pre-nupThe announcement by Alan Shatter, Minister for Justice that the government intends to review Pre-Nuptial Agreements has undoubtedly given significant relief for many young farmers in Ireland. Unfortunately however Pre-Nuptial Agreements are not provided for under the Children and Family Relationships Bill 2013. The announcement has no doubt been assisted by the consistent lobbying by the Irish Farmers Association over the last three years.

Farmers, more so than any other business, rely heavily on land being intact so as to generate an income be it in relation to dairy farming or crop farming. In contrast to other businesses, whereby an alternative business property can be sourced if required, farmers rely on the land to produce an income and alternative land is not as easily sourced due to the high cost currently of agriculture land and a lack of property available adjacent to existing enterprises.

Farmers are therefore more susceptible and rightly fearful of the prospect of a divorce in the family. This is cited as one of the reasons in the recent Land Mobility Report provided by the Irish Farmers Association for the poor land mobility rates in this jurisdiction. The trend in recent years has shown very poor transfer rates from farmers to their successors.   The recent report does however suggest that concerns about the impact of a relationship break down in respect of successors is a considerable issue when talking to farmers but the evidence from the survey did not support this view.  This may be in a large part due to the fact that farmers will have to transfer the farm regardless in due course however the timing of this leads to uncertainty for the younger farmers.  The report further states:-

“this issue may be part of the reason why land owners may hold onto the farm longer, ultimately delaying transfer which can have a significant impact on the younger farmer. The fact that a significant proportion of farmers who have a farming successor identified intend to transfer their farm in their will indicates that potential inheritors are uncertain about their future as farmers. “

Farmers are subject to Divorce the same as the rest of the population. Relationships break down for a wide variety of reasons and Divorce applications are on the increase in this country. The recent statistics provided by the Central Statistics Office indicate that 2,819 divorces were granted by the High Court and Circuit Court in 2011.  A Divorce in relation to a family farm has potentially significant repercussions with a variety of competing interests at play.

The Irish Courts have a constitutional obligation to ensure that “proper provision” is made for both spouses and any dependent children.  A Judge has wide discretion and can make any Orders that the Court feels appropriate in order to ensure that this objective is achieved. Unfortunately in certain scenarios this can have a catastrophic impact on farmers.

In order to achieve “proper provision” for a spouse and / or dependent children , the sale of lands may be ordered so as to raise capital for the purchase of an alternative home for the spouse and / or children.  In the current climate, where finance is extremely difficult to obtain due to the tightening of credit facilities, a farmer may not be in a position to raise the requisite finance and the next step is unfortunately an Order for Sale for a portion of land or in certain circumstances the entire land holding. This of course has devastating consequences for an Irish farmer where land is in short supply and usually every acre is necessary to generate an income.

Furthermore, even in the event that a sale of land is not ordered, the transfer of the family home may prove problematic.  The family home on a farm is generally adjacent if not in the centre of the hub of the farm being the farm yard. An order transferring the family home to a non-farming spouse will at the minimum provide for an ongoing interconnection which may not be desired by the separating spouses and may also lead to significant logistical difficulties in terms of calving etc where a farmer may have to reside in an alternative property some distance away.

The prospect of marital breakdowns have far reaching consequences also for the extended members of the family. Farms may have been transferred subject to the retired farmer receiving weekly payments or discharge of nursing home costs. If the productivity or viability of the farm has been affected by a Divorce Court Order, this of course has a knock on effect on any such arrangements.

A pre-nuptial agreement while currently not per se enforceable may provide a modicum of security to these arrangements.  A pre-nuptial agreement executed in the current times will at the very least provide an indication as to the intention of the parties prior to the marriage and will in cases of short marriages be of considerable assistance to any Court dealing with the matter.

With the passage of time, the enforceability of a pre-nuptial agreement may be eroded, particularly in circumstances where joint assets may be accumulated and the non-owning spouse may have contributed to the overall profits and viability by engagement with the farming enterprise.  More significantly, the presence of children will be obviously a significant issue both in terms of financial implications and succession issues.

There are a number of important steps that must be taken to ensure that the Pre-nuptial Agreement will be considered:-

  • Firstly it is imperative that both parties would have separate independent legal advice.  For such an agreement to “bear weight” the non-owning spouse must have legal advice on the implications of the Agreement, otherwise the Agreement will be of little or no effect.
  • Furthermore there must be financial disclosure between the parties, preferably by way of exchange of Affidavits of Means. An Affidavit of Means is a sworn document detailing assets, income, liabilities, weekly expenditure and pension entitlements and is a snapshot in time of the parties current circumstances.
  • Any Pre-nuptial Agreement should be executed and signed a minimum of 28 days prior to the wedding. This is in order to ensure that neither party can claim duress or undue influence due to the proximity in time of the marriage.

Given the issues surrounding Land Mobility, a Pre-Nuptial Agreement would be of significant assistance in relation to Succession Rights. Such an agreement can provide for a renunciation/waiver of Succession rights including the Legal Right Share pursuant to Section 113 of the Succession Act, 1965.

It should be noted however that for any Agreement to bear scrutiny by the Courts, it must be fair to both parties together with the formalities as set out above closely observed.  The concept of “proper provision” should always be to the forefront of any negotiations surrounding Pre-Nuptial Agreements with certain events such as the birth of a child or a significant change in circumstances triggering a review of the provisions in the Agreement.

Annette Sheehan is a Solicitor with FitzGerald Solicitors specializing in Family Law.  FitzGerald Solicitors are located in 6 Lapps Quay, Cork.

Please note that you should contact your Solicitor for specific legal advice tailored to your needs as each case is different and the foregoing article is not intended to provide legal advice.

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