It is common knowledge that managing a family business is full of pitfalls. This is especially true where there is a marriage and an agricultural business.

In these cases it is increasingly important to think carefully about:

  • Giving shares or an interest in the business to your spouse unless, they are going to have a day to day role in the business. Benefits of such action that may exist at the outset may have serious consequences if the marriage does not last as long as the business.
  • Making your spouse a director, company secretary or employee unless, they are actually going to fulfil the role. Break-ups are rarely without some degree of acrimony and a divorcing spouse pivotal to a business may cause disruption with the option to dismiss your spouse protected by Employment law.
  • Considering a pre-nuptial or post nuptial agreement. Since the Radmacher case in 2010, these have been effectively legalised and in many cases such an agreement can take the business, although not necessarily income from that business, completely out of the marital assets.

If the marriage has already broken down and the above steps have not been taken, then you must accept that your divorce may be more complex than most. What is now important is how you approach it and who you seek for the best advice.

There are many challenges when facing a divorce. However, if there is an agricultural business involved in a marriage breakdown, the situation can seem insurmountable as whilst domestic life may be falling apart, farm life needs to go on.

An experienced divorce lawyer is critical to ensuring your family farm or agricultural business is dealt with appropriately. As well as the traditional route of negotiation and litigation, there are now more options available when dealing with divorce:

Mediation: this is now compulsory for divorcing couples who want the court to resolve their financial issues and is the opportunity to assess whether there is hope for an alternative way of resolving their dispute.

Collaborative Law: this approach has significant benefits for businesses, encouraging open discussion involving other family business members and advisers such as accountants who can ensure full financial disclosure and support to lawyers in identifying options which provide a fair settlement but with least negative impact on the business.

But whatever the approach taken with your solicitor, it is important to look at the liquidity of the assets available to the parties. This is essential when ascertaining whether it is possible for the business to be able to continue as a ‘going concern’ and ultimately be passed down to future generations.

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Contact: Nicola Coates

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