Divorce always poses challenges, but it is even more complicated when you and your spouse live on a working farm. The law tries to balance the need to preserve Ontario’s heritage of family farms against the needs of both spouses to exit the marriage with adequate funds to start over, but the logistics are complex.
Farm divorces require special expertise and a network of experts to value your primary asset, your farm. A Kawartha Lakes farm divorce lawyer at The Riley Divorce & Family Law Firm could bring his skills and trusted experts to help dissolve your marriage and preserve the farm. Reach out to a seasoned divorce lawyer today to schedule a private consultation.
Sometimes a couple owns a farm outright because they bought it together before or after marriage. In many cases, one spouse might have inherited the farm or received it as a gift. In the latter scenario, the receiving spouse owns the farm—unless they made their spouse part-owner—because inheritances and gifts to one spouse are not marital property. Note that the marital home is treated separately, even if it is located on or part of the farm.
Many family farms have more complex ownership structures. Some farms are held in trusts, and others might be limited corporations with shareholders besides the spouses. Sometimes only one spouse is a shareholder. Some farms are structured as partnerships.
The first thing your Kawartha Lakes legal professional will do is establish who owns the farm and the legal interest of each spouse in the property and the business. This task often requires the expertise of Chartered Business Valuators.
Dividing the Martial Property
After establishing each spouse’s ownership interest in the farm, the professionals must value it. Doing so requires an appraisal of the land, improvements, equipment, quota, crops, livestock, and any other asset critical to the farm’s operation.
The Ontario Family Law Act s. 5(1) requires divorcing couples to equalize their “net family properties” at the time of separation. Explained simply, this means that each spouse’s increase in net worth during the marriage is divided equally between them. The matrimonial home is not included in this calculation, however, in many cases the analysis would consider the increase in the farm’s value during the marriage.
The Ontario Family Law Act s. 11 bars courts from ordering the sale of a farm to accomplish equalization unless there is no other reasonable alternative. A diligent farm divorce lawyer in Kawartha Lakes could explore options such as:
Issues When the Farmhouse is the Matrimonial Home
Ontario law gives each spouse equal rights to possession of the matrimonial home, which it defines as a residence the couple occupied together during their marriage. The couple could have more than one matrimonial home, as would, for example, an Ottawa couple with a hobby farm they occupy on weekends and during the summer.
A spouse has a right to each matrimonial home, regardless of whether they are on the title or mortgage. If you have children, courts support the primary caretaker remaining in the home, but there is no requirement to do so if you and your spouse make other arrangements. A farmhouse that is a matrimonial home is not subject to the property division rules protecting farms.
Sometimes the departing spouse buys out the spouse who opts to remain in a matrimonial home. In other cases, you might sell the farmhouse to a third party and split the proceeds. If the needs of the farm require another solution, a knowledgeable Kawartha Lakes farm divorce lawyer, such as Paul Riley, could review a specific situation and advise a spouse about dividing the interest in the matrimonial home.
Divorcing while maintaining the viability of a working farm can be quite challenging, but the law offers some protection. Seek a legal representative familiar with the complexity of valuing an agricultural operation and achieving a property division solution that supports the profitable continuing operation of the family farm.
Our seasoned Kawartha Lakes farm divorce lawyers have a sophisticated understanding of farm economics, a deep appreciation of the area’s agrarian heritage, as well as the legal skills to handle a divorce involving agricultural property. He is available at any time to discuss your concerns, so call as soon as you decide to get a divorce. Reach out today.
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