Collaborative Practice and Farming Divorces
What is Collaborative Practice in Family Law
Using the collaborative process to resolve issues that arise when a relationship breaks down, involves each party instructing a collaborative lawyer and the lawyers and the couple making a commitment at the outset, not to go to Court. Instead they agree to resolve their issues by way of a series of four-way meetings and there are discussions round a table with each party having a collaborative lawyer at their side.
This is a holistic and team approach and involves the couple trying to look at the family as a whole rather than resolving issues by just looking at their own point of view. This approach enables the team to be able to work creatively and think outside the box. This means that hopefully the couple will keep lines of communication open going forward, which will be particularly beneficial where there are children involved.
Why is this suitable in a Farming divorce?
Farming divorces can be particularly complex.
- Often it is not clear how the assets are held or who owns the assets. They may be held in a partnership, be part of a limited company of held subject to a Will Trust. In a farming divorce often where assets have been passed down through generations, the documentation may not be in order and it may be difficult to build up a clear picture of the assets
- Properties comprised in the business may be subject to subject to tenancies, agricultural restrictions and complicated restrictive covenants
- There may be other family members who are partners or shareholders and they may live on the land owned by the business and they may require separate legal advice.
- If any final settlement does not take into account third party interests, going down a more traditional route might involve third parties and other family members becoming involved in Court proceedings. Apart from being stressful and causing acrimony between the couple and other family members, this can be expensive and delay matters being resolved.
- As well as tangible assets, there may be intangible assets that need to be valued. This could include for example intangible assets such a single farm payment. Consideration now will also have to be given as to the impact of Brexit.
- There may be complex tax implications, such as benefits by transferring property not classed as a main residence, in the tax year of separation. Conversely there may be arguments for delaying any separation or for delaying proceedings until the next tax year.
- Often farming businesses are capital rich and cash poor. A priority will always be to try and maintain the business but inevitably a financial settlement is likely to involve a payment to one party. Consideration has to be given as to how this can be achieved within the context of the business.
Using the collaborative process
If a couple in a farming divorce are unable to work together and negotiate a settlement it is likely that proceedings will be issued at Court. This can result in protracted, acrimonious and very expensive litigation, with the outcome being somewhat of a lottery.
The collaborative approach means the couple keep control. It also enables other professionals to be brought in to advise and assist. In farming divorces, it is important to establish a team in addition to the lawyers to include land valuers, accountants, agricultural advisers and financial advisers.
The team can build up a full picture of all of the assets and look at a settlement that provides for the optimum use of the assets for the benefit of both parties within the context of what the law says.
Lawyers still work within the “shadow of the law” because when settlement is reached, the Court will still be asked to approve the settlement and convert the agreement into a binding Court Order.
This means that inherited assets for example are not ignored as the law says they have to be considered, provided needs can be satisfied. As part of the discussions round the table, the couple will both hear information as to how the law is to be applied in their particular case.
The collaborative process, enables, the team to be more creative. There can be discussions about, Can the farm diversity or sell land to raise cash? Can a party be paid in instalments over a number of years to prevent an adverse effect on the farming business? What are the options for raising capital? These discussions will be open and transparent and look at the options and implications for both parties
When any marriage breaks down, emotions run high. The party in the weaker financial position may feel emotionally and financially vulnerable and feel they want to go on the “offensive” to try and protect his or her future financial security.
The party in the stronger financial position particularly if they have inherited the farming business, will feel very protective and “defensive” and reluctant to relinquish assets and be mindful of protecting the family business.
With the right attitude and support, through the collaborative process, both these positions can be secured. Collaborative lawyers can’t wave a magic wand, but they can assist the couple reach an agreement they “can live with” going forward. There is no such thing as a “good divorce”, but hopefully reaching an agreement through the collaborative process will have wide reaching and long-term benefits for the family as a whole.
Elizabeth Gallagher is a collaborative lawyer and a Consultant in the family team at Sintons. She is also part of the Rural Team comprising of a number of specialist lawyers at Sintons who advise on all aspects of agriculture, estates and rural type matters.