Blog by Margaret Simpson, Partner
In many farming families arrangements are made for the son or daughter of the farm owners to be brought in to the business with a view to them taking over the farm completely – thus enabling the parents to retire or at least to take a reduced role. This seems like good succession planning – allowing the farming enterprise to remain in operation for the next generation and beyond.
However, difficulties often arise where the son or daughter, who might be living in one of the farm cottages or, more frequently, who may have moved into what was the family home, brings in a partner to live with them.
Assuming that they don’t marry – and given that there is no such legal concept as a ‘common law husband or wife’ – you might be excused for thinking that such an arrangement is just fine. The incoming girlfriend or boyfriend will not have any rights in the property or the farming business and if the relationship breaks down he or she can simply leave.
Sadly, the situation is not always as straightforward. In my experience, few families consider, discuss and record their actual intentions. As a result, disputes often arise.
Suppose the farmland and property is owned by the parents, having inherited it from previous generations. Let us also suppose that the son or daughter is a partner or shareholder in the trading part of the business. The cohabitee may wish to invest some of his or her own money into the property in which they are living. It is their home after all and they may decide to pay for a new kitchen, bathroom, conservatory or such like.
By virtue of making that contribution to a property in which he or she has no legal interest, what is being acquired?
If the relationship of the younger couple breaks down it is not necessarily just a question of the partner vacating the home. He or she may seek to assert that they have acquired an interest in the property because of the contributions made to it.
The partner may have helped in the farming business – assisted with the business accounts for example without any formal payment or other remuneration.
Promises may have been made to the cohabiting partner about the future of the farm and his or her share in it.
All of these factors can cause significant problems if the relationship breaks down. The outgoing cohabitee may make a claim for a share in the property or the business because of his or her contribution. Litigation may follow. The parents, and sometimes other family members, may be brought in to the dispute. There is confusion about who intended what, who promised what and what contributions were made.
It is vital that a clear and concise document is drawn up at the time of cohabitation dealing with all of these issues to ensure no misunderstanding and to provide for what is to happen if the relationship breaks down and separation occurs.
This blog first appeared as Margaret’s monthly column in the Yorkshire Post’s Country Week supplement.
Margaret has significant expertise in complicated financial matters you can contact her on 01748 900 888 or email firstname.lastname@example.org You can follow Silk Family Law on Twitter @Silkfamilylaw