If you and your spouse own a family farm, special considerations apply if you decide to divorce. Preparing for this situation can help minimize the impact to the business.
Keep these factors in mind when planning to end a marriage involving a family farm in New York.
Equitable property division
New York follows the equitable property division standard for divorce. This means that the couple must divide assets and debts fairly, but not necessarily equally. Farms include many assets with limited liquidity, such as animals, equipment and land. As a result, property division becomes a challenge, especially when it comes to determining a fair valuation of marital assets.
Separate assets and prenuptial agreements
When previous generations started the family farm and only one spouse receives it in inheritance, it remains separate property. The couple can also establish the farm as separate property in a prenuptial or postnuptial agreement.
However, when the farm increased in value over the course of the marriage, the amount of this increase constitutes marital property. The farm can also become marital property if both partners significantly contributed to its daily operation. Commingling separate and marital assets, such as when the family home is on business land, can also transform separate property to marital property in the eyes of the court.
If you have children, you may want to establish a plan for their inheritance in your divorce agreement. Otherwise, children your spouse has in the future could inherit a significant portion of the farm assets. The farm may have a succession planning process that addresses this situation; if not, consider drafting this legal document.
New York awards spousal support when one spouse is unable to financially self-support after the divorce. If both spouses worked on the farm and one will no longer do so, the court may award him or her a lump sum, land or payments over time to pursue other types of employment.