Farming goes beyond the fields – it’s a livelihood built on generations of dedication, tradition, and family life.

Because of this deep connection, things can get complicated if a relationship breaks down, particularly where prudent succession or tax planning has been carried out with a particular plan for the future in mind and without consideration to potential family law pitfalls. 

For farmers, the most important consideration is often ensuring that the end of their relationship or marriage does not mean the end of their family’s farming livelihood.

So, what happens to a farm during a divorce and how can family farming heritage be best protected? 

Treatment of farms in a divorce

In Scotland, the law treats farms the same way as any other "matrimonial property". This means any assets or liabilities owned by one or both spouses at the time of separation could be up for division upon separation and divorce. That includes:

• property bought during the marriage;
• property bought before the marriage to be used as a family home;
• furniture and items in the family home;
• interests in newly created business interests during the marriage

Gifts from third parties or inheritance received during the marriage are excluded from “matrimonial property” so long as they have remained in the same form as at the time of the gift or inheritance. 

The complexities of farming

Unlike a house or a car, a farm is often tied up in a web of ownership, tenancy, and business arrangements. It’s common for:

• the person who owns or rents the land to be different from the person who works it
• the farming business to operate over several pieces of land, sometimes owned or rented in different ways;
• multiple people or family members to be involved through partnerships or companies;
• farms to be passed down to the next generation early and during the course of the marriage;
• land to be held in trusts;
• farming businesses and practices to diversify and with that, new interests and assets being created during the marriage;
• farming land to be sold or developed during the marriage without the proceeds of sale being  protected.

Because of this, whether a farm is “matrimonial property” or not is often complex and a deeper understanding of the property and farming business is often needed, which usually involves:

• checking land ownership or lease documents;
• looking at when the land or business was acquired;
• understanding the operation of complex trusts;
• reviewing partnership or shareholder agreements and accounts, and
• Getting a valuation from a specialist surveyor and accountant for land, livestock and machinery.

In many cases, a spouse becomes a partner in the farming business, resulting in the division of the partnership interest being a further complication on top of the division of matrimonial assets. It is crucial that the terms of the partnership are carefully considered and formally recorded from the outset, to help avoid disputes in the event of a marriage or civil partnership breakdown.

Can I protect my farm before a separation? 

Yes, you can and indeed you should! Farms do not just hold financial value, but family history and emotional ties too. Many farms in Scotland have had to be split or sold during a divorce due to inadequate protection being put in place in advance of, or during, the marriage.

Prenuptial agreements (made before marriage), postnuptial agreements (made during the marriage) and cohabitation agreements (for non-married couples) are legal ways to protect specific assets - like a farm or an interest in a farming business - and future money flowing from these assets. These agreements clearly set out who owns what and what should happen to certain assets if the relationship ends. If properly entered into, these agreements should act as a safety net to protect the farm from potentially having to be sold or split in the future. 

Family lawyers can help you draw up a proper agreement and should form a key part of the wealth protection and estate planning advisory team.   

What if I inherited my farm?

If you inherited the farm, we need to look at when the inheritance was received relative to the marriage, and what has happened to the inheritance since it was received. Again, this can be complicated depending on the nature of the farming business and the land itself.  

The goal is to achieve fairness which cannot always be achieved by what liquid capital is available. It should be borne in mind that the value of a farm, even if not “matrimonial property”, might still be considered by a court when deciding how to fairly divide everything else and how any financial settlement is to be paid. 

Farming, for the future.

Separation and divorce are never easy. However, if you’re part of a farming family, there are additional financial and emotional factors to consider. 

Understanding how the law treats farms should a relationship break down is critical before any succession or tax planning is finalised and implemented

A holistic approach is essential. Rural and family lawyers play a crucial role in helping farming families navigate the complex intersection of personal relationships and business interests. Working collaboratively, they can draft protective agreements that guard against the unintended legal or financial consequences of otherwise well-intentioned tax or succession planning decisions.  

Only then can a farm, and a farming legacy, be truly protected for generations to come.  

We have rural, family and tax specialists who are well placed to assist clients plan for the future, and for the ‘ere and now’. Please get in touch if we can assist with any of the issues raised above.  

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