‘Complex ownership structures mean prenups are particularly helpful in reducing confusion’

“Secondly, in a farming business one can often find limited liquid funds, due to limited income.

However, the overall capital value of the land, buildings and other assets hold significant value.

“This can mean that it is difficult to raise the money to fund a divorce settlement.”

The viability of the farm would ‘almost inevitably’ be compromised if one party tried to leverage assets through sales or heavy borrowing to raise capital to fund a financial payment.

Solutions

Mr Hawkhead said several high-profile court cases had paved the way for creative solutions to be found when obtaining a fair settlement in farming-related divorces.

He said lump-sum payments could be made over several years to the former spouse if funds were not immediately available, or an organised sale of certain assets would be possible.

“However, the courts are sensitive to the significance of the farm as a home and as a livelihood to the family and would be reluctant to go down the route of selling the business,” Mr Hawkhead said.

A prenup can record what assets are not regarded as ‘shareable’ and make clear who brought what into the marriage as well as anticipating future inheritance.

“An important thing to ensure is if significantly valuable assets are intended to be preserved in this way, serious consideration should be given to making provision for the other party’s financial needs,” he added.

A court will recognise a prenup provided the following points are considered:

• Both parties have agreed an outcome they both accept to be fair;
• There has been full disclosure of both sides where financial circumstances are concerned;
• Both sides fully understand the agreement’s implications;
• Proper legal advice has been sought.