Women in Farming - How to protect your family farm when entering into a relationship3.02.2015
As young women in farming, it is likely that you have already or will at some point inherit your parents’ or grand-parents’ family farm and/or assets. You will inevitably want to protect these inherited assets to ensure that they remain in the family to pass down to future generations.
The question therefore is, ‘how can you achieve this during the course of your lifetime?’ Of course no one can predict what the future holds; will you enter into a relationship and cohabit? Will you marry? We can however, plan for any one of these eventualities so that your farm business is protected as far as possible.
Ultimately if you cohabit and choose not to enter into marriage then, unless you expressly decide to share your assets with your partner, be it the family farm house, agricultural land, machinery etc, then your partner will have no legal or beneficial interest in any of these during the course of the relationship or in the event you separate.
This does not however mean that you are completely safe from any claim being made by your partner/former partner as they could always decide to pursue a claim at court for an interest they believe they have acquired during the course of the relationship as a result of their contributions during the same, even if it has not been expressly set out between the two of you. For a ‘belt and braces’ approach therefore, to prevent any uncertainty, you may wish to enter into a cohabitation agreement with your partner setting out exactly what your intentions are in respect of one another’s assets. By doing this you can clearly stipulate what interest, if any, your partner will have in your assets and how such interest should be realised.
If you choose to enter into marriage then your partner will, under English Law, be entitled to a share in the ‘matrimonial assets;’ these will include any assets you own together but also any assets you may own separately and have brought into the relationship such as, the inherited family farm house, farm building, machinery, agricultural land etc. The starting point when establishing how these assets should be divided is that of equality. Unfortunately, just because these assets have passed down through family generations, does not automatically mean that they are excluded from the pot of matrimonial assets and/or protected from being split between you and your husband upon divorce.
This is an unwelcome thought for the majority of farmers whom have built up not only their family business but also their family traditions over a significant period of time. If you want more certainty then a prenuptial agreement, (pre-nup), may well be the answer.
Since the Law Commission released their report on ‘the future of financial orders on divorce’ back in February 2014, there has been much talk about pre-nups and how they can be used to protect assets in the unfortunate event of a marriage breaking down.
Up until recently there was much sceptism as to how much weight a pre-nup would hold; would it even be worth the paper it was written on? Now however, the use of pre-nups is becoming much more widespread as those entering into marriage wish to protect their assets from any unfortunate or unforeseen events happening in the future.
Like a cohabitation agreement, in a pre-nup, you can clearly set out before the marriage your intentions in respect of both yours, and your future husband’s assets. Within a pre-nup you can provide clear stipulations setting out how your inherited assets, joint assets and any assets you perhaps build up during the course of the marriage, should be treated should your marriage unfortunately breakdown
As with all things in law, the existence of a pre-nup does not entirely prevent one half of a couple issuing any financial proceedings at court upon separation if they are intent on seeking further financial provision over and above that which is provided for within the pre-nup. It will then be for the Court to decide whether the terms of the pre-nup should be upheld or varied.
The likelihood of the pre-nup being enforced will ultimately depend on how well it has been drafted. Specialist matrimonial solicitors will be all too aware of the various safeguards which have to be met in order for a pre-nup to hold the maximum weight possible should it ever need to be relied upon. One of these fundamental safeguards is that of ‘needs.’ It is important that, particularly in the event of a long marriage, the financial needs of both husband and wife, (upon separation), are met and that neither one should find themselves in significant financial hardship upon separation in comparison to the other. This also relates to any children born into the marriage. This is an important consideration when drafting a pre-nup and one which regularly needs to be reviewed during the course of a marriage which is why pre-nups are often referred to as ‘living documents.’ It is not uncommon for addendums to be created during the course of the marriage to ensure that the original pre-nup reflects a fair and appropriate outcome in light of any significant changes which may have come to fruition during the course of the marriage.