How does separation and divorce affect people in agriculture?
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With around 67,000 people in Scotland working in the agricultural sector and 74% of Scotland's total land area being comprised of agricultural holdings, farming forms a fundamental part of Scottish life. Farms and crofts are often homes as well as places of business, and in some cases have been in the same family for several generations.
This means they can take on a higher level of significance in people's thoughts when relationships break down.
How are the assets divided when a farm or croft is involved in a divorce?
Generally, farms and crofts are dealt with in the same way as any other item of matrimonial property. Under Scots law, 'matrimonial property' refers to:
- all property belonging to both parties, or each of them separately, at the 'relevant date' (date of separation);
- property that was acquired by both parties or one of them before the marriage for use as a family home, or as furniture or plenishings for that home;
- property that was acquired during the marriage, but before the 'relevant date'.
The exceptions that fall outside 'matrimonial property' are items that were given as gifts or via succession from a third party.
Where farms and crofts often vary from other assets is in relation to the sometimes complex ownership and business structures that exist around them. Crofts and farms can either be owned or tenanted.
It is not unusual for the owner or the tenant of a croft or a farm to be different to the person or entity that actually farms the holding.
The farming business often operates on multiple holdings and the ownership or tenancy structure across these holdings can vary and may have been acquired at different times and in different ways.
When negotiating the division of property on separation where farming or crofting interests are involved, it is essential to build a full picture of the ownership or tenancy position, the timings of acquisition and visibility of the business structure - including sight of any partnership agreement or shareholders' agreement and the farming business' accounts.
It will almost always be necessary to have the farm or croft valued by a specialist surveyor and the business valued by a specialist accountant.
I inherited my farm, am I at risk of losing it in a separation?
Commonly, farms and crofts (owned or tenanted) and farming businesses are passed down through generations and, if this is the case, (whether or not a party to the marriage inherits the croft or farm before or during the marriage), it is not matrimonial property.
However, the value of that inherited agricultural asset can be taken into account when considering the respective resources of the spouses and deciding how the matrimonial property is to be divided fairly, which usually means equally.
Is there anything I can do to protect my farm or croft in the event of a separation?
Yes. Our family lawyers regularly advise clients on the terms of prenuptial agreements, which are entered into before marriage.
Postnuptial agreements are the same but are entered during the marriage, but before separation – so it's not too late to put an agreement in place if you're already married.
Such agreements have the effect of ringfencing certain assets, meaning that your spouse can't make a claim on those assets. Once the terms are agreed, we draft those agreements and, once signed by the couple, they are legally binding.
Given the significant monetary - and often the sentimental value of many agricultural assets - the importance of protecting these in the event of a future separation cannot be underestimated.
Sarah Lilley is a partner in family law, and Gary Webster is a partner in rural business and natural capital at Brodies LLP, both based in Inverness.
