Family farmers must plan for various unforeseen circumstances, such as crop failures or equipment breakdowns and replacement. Likewise, there should be a plan in case a marriage ends in divorce.
While no one wants or expects a loving relationship to end this way, failing to take steps to protect themselves and their business can have devastating consequences.
Equitable distribution and family farms
When a divorce happens, much of the process focuses on dividing assets owned by both spouses. Illinois is an equitable distribution state, meaning a court decides who gets what based on what they believe is fair, but that doesn’t mean it will be a 50/50 split.
However, dividing a farm can be tricky unless a valid prenuptial agreement exists outlining how to allocate assets in case of a divorce. Most family farms pass from one generation to another, and property owned before marriage is usually not considered a marital asset.
Farms often require complex valuations
Farms can be challenging to value compared to other businesses during a divorce. That’s because they include:
- Land
- Livestock/crops
- Equipment
- Type of operation
When both spouses work on the farm to increase its value, that growth and other assets acquired during the marriage, such as land or expensive equipment, can be considered marital property. Valuing these properties may require separate appraisers for both spouses.
Finding a workable solution
Divorce among family farmers has steadily risen since the economic crisis of the 1980s, resulting in thousands of bankruptcies and foreclosures. Due to these cases’ complex nature, it’s essential to find a family law attorney who understands the farming community. An experienced lawyer can help find a reasonable outcome allowing a spouse to receive their fair share and the farm to remain in operation.
Please contact our office with questions or concerns regarding your case, especially if a family farm is involved.