Divorce is never easy, but when divorce happens to a farming family, it presents a unique set of challenges that can threaten the very survival of the family farm. Navigating these complexities requires an understanding of the implications of a farming divorce. Obtaining the right legal guidance and strategic planning can protect you and pave the way for life after a farming divorce. Based on the various aspects and consequences of farming divorces, from the division of property and equipment to the inter-generational aspects of farms, you need help to safeguard your interests and ensure the future of your family farm.
- Farming divorces require special considerations of agri-business to address the complex issues that are necessary to protect farming interests, including the valuation of farmland, equipment, and implements
- Expert valuations, knowledge of state divorce laws, and an understanding of the industry are all necessary for the fair division of property in farming divorces.
- Guidance from an attorney with experience in farm-related matters can help ensure a fair and viable settlement, help you plan strategically for the future of the family farm, and help manage cash flow and investments post-divorce.
Understanding the Complexities of Farming Divorce
The economic turbulence of the 1980s left a significant mark on many farmers, resulting in farm losses, escalated circumstances of abuse, reduced marital stability, and other family conflicts. One spouse’s belief that the marriage should primarily serve the farm and the family agricultural interests can cause turbulence and an unhealthy imbalance when the other spouse does not share the same beliefs. Workaholism and other debilitating issues can also contribute to the breakdown in family dynamics. This is especially true when couples experience the strife of a lack of separation, particularly when the farm represents both the marital home and the marital business for the couple.
Understanding the unique challenges of farming divorces, such as the the nature of relationships in the agricultural industry, the inter-generational aspects of farms, and the requirement to maintain operational viability, will help you protect your interests and secure the future of your family farm. Additionally, the psychological effects of a farming divorce on family members can include intense emotions, anxiety, and depression.
The Special Case of Marital Property in Farm Divorces
Marital property in farming divorces can be complicated by proper liens, inherited property, and individual or non-marital property. Non-marital property is identified as property outside of the marital estate. Pursuant to Illinois divorce law, all assets that are acquired during the course of the marriage are presumed to be marital assets. Property falls outside of the marital estate if acquired prior to the marriage, or through gift or inheritance, or by other special means or circumstances. The value of farmland and other farm property in divorce settlements is typically determined through appraisals and expert valuations. The division of farm property is not required to be divided 50/50 or equally between the parties. Rather, Illinois divorce law provides that all assets will be divided in a manner that is fair and equitable.
Valuing and Dividing Farm Assets
Farm assets, such as crops, livestock, and machinery, should be accurately valued before it can be divided fairly during the divorce process. Separate appraisers may be needed to assess the individual value of the land, livestock, equipment, and and the farm operation. To effectively divide farm assets in a farm divorce, it is advisable to compile a list of all assets and property information. The list should include all crops, livestock, farm equipment and machinery, grain inventory prepaids, farmland and other real estate, as well as contracts with vendors, proof of purchase of livestock, and information regarding tenancy and lienholder issues.
Divorce attorneys in farm divorces often consult with qualified experts such as business valuation experts, accountants, and real estate and equipment appraisers. Experts in farm divorces help farmers obtain fair and supported valuations for their property distributions during a farming divorce. The value of the land, crops, and farm equipment are often determined through appraisals or farm experts in order to accurately assess the fair market value of the equipment. Depending on the circumstances of your farm, the valuation method for the specific situation varies from case to case.
Maintaining Operations: Keeping the Farm Afloat Post-Divorce
Sensible financial planning is necessary to maintain solvent farm operations after a divorce. Post-divorce, the farming operation may need to be restructured to accommodate new ownership arrangements and financial realities. This should be decided or considered during the divorce. You need help to safeguard farm property, equipment, and other assets from the financial repercussions of a farming divorce. This includes farming concerns but also the traditional division of marital property, the calculation of child support, and the determination of alimony. An ironclad prenuptial agreement can protect the family farm from the financial repercussions of divorce. Proactive financial planning and seeking professional advice can help you protect your farm interests and business interests.
Post-divorce financial planning can also assist farmers in recognizing and prioritizing their financial objectives and other necessary next steps. You need to be making prudent decisions to safeguard the farm, consider the tax consequences, and attain financial independence. Post-divorce financial planning can also help farmers identify and prioritize their goals, increase the cash flow of the farm, and enable them to make informed decisions to preserve the farm and attain economic security. This may involve collaborating with financial experts, such as accountants and financial planners, to develop a comprehensive plan for ongoing farm operations and future income generation.
