Protecting farming families: prenups and Living Together Agreements

For farming families, a prenuptial agreement, or Living Together Agreement, is about far more than emotions. They are important tools for protecting land, legacy, livelihood and generations of hard work.

Sarah Evans, Head of Coodes’ Family team, explores why future planning is crucial and how to safeguard your assets.

The unique challenges of farm marriages

Home is where the heart is, and for farming families, it is also the business, family heirloom and retirement plan. Unlike other businesses, farms are typically family-run and asset-heavy. Often passed down through generations, keeping them intact isn’t just a financial matter – it’s personal too.

Farming families face the tricky balance of maintaining both a personal and working relationship. Without a prenuptial or Living Together Agreement (LTA), a relationship breakdown could put the entire farm at risk. One person could be entitled to a significant share of the farm, possibly forcing the sale of land, livestock or machinery. It could disrupt family partnerships or threaten the survival of the farm altogether.

What are prenuptial and Living Together Agreements?

A prenuptial agreement, or prenup, is a legal document signed before marriage to outline how assets and debts will be divided in the event of divorce or death. For farmers, this is a crucial way to safeguard land, equipment, livestock and other assets. It’s not about mistrust but rather planning for the future. Just like an insurance policy or a succession plan, prenups are a way to proactively manage risk.

A Living Together Agreement, also known as a Cohabitation Agreement, serves a similar purpose for unmarried couples. In England and Wales, unmarried couples do not have the same legal protections as married couples. Therefore, this legally binding agreement ensures each party’s assets remain their own and jointly owned assets will be divided (with legal assistance if necessary) should the relationship end. While these agreements can outline how assets should be divided in the event of death, it is important to note they cannot override a will.

Why farms must be protected

Prenups and succession planning

Farming prenups can include tailored clauses to ensure specific assets such as inherited land, livestock or machinery remain within the family. They can also address how the farm’s income will be managed, particularly where one partner isn’t involved in the business. If a spouse is not actively involved in the business, it may not be fair or practical for them to claim ownership over it in the event of a divorce. Additionally, a prenup can also protect one partner from assuming liability for any debts the other may have accrued which includes farm loans or equipment leases.

If there is a succession plan in place for the future of the farm’s inheritance, then a prenup can prevent future complications that might disrupt this plan. Furthermore, a prenup is useful in situations where there are second marriages or blended families involved. If there are children from previous relationships, a prenup ensures those children have a clear inheritance path.

Living Together Agreement reform on the horizon

On the other hand, Living Together Agreements are a flexible way to set out the terms of a break-up or death. For example, parties can confirm which assets or debts are their own, set out childcare arrangements or decide how the farm would be managed.

The Government is currently planning reforms for cohabitation rights in England and Wales. This could shake up what happens with regards to who has the right to financial support or property, among other things. A Living Together Agreement will protect farms and farming families’ wishes ahead of these reforms and both parties should seek out independent legal advice to organise an agreement.

Next steps

Farming is a way of life and so much more than just a job. A prenuptial or Living Together Agreement won’t change that, but it can protect it.

Coodes’ Family team understand the complexities involved with managing assets in a farming family. Our planning services can help you build a life together without risking the legacy you have worked hard to preserve. Whether you would like to know more about prenuptial or Living Together agreements, get in touch to protect you, your family and your farm.