Preventing An Earthquake: What to do when the Farm or Ranch Family Divorces

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Preventing An Earthquake: What to do when the Farm or Ranch Family Divorces

One of the challenging circumstances that we often see in the practice of family law in the Medicine Hat area is dealing with farm and ranch families going through divorces. In addition to all of the issues of parenting, income allocation and division of property that all divorcing parents must deal with, farm and ranch families often have situations where they are dealing with multi-generational operations. This can increase the pressures and expectations of both the parents and the children on the divorcing couple. If the farm or ranch is part of a larger extended family operation, then there are often aunts, uncles and cousins who also have expectations and concerns about what will happen. Given all of these outside pressures, it is easy to see how a divorce in a farm or ranch family has the possibility of causing a huge earthquake that can cause fault lines between generations and between family members – fault lines in relationships from which they may not recover for years, if ever.

Sometimes, these agri-businesses are actually structured into a corporation, which means that these outside influencers not only have expectations, they may have legal rights and responsibilities to each other as well.

With some good legal and accounting advice, it is possible for the farm or ranch family to divorce, while at the same time ensuring that the operation continues to be a viable ongoing operation with the ability to generate income, not only for the current family, but hopefully for the next generation as well. The law does recognize that both the husband and the wife may have owned property before the marriage; it exempts a portion of that property from distribution in a divorce. It also recognizes that some property may have been gifted, or transferred between family members for less than its full value.

In order to be able to take advantage of tax planning and the appropriate use of farm/ranch subsidies, it is most advantageous for the divorcing agri-business family to make use of a team – an experienced family lawyer for each of the former partners, an accountant and a business lawyer working together. This team can work together to protect both spouses, the farm or ranch business and the eventual inter-generational transfer of the business to the children.

Because of the complexities of the issues in this situation, if the divorcing couple chooses to go to court to fight about how they will divide their property, instead of negotiating an agreement, they will probably lose the ability to plan and take advantage of tax and corporate planning strategies that can diminish some of the damage from the earthquake. Many of these advantages require cooperation between the divorcing couple. Indeed, it often takes the combined professional efforts of the entire team to ensure the final plan is one that works for everyone and promotes the successful reorganization of the family as well as the business. The breakup earthquake doesn’t have to cause permanent damage or destruction to the family or the business. By reducing the damage, the divorcing couple can work together to preserve the future success of the business for succeeding generations. These deep-rooted family businesses bring important strengths to our community as they continue through the generations. In order to prevent this damage, it is most important to engage a team of specialists to assist the couple in separating in the most advantageous way possible. Finding family lawyers, business lawyers and accountants with an understanding of the agricultural business, who want to work together to preserve the business and the family relationships, is the most important consideration for the divorcing farm/ranch family.

Catherine Regier
Catherine Regier helps you navigate the turning points of life. She is a partner with Pritchard & Co. Law Firm, LLP. Contact Catherine at (403) 527-4411 or at