus land, drawing on partnership or company funds where lawful and tax-efficient, or agreeing deferred lump sums.

However, borrowing capacity must be assessed carefully. The court will need to know whether the business can afford repayments without undermining working capital, seasonal cash flow or future investment in the farm.

Can a settlement be paid over time rather than as one immediate lump sum?

Yes. A settlement might provide for payments by instalments, payments following sale of specified assets, or a charge over land to secure the receiving spouse’s entitlement. The terms need to be clear, enforceable and commercially realistic, including interest, default provisions and timings.

Could pensions, investments or other assets be offset against the farming business?

Offsetting is often considered. For example, the non-farming spouse might retain more of the pensions, savings, investments or non-farm property while the farming spouse retains the business.

Could non-core land or assets be sold instead of the whole farm?

Selling non-core land, redundant buildings, development plots, cottages, investment property or surplus machinery may be preferable to selling the entire farm. The important question is whether the asset is genuinely non-core.

A field that appears surplus may in fact be needed for grazing, access, nutrient management, borrowing security or future diversification. Any proposed disposal should therefore be reviewed with the valuer, accountant and farming client before being built into a settlement.

What happens if the farmhouse is both the family home and essential to the business?

The farmhouse can be particularly sensitive because it may be both the family home and operationally important to the farm. The court will consider the housing needs of both spouses and any children, but also whether removing the farmhouse from the holding would harm the business.

Options may include one spouse remaining for a defined period, alternative housing being purchased, a transfer subject to a charge, or sale of another property to meet housing needs.

How are borrowing, tax, guarantees and partnership or shareholder agreements affected by a proposed settlement?

These issues can materially affect what is achievable. Existing borrowing may restrict sales or transfers without lender consent. Personal guarantees may need to be released or replaced.

A disposal of land or shares may trigger capital gains tax, inheritance tax planning consequences, VAT issues or loss of reliefs. Partnership and shareholder agreements may limit transfers, require consents, or give other family members rights of first refusal.

A settlement should not be agreed in isolation from these documents and liabilities.

Can a prenuptial or postnuptial agreement save a farm in a divorce?

A nuptial agreement can help to protect and preserve farms and farming businesses from a claim by the spouse. Where families want to reduce risk before marriage, a properly prepared prenuptial agreement can help ring-fence inherited farming assets and set clear expectations.

The parties can agree to ring-fence such assets from being divided on divorce which helps to protect those assets from a sale/transfer and disruption to businesses.

A nuptial agreement can also benefit the ‘non-farming’ spouse, to ensure there is agreement and clarity over what they may receive on a divorce to meet their needs.

This would mitigate the risk of any future litigation to reduce acrimony, stress and costs on a divorce. Legal costs of divorce and divorce settlements can often eradicate years of wealth and asset accumulation which a nuptial agreement seeks to avoid.

Although nuptial agreements are not strictly legally binding, there is significant weight given to its terms and it is highly likely it would be upheld if qualifying criteria is met.

What information is needed to establish whether a settlement will leave the farm commercially viable?

The parties will need to provide full financial disclosure. Both parties have an obligation and must give full disclosure of their financial positions. This is the case for all divorce settlements. In the case of a farming divorce, this will include information as to how assets are held, to full access to the latest managing accounts, as well as a review of income generation and spending.

It is recommended that this takes place early on to avoid protracted arguments and mistrust between the parties that may cause issues down the line.

Contact our Divorce Solicitors

Farming divorces demand a deep understanding of agriculture, business structures, and family legacy. Our Partner-led team brings decades of experience advising rural families, guiding them through complex divorce settlements.

Early advice is particularly important where land, partnerships, companies, borrowing, tax liabilities or succession planning are involved. Working with legal and financial professionals at an early stage can help establish what is realistically achievable and reduce the risk of a settlement causing unnecessary disruption to the business.

Our Agriculture & Rural Economy specialists can also coordinate advice across the legal issues affecting you and your farm, helping you plan a settlement that considers both your immediate needs and the farm’s long-term future.

Contact Our Solicitors