Dividing agricultural investments during divorce in Minnesota

Minnesota Divorce is a complex emotional and financial undertaking, and when a farm is involved, the situation becomes even more intricate. Beyond the emotional toll, farm divorces involve unique practical challenges due to the nature of the assets and income streams involved.

Farms are often multi-generational, with deep emotional and financial ties. Additionally, valuing agricultural land, equipment, and livestock can be more complex compared to a typical household’s assets.

Property Division in Farm Divorces

Minnesota follows equitable distribution laws, meaning marital property is divided fairly, not necessarily equally, between spouses. This includes farmland, equipment, livestock and any debts associated with the farm operation.

However, farms owned prior to marriage might be considered separate (non-marital) property, impacting the distribution. It’s possible that the court can look at the contributions by each spouse and determine. This is not the norm, however, and the court normally looks at what is marital and simply divides it in half (or more precisely, the value of that).

Did one spouse inherit the farm? Or get a good deal from a grandfather? That’s a different story than which means it’s non-marital property, and the person who received the gift might be able to get it free and clear of any claim from the other party.

You also have to look at how long it’s been in the family, is it a century farm? If so, that’s a pretty good argument to keep it in the family.

Valuing the farm during a divorce

Farm valuation goes beyond simply appraising the land. Here’s what’s considered by most courts in Minnesota:

  • Market value of the real estate: This considers comparable land sales and agricultural factors; usually, we need an expert to appraise this, so tax value might not be the most accurate.
  • Value of equipment and livestock: Age, condition, and market trends all play a role.  It helps if you have a FinPack because that has the values of the equipment, but if you don’t, then we normally need to get a chattel appraiser involved.
  • Intangible assets: Location of the farm, location of the homestead, and the productivity of the land all can impact the value.
  • Debts and liabilities: Outstanding loans and mortgages are factored into the overall picture. The rule of thumb is that the debt follows the asset, so if you want that 40 acres, then you usually will take the debt associated with it.

Due to the complexities involved, both spouses may rely on independent appraisers to ensure a fair and accurate valuation, but in Minnesota, it’s not the norm to have independent appraisers unless there is a unique issue.

Creative solutions for a sustainable future

Acknowledging the unique challenges of farm divorces can help divorcing co-owners explore creative solutions for asset divisions. One spouse may purchase the other’s share of the farm using marital assets, loans or a combination of both. Couples can also consider selling their farm and dividing the proceeds after settling debts to ensure a fresh start for both parties.

By understanding the principles of equitable distribution, the complexities of farm valuation and the available solutions, couples facing this situation can navigate the process with a focus on fairness and a sustainable future for all parties involved. It can also help to work with an experienced legal team who can provide personalized solutions.