Legal Considerations for Farming Families Facing Divorce
Although unique farming considerations have to be considered in a farming divorce, the divorce laws that apply to every divorce also apply to farming divorces. Farming families have to deal with the same issues that occur in many other divorces, but every issue in a farming divorce should be contemplated through the lens of the farming business and maintaining the vibrancy of the farm operation. The judge in farming divorces should consider the contribution to the farm, the necessity of calculating child support based on farm incomes, and establishing spousal support based on farm income and expenses. Farm income is taken into account in child support calculations by the divorce court, which has the authority to adjust the income and deviate from the statutory guidelines for child support determination. The income of the parties, including farm income, is usually averaged over a few years to determine the appropriate amount for child support. This is not the general approach to determine child support, such as for W-2 wage earners.
Child Support Calculations Amidst Farm Incomes
Child support calculations for farm families require distinguishing between personal and farming expenses. In divorce cases, the judge will undertake an effort to construe the income of the parties as best as possible under the circumstances. All expenses are taken into consideration in farming divorces, including determining the portion of each expense that is personal and determining the portion that is strictly related to farming.
In farm income cases, child support is generally determined by evaluating the parties incomes in the context and considerations of the specific farm, such as through the averaging of income over multiple years and accounting for the variable nature of farm incomes. The court may deduct farming expenses from the gross income of the parent when computing child support, however, the precise approach may fluctuate depending on the leanings of the judge and the specific facts of the case.
Spousal Support and Contributions to the Farm
Spousal support or an award of alimony may be granted or ordered in farming divorces for the non-farming spouse. Factors such as the length of the marriage, the standard of living established during the marriage, each spouse’s age, health, and other relevant factors are considered when alimony is determined. However, income is the primary consideration when the divorce judge calculates alimony. Courts are required to determine that spousal support is offered within the limits and guidelines provided by law, unless the parties voluntarily agree to a different arrangement. The law encourages or contemplates the spouse requesting alimony to contribute to their own expenses or seek independent employment, if possible, and to seek training if doing so is necessary to become employable. When the non-farming spouse or any other person seeks alimony, they may be required to undertake an effort to re-enter the workforce and may be required to submit job search affidavits or other proof of efforts to seek employment. However, even when they find work, the income of the non-farming spouse may not be much higher than the minimum wage. Alimony may also be used to help a farming spouse and required to be paid by the non-farming spouse, depending on their financial situation and the economic circumstances of the parties.
Negotiating Settlements: Balancing Fairness and Viability
Settlement negotiations should strive to fit the context of the family farm when determining what constitutes a “fair and equitable” division of assets and debts as defined by the Illinois Marriage and Dissolution of Marriage Act. Settlement agreements in farming divorces should consider the unique features of farming, including land ownership, land liens and contracts, and other land concerns, and ensure that the settlement agreement safeguards your business. The financial health of the farm can significantly impact settlement negotiations in divorce cases, affecting the division of property and assets, the financial support, the alimony determination, and other factors. The farm’s value, income, and liabilities will all be taken into account when determining a reasonable settlement, and the judge may have recommendations for settlement that can be provided in the context of a pre-trial conference. By working with an experienced divorce attorney and focusing on achieving a settlement that balances fairness and viability, you can protect your farm’s future and ensure the financial stability after divorce.
Farming Divorce: Planning for the Future of the Family Farm
An experienced divorce lawyer can help improve life after divorce for farming families. No two farms are the same, and no two divorces are the same. However, many farming divorces involve complicated matters, such as the restructuring of the farming operation and coping with other changing family dynamics. Legal related issues that arise in managing a farming divorce include the following considerations:
- Farmland and valuations
- Crops and livestock
- Leases and liens
- Farm debts
- Equipment inventory
- Agricultural contracts
- Family trusts
- Subsidies and credits
- Farming tax issues
- Land and mineral Rights
- Cross collateralized debts
- Managing cashflow
- Restructuring the farming operation
- Establishing income sources for both parties
- Lack of necessary skills
- Other financial repercussions
To navigate the challenges connected with such issues, experienced divorce attorneys and other qualified experts need to be involved in the farming divorce.
Divorce presents a unique set challenges for farming families, which requires the careful navigation of complex legal issues. The financial, emotional, and business factors involved in a farming divorce are wide ranging. From understanding the intricacies of marital property, assets that fall outside of the marital estate, and farming rights and contracts, attorneys involved in a farming divorce need a strong grasp on the issues that are specific to your case and risks that are specific to your case. The future of the family farm may depend on it. Post-divorce, the ability to manage cash flow and investments, changing family dynamics, and the possible restructuring the farming operation all may need to be addressed to ensure continued viability and to preserve the legacy of your family farm.
Consulting with a Farming Divorce Attorney
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