Do I Have to Sell My Farm in a Divorce? Understanding Property Settlements for Farming Families
03.06.25Separating from a partner is never easy, and it can become even more complicated when businesses such as intergenerational farming enterprises are involved.
Farms are often more than just assets on paper. They represent legacy, family history, and years of hard work. That deep emotional and financial investment can make property settlements in farming families particularly complex.
In many cases, a farm has been in the family for many generations. Dedicating their life to working on the land spending many long and hard hours to one day pass it onto the next generation. This not only creates an emotional tie to the farm, which makes the property settlement process difficult, the other difficulty that arises is meeting the spouses’ entitlements (typically a cash payment) without selling the family farm, as often farmers are considered to be asset rich but cash poor.
Does the Family Court Treat Farms Differently?
Many clients are surprised to learn that there are no special legal protections for farms in property settlements. Courts apply the same principles to farms as they do to other types of property, even if a spouse has spent their entire life working the land.
Before 1985 a Court did consider that land used for farming purposes and to produce a living income, were in a separate category to your normal property real estate. In Scott v Scott (1977) FLC 90 – 251 Demack SJ held that land used for farming was to be put in a different category to that of the former matrimonial home. At paragraph 7 His Honour said “In my view land which is used for farming purposes and which I essential to the production of an income is in quite a different category from land which simply provides a place for the family home. If the continued availability of the land is essential to one spouse as a place on which to work and produce income, in my opinion, any property order affecting such land should not affect its production capacity or seriously reduce its income producing potential.”
The statement of Demack SJ was also agreed by Asche SJ in Magas & Magas (1980) FLC 90,995, however His Honour further stated at paragraphs 13 and 14 “I would agree, with respect, with what his Honour there says but with this rider: If arrangements can be made which would relieve the spouse who is working a farm as a farmer, from selling the farm but at the same time doing proper justice to the claim of the spouse who is not living on the farm, then of course those arrangements should be made. His Honour, the learned trial judge in this case, has arranged things so far as he can to that end. I appreciate that it is not an ideal situation but few of the cases which come before this court are. and further “If there is no other way to do that which is just and equitable then a sale must take place.”
However, in 1985 the courts historical view as to the treatment of farms shifted to a new direction, following the Full Court Decision made in Lee Steere v Lee Steere [1985]. His Honour stated:
“If there is no other way to do that which is just and equitable then a sale must take place. It becomes an incident of the sad fact that, when two persons separate, property which might have given them together a reasonable competence will not be sufficient for each when divided. That is an inescapable situation and cannot be used as an argument to deprive one party of that to which he or she is otherwise properly entitled.”
“The fact that the subject of property proceedings under sec. 79 is a farm may give rise to considerations as to the way and means by which property division should be effectuated, a matter which will be discussed later, but there is no “farming case” exception to the ordinary principles applicable under sec. 79 of the Act.”
“We must therefore reiterate that in relation to farming properties, as in relation to all other assets be they business assets or suburban land, the ordinary principles of sec. 79 of the Act apply.”
It was further considered in Lee Steere v Lee Steere that section 79(4)(d) already provides, that a court must consider the effect of any proposed order upon the earning capacity of either party. His Honour stated, “an order which would deprive a party substantial of what he or she is entitled by reason of contribution would not normally be considered just and equitable.”
The courts will now consider farms no differently than any other business would be treated in family law proceedings and no “special consideration” is given when a spouse has inherited or acquired a farm, even if that means the farm is required to be sold.
Recent Family Farming Case: Leeming v Estrada [2023]
In the recent decision of Leeming v Estrada [2023] FedCFam C2F 729, the Court considered a 12-year relationship, the Husband was 65 and the Wife was 61 years of age, the parties did not have children however both parties had adult children from previous relationships. The Husband owned the farming land at the time of living together.
