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For Better or Worse? Farm Divorce in 2019 Image

For Better or Worse? Farm Divorce in 2019

Posted by: Andrew M. Tatge

As I write this in December 2018, the news is being flooded with articles on farm bankruptcies and the looming crisis for farmers and their lenders due to various economic situations outside of each farmer’s control. Farm divorces are estimated to increase.

For anyone who has been in or read about the agricultural industry for many years, you know that this part of the economic cycle is nothing new. Even farmers who have only been in the industry for a few years know about the troubles of the 1980’s and other periods since then. From that, we have learned a lot about how to prepare for the inevitable, but it still hits hard when the situation is actually present.

Further complicating matters, a downturn in the farm economy, the added financial strain, the emotional and physical stress, and other family dynamics, can play a large role in causing strain to a farm marriage. Many farm couples begin to analyze the situation and determine what is most important to them. Sometimes, it galvanizes the relationship in a way that strengthens it. In others, upon reflection, it becomes clear to one or both spouses that the marriage is over. When that happens, there are a number of additional stressors and factors coming into play, as you can imagine.

When a divorce hits a farm family during lean times, it is important to understand and keep in perspective the farming unit and operation. Is it possible to give the non-farming spouse a “fair and equitable” division of the farm estate and still allow the farming operator to continue with some semblance of the former lifestyle? Should the farming spouse be able to purchase the farm at the then-current economic circumstances without regard for the past or the future? There are many different ways that a farm divorce can be handled and is important for each party to understand the various different ways a settlement can be reached. Many times, a farming spouse buys out the non-farming spouse with payments over time and secured by land or other assets. When that happens, it is important to understand what security is available, what makes sense, and to fashion an outcome that is not overly burdensome to either party. This can be done through negotiation with the help of attorneys, and other professionals including accountants, bankers, and appraisers, who can assist in providing both parties with good information to make reasonable decisions under the circumstances.

The last thing either party wants is a long, drawn out legal process that involves foreclosure, difficulties with refinancing and lender relations, etc. When land is sold or crops need to be sold before the normal time and the tax cycle, significant costs and expenses can be incurred which should then be borne by both parties in a way that allows people to move on with their lives.

Being vindictive is the worst possible approach because “what is good for the goose is good for the gander.” Neither party has significant leverage and it is important to work together. But sometimes that can only be done appropriately when both parties have the right frame of mind.

Andrew M. Tatge is a partner and chair of the Family Law and Divorce Practice Group at Gislason & Hunter LLP. He regularly represents farmers, business owners, professionals, and other high income and high net worth individuals (or their spouses) in divorce and related actions. He also writes and speaks regularly on divorce issues related to business owners and family farm and he regularly presents a seminar on Divorce for Farmers on behalf of the National Business Institute. Andrew can be reached at atatge@gislason.com or (507) 387-1115.

This information is general in nature and should not be construed as tax or legal advice.