Protecting your farm in a relationship breakdown

A marriage breakdown in the farming world can be very complex when so many assets are involved. Future planning for your farm can help alleviate future financial and emotional pressure.

In 2018, Teagasc conducted research focused on farmer decision making regarding farm transfer. As part of this research, marital breakdown was raised as a core concern amongst farmers reluctant to transfer the farm to their successor.

In this article, Karen Tobin, Family Law Solicitor, Comyn Kelleher Tobin LLP (CKT) and Amy Cahill, Trainee Solicitor, Comyn Kelleher Tobin, look at the different options available to farmers to ensure the farm and assets are protected, and they take a quick look at what happens in the courtroom.

The courtroom

Where there is a breakdown of a marriage, the court will divide the assets to ensure there is “proper provision” for the parties involved.

This does not necessarily mean an even 50/50 split of the assets. The court considers all the assets of the couple, irrespective of how they are acquired.  This means that inherited family farms can be subject to a court-ordered sale or division to raise capital.

In the case of JBB V SMB, the High Court considered the position of inherited property when dividing marital assets, which included a farm inherited by the husband and a house inherited by the wife.

The court placed emphasis on the “special place of inherited property”. The court made proper provision for the wife without interfering with the farm, which remained with the husband.

It is, therefore, clear that if a court is satisfied that proper provision can be made for the ‘non-inheriting’ spouse with other marital assets that the parties hold, the inherited property will remain with the ‘inheriting spouse’.

It is important to remember that this is not guaranteed and that all property, no matter how the parties obtain it, is available to be considered by the court in the distribution of assets.

Advice for couples living together/co-habiting

Co-habitation agreements are enforceable under Irish law. This agreement allows couples living together to determine certain matters during the relationship, or in the event that the relationship should end by way of breakdown or death.

The agreement can make provision for the parties’ property, finances, maintenance obligations, and custody and access arrangements for any dependent children.

The agreement must be in writing, and both parties must have obtained independent legal advice. Your solicitor will assist with drafting this agreement.

Couples preparing to get married

A couple about to get married should consider entering into a pre-nuptial agreement to plan for any potential marital breakdown.

A pre-nuptial agreement is a contract entered into between two parties intending to marry. This contract sets out how their individual assets would be divided in the event that the marriage comes to an end.

The purpose of the agreement is to protect the assets that each party brings with them and plans for the division of such assets should the marriage break down.

Are pre-nuptial agreements valid in Ireland?

Pre-nuptial agreements are not legislated for in Irish law. A court cannot enforce a pre-nuptial agreement.

However, pre-nuptial agreements can have a persuasive value for a court in determining how assets could be distributed in the context of a judicial separation/divorce.

The court may give consideration to these agreements provided that they are completed fairly, and both parties are independently advised.

Pre-nuptial agreements will assist in giving clarity and assurances to any parties where a farm is involved.

The potential breakdown of a marriage poses significant difficulties for farming enterprises, firstly by reason of the value of the farm and, more importantly, as a result of acquiring farms through family lineage throughout generations.

Often, a farmer’s priority is to grow and develop the land to ensure that they will be in a position to pass it on to the next generation.

Conclusion

Co-habitation agreements and pre-nuptial agreements are just simple steps that you can take to help protect your farm. Having an agreement in place will assist in the instance of a marriage breakdown. Without these agreements, the process of a marriage breakdown can be costly and complex.

In the first instance, it is advised that you reach out to a solicitor to start the process of compiling an agreement.