The Husband’s evidence at the trial included that his livelihood is as a farmer, an occupation he has held for approximately 45 years, and is tied to the retention of the farming enterprises and the farming land from which it operates and that he will not be able to continue to earn an income if he does not retain the farming land (see paragraph 225). The Husband further contended that the farming land was owned by his family for many decades and there was a strong family connection to the land, which he also wished to continue to pass on through generations (see paragraph 226).
Orders were made for the Wife to transfer her interest in the farming land to the Husband in exchange for a cash payment to enable the Husband to keep the farm. However further Orders were made that if the Husband was unable to pay the Wife her entitlement, then the Farming land would need to be sold. At paragraph 232 it was stated: “It is well established that although a party having owned land prior to cohabitation it is a relevant and important factor, particularly in the case of farming land that has been worked by that party, and owed by their family over an extended period of time, where there is no other way to achieve justice and equity between the parties, that land must be sold.”
When it comes to property matters, the Court usually works through five main steps.
- Determine if it is just and equitable to interfere with the parties interests in property;
- Identify the assets, liabilities, and financial resources of the relationship.
- Identify the financial and non-financial contributions of the parties, including initial contributions, contributions made during the relationship and contributions post-separation.
- Assess a range of additional factors (called “future needs” factors) under section 75(2) of the Family Law Act These factors consider the needs of both parties, now and in the future. They include matters such as health, age and who has primary care of the children.
- Consider whether the proposed division is just and equitable in all circumstances.
Although the decision in Lee Steere v Lee Steere confirms that farming matters are not given special treatment, certain unique aspects of farming cases are still considered within the Court’s five step approach. For instance:
Considering Initial Contributions
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- This includes looking at whether the farm existed when the couple began living together and what its value was at that time. The Court also considers whether the spouse who brought in the farm was already working on it, and whether they had spent most of their life doing so based on a promise that they would one day own it.
For example, in Casper v Casper [2009] FamCA 989, the Court examined a 16-year marriage where the couple took on traditional roles: the wife managed the household and cared for the children, while the husband ran the farm and was the primary income earner. The Court ultimately awarded 70% of the property pool to the husband due to his significant initial contribution. At the time of the marriage, he already held substantial assets through a family trust that included the farming property. The farm and its equipment were valued at around $2 million when the couple married, and by the time of the trial, the farm had increased in value to approximately $9.75 million, making up the bulk of the property pool.
Considering Future Needs
The court also looks at what each person will need moving forward.
Example:
- What are each party’s financial and personal needs after the relationship ends? Can the farming spouse find other employment if they no longer have the farm? On the other hand, did the non-farming spouse spend a significant amount of time helping on the farm, limiting their ability to build their own career?
- How much of the total property pool is tied up in the farm? This includes the land, livestock, machinery, and other farming assets.
- Is the farming spouse in a position to pay the non-farming spouse their share without having to sell the farm?
Recent Farming Cases:
Cromwell v Cromwell [2006] FamCA1454
Fischer & Fischer [2014] FCCA 1088 (6 June 2014)
How Can I Protect My Farm in a Separation or Divorce?
If you are part of a farming family or own a rural property, protecting your farm in the event of a relationship breakdown is crucial. One of the most effective ways to do this is by putting a Binding Financial Agreement in place early in the relationship.
For example, if you’re planning to bring a family member into a farming business but want to ensure their partner doesn’t gain a share of the property in the event of separation, a Financial Agreement can clearly outline how the farm will be handled. These agreements help protect family assets, including farming land and trusts, from future legal disputes.
It’s important to understand that the Family Court treats farms the same as any other property, even if the farm has been in the family for generations. This is why seeking legal advice early on can make all the difference later down the track.
At Ramsden Lawyers, our experienced family lawyers will provide you with legal advice specific to you and your family needs. We understand both the emotional and financial impact of separation and can guide you through your property settlement with practical, outcome-focused advice. Contact us today for guidance on protecting your farm and rural assets during separation or divorce.
AUSTLII SOURCES
Lee Steere v Lee Steere [1985].
Magas & Magas (1980) FLC 90,995
