Farming Succession Planning
When considering succession planning, one of the risks that modern, well-established, diversified, farming businesses would do well to consider is the risk from ‘the young farmers’ broken relationship or divorce. In this modern society, is it time for farmers and their families to look more closely at protecting their, business by introducing the idea of pre-nuptial arrangements when their children, younger partners or shareholders are getting married? Whilst it might seem harsh to those more sentimental in this world, a pre-nuptial agreement (“PNA”) might assist in protecting the farming business and should be considered as an option.
A PNA is an agreement signed by a couple in advance of getting married to reduce the risk of financial and property claims being made to the court, if the marriage breaks down and thus threatens the future of the farm or business. A PNA is not binding on the court, but whilst it cannot prevent a person from making financial and property applications to the court on divorce, it may be that the existence of a PNA will make it more difficult for a person to succeed with such a claim.
The law gives the court a very wide discretion in determining claims in divorce. 10 different judges may come up with 10 different decisions on the same set of facts. That does not mean that any of them got it wrong. Only if a decision was clearly wrong would an appeal succeed. Similarly a court will not override a PNA simply because the judge hearing the case would have come to a different outcome to that created by the PNA. So, if a properly and carefully constructed PNA, which is written fairly and with full financial disclosure, produces a result which the court considers to be fair, the PNA is likely to survive.
The content of the PNA must follow specific guidelines so it is sensible for both parties to the relationship to take their own independent legal advice in connection with the document.
The Thompson Smith and Puxon Family and Divorce team work closely with the Agriculture and Estates team on farming succession planning. For an initial discussion on succession planning for your farming business contact Fiona Ashworth on fiona.ashworth@tsplegal.com or by telephone on 01206 574431.