Farms and Rural Property in a Family Law Settlement

The farm is part of the asset pool

Like any other property, a farm — including the land, improvements, livestock, plant and equipment, water entitlements, and any business operated on the land — forms part of the asset pool to be considered in a property settlement. The fact that it has been in one family for generations, or was gifted or inherited, does not automatically exclude it. However, the history of the property and the nature of the contributions made by each party are highly relevant to the outcome.

For rural Victorian properties — particularly those in areas like the Goulburn Valley, Western Districts, Mitchell Shire, or further afield — the values involved can be very substantial.

Valuing a farm

Valuing a farm for family law purposes is considerably more complex than valuing a residential property. The land must be valued by a rural property valuer, who will consider comparable sales and the productive capacity of the land. But a farm is more than its land — it includes livestock, plant and equipment, water rights and allocations, growing crops, and often a farming business carried on the land.

A forensic accountant may also be required to value the farming business separately from the underlying land. Water entitlements can themselves be highly valuable assets, particularly in irrigation districts. Where the farm is held in a trust or company, additional complexity arises.

Both parties may commission their own valuations, which can produce different results. In contested matters, a court may appoint a single expert or hear evidence from competing experts.

The challenge of liquidity

One of the distinctive challenges of farming property settlements is liquidity. A farm may be worth several million dollars but generate only modest cash income. Requiring one party to pay the other their share in cash — or requiring the farm to be sold — may be simply impractical without destroying the enterprise.

The law recognises this. Courts can be creative in structuring settlements that allow the farm to remain operating while giving the other party their fair entitlement — for example, by structuring payment over time, by offsetting the farm's value against superannuation and other liquid assets, or by creating a charge over the property.

However, the court cannot simply ignore a party's entitlement because the farm is illiquid. Finding a workable structure requires careful legal and financial planning.

Generational contributions and gifts from parents

Many farming properties have been in one family for generations, passed down through gifts, inheritances, or family arrangements. These origins are relevant to the property settlement — they are treated as contributions by the party from whose family the farm came.

However, the weight given to initial contributions diminishes over time and is affected by the length of the relationship, the other party's contributions, and other factors. A property that was gifted to one partner at the start of a 30-year marriage where the other partner also worked on the farm will be treated very differently from a farm received as an inheritance in the final years of a short relationship.

Parents who transfer farm property to a child (and their partner) should also be aware that family law can undo the intended benefit if the relationship later breaks down.

Keeping the farm operating

A key concern for farming families is keeping the farm viable through and after a separation. Long, contested proceedings — including interlocutory disputes about management and maintenance of the farm — can be damaging to the operation. Early negotiation, even in the most difficult circumstances, is generally preferable to contested litigation for farming families.

Where possible, interim arrangements should be agreed — for example, who manages the farm during the proceedings, how income is applied, and how capital expenditure decisions are made. These practical matters can be as important as the final settlement outcome.

Get experienced advice early

Farming property settlements require lawyers with experience in both family law and rural property matters, and access to rural property valuers, forensic accountants, and financial advisers. The complexity and the stakes involved make early legal advice critical. At Freemont Family Lawyers, we work with clients across Victoria — including those in rural and regional areas — who are facing the unique challenges of a farming property settlement.