This blog discusses the considerations in the division of a farm as part of the marital estate and how same may be valued in a dissolution proceeding. A farm that as part of the marital estate creates unique issues in a dissolution of marriage, and the potential for argument over the ultimate division of the farm property, which the firm has handled at the trial court level and on appeal to higher courts.
In determining the division of farm property, some consideration must be given to how the farm was acquired, which may impact the ultimate division from the presumption of 50/50. Farms are often times brought into the marriage by one party or are acquired through inheritance. There may be arguments for deviation based upon how the farm was acquired, or the involvement of the parties in the farming operations.
The threshold or another key question is if the farming operation is valued as a business, or as the individual value of each item that makes up the farm. This will generally be fact sensitive and determined on a case by case basis. If the farm is valued based upon each item, and not as a whole farm operation, there are several parts of the valuation of the farm property including the real estate, equipment, livestock, horses (and other animals) and growing crops.
Farm property, or the real estate, can typically be valued by a farm real estate appraiser. One well-known farm appraiser is Halderman Real Estate and Farm Management. Depending upon the location of the farm property can impact the value significantly, especially in developing areas where farms are being purchased for residential housing. Therefore there can be a wide range in the value of the farm real estate itself.
Crops that are growing in the field are considered part of the marital estate. The crops can be valued and can include any subsidy or funds provided by the USDA. The court can also consider the value of the party’s labor in tending to the crops to reduce the value of same.
Farm equipment can likewise be valued by an appraiser as well as livestock. Horse farms are somewhat more difficult, as the value of a horse can change quickly, and typically they are more valuable for breeding purposes.
Ultimately when the Court determines the division, the Court could award a dollar amount to the party that is not awarded the farm property, or the Court could divide up and award the real estate to each party. Depending on how the party is awarded either funds or real property may have tax implications, which are beyond the discussion of this blog.
The take-aways from this blog post is a (crop) farm divorce (which varies slightly from livestock operations) involves a complex operation that has more or less value depending on some of the variables noted in this blog. It is critical to have a skilled attorney who understands the wide range of variables in valuing a farm for divorce, as well as experts ranging from experts on farm real estate values to the animals, crops, and equipment itself. Without these, a divorcing party stands to loses tens of thousands to hundreds of thousands of dollars of unaccounted for value. A farm divorce is a complex legal, financial, and valuation transaction. Understand this if you are going to be in a farm operation as a part of a divorce case.
This blog post was written by attorneys at Ciyou & Dixon, P. C. who handle the full spectrum of domestic issues, ranging from premarital agreements to divorces to appeals. This includes the unique, challenging, and complex issues associated with the “farm” divorce. We hope this blog has provided you with useful information in understanding the implications of farm ownership under Indiana divorce law. This blog is not a solicitation for legal services or a specific legal advice. It is an advertisement.