June 2020

Life insurance explained: Term vs. Whole of Life

Posted on 25 June 202030 March 2025 by Sophie Soraf

If the Coronavirus pandemic has done anything, it has shown us that we never know what’s around the corner. So, while taking out life insurance might not be at the top of many people’s ‘to do’ list, it is arguably one of the most important financial products anybody can purchase.

Over the past few months, thousands of people have lost loved ones tragically and unexpectedly, pushing them into financial hardship at an already difficult time.

What is life insurance?

Life insurance is designed to pay out a lump sum to your family in the event of your death, enabling them to keep up mortgage payments, bills, childcare costs and whatever else is required to maintain the lifestyle they’re used to when they no longer have your income to support them. A payout from a life insurance policy could make the difference between your loved ones facing a financial struggle at a challenging and emotional time and being able to maintain a stable environment with the standard of living they enjoyed while you were still with them.

Do I need life insurance?

If you need convincing that life insurance is a good product to buy, then ask yourself this: if you were to die, how much money would your family need have to live on? How long would it be before they found themselves running short of money? If your income covers vital outgoings such as the rent or mortgage, bills, or grocery shopping, then taking out life insurance is an excellent decision.

Even if you aren’t the main breadwinner, however, you may still be making a contribution to your family that would be difficult (not to mention expensive) to replace if you were no longer here. You may for example, be the primary care giver for your children, providing housekeeping and other home-based services that are critical to your family’s wellbeing.

What is the difference between term and whole of life insurance?

Term and whole of life insurance are the two main types of life insurance available on the UK market. A term life insurance policy is designed to last for a certain period of time, called the ‘term’. It will only pay out if you pass away during the term of the policy. If the policyholder dies after the term has expired, the policy won’t pay out.

On the other hand, whole of life insurance does exactly what it says on the tin – it will pay out to your beneficiaries whenever you die, no matter when that is, because it is designed to last for your entire lifetime.

What are the advantages of term life insurance?

The main advantage of a term life insurance policy is that it is designed to be temporary. So, it can cover you while you have financial responsibilities such as a mortgage and children to take care of, but you can stop paying premiums once your children have grown up and moved out.

It can also be a cheaper option as there is less risk associated with it for the insurer. Term life insurance policies can therefore provide the maximum death benefit available for lower monthly premiums.

Term life insurance policies also tend to be simpler and a lot easier to understand than permanent policies. There tend to be fewer exclusions, hidden costs or risks to worry about later down the line.

What are the disadvantages of term life insurance?

Because term life insurance policies expire, you may have to take out another policy to cover you. However, because you will be older and will therefore be perceived to have more age-associated health risks, premiums for a new policy will increase the older you get. For example, taking out a policy in your 20s or 30s will be cheaper than if you were to take out a new policy in your 50s or 60s.

Term life insurance can also be more uncertain. You may pay premiums for the whole of the term for no benefit, if you outlive the policy period, while you may develop a health problem during your term that renders you uninsurable, making it difficult or impossible to take out a new policy once your term life insurance policy has expired.

What are the advantages of whole of life insurance?

Whole of life insurance has the obvious advantage of lasting for the policyholder’s lifetime, thus providing extra security by guaranteeing a payout to your beneficiaries, no matter when you die. However, there are also other benefits to be aware of.

Unlike a term policy, you won’t face having to find a new policy when your current one expires, so you will remain insured even as you get older or if you develop health conditions.

Some whole of life insurance policies also offer the unique advantage of allowing you to invest your premiums in stocks and shares, enabling you to grow your money depending on how the stock market performs.

What are the disadvantages of whole of life insurance?

The main disadvantage of whole of life insurance policies is the expense. Whole of life policy premiums can be many times more expensive than a term policy covering you for the same amount – this is because insurers know that they’ll have to pay out on your policy at some point, whereas they may never have to pay out on a term life insurance policy.

They are also more inflexible, and you may find the premiums more difficult to keep up with as you get older, retire and have less income to live on. If you mainly need life insurance to cover you while you have mortgage payments and dependants at home, then term insurance will be more suitable because you can cancel your policy once it’s no longer needed.

What type of life insurance is best for me?

This entirely depends on your personal circumstances and what you need the payout to cover.

One of the biggest selling points of whole of life insurance is that it can be used to help your family deal with an inheritance tax bill. These bills can really shoot up if the value of your estate exceeds the nil-rate band threshold of £325,000 and has to be paid before your beneficiaries are given access to your estate. As such, many families are forced to take out huge loans to cope with the cost, adding stress to this already heart-breaking time. It should be noted, however, that a whole of life insurance policy can only help your family in this way if it is written in trust – this means that the payout from your policy won’t be considered as part of your estate.

However, if you need life insurance to cover a particular period in your life where you have a lot of financial responsibilities, then term life insurance will be a cheaper, more flexible option that doesn’t leave you paying expensive premiums when you no longer need to.

At Tees we provide independent financial advice across a whole range of financial products, including life insurance. Working in partnership with you for the long term, we are always there when you need us.

If you need help choosing the right life insurance product for your needs, call us today.

This material is intended to be for information purposes only and is not intended as an offer or solicitation for the purchase or sale of any financial instrument.

Tees is a trading name of Tees Financial Limited which is regulated and authorised by the Financial Conduct Authority. Registered number 211314.

Tees Financial Limited is registered in England and Wales. Registered number 4342506.

Increasing the value of your leasehold property

Posted on 18 June 202026 March 2025 by Sarah O'Sullivan

Over the past few years, the leasehold system has come under significant scrutiny for being unfair and complex. Issues such as extortionate ground rents and service charges, as well as the potentially huge cost involved in extending a lease or buying the freehold, can make owning a leasehold property expensive, complicated and stressful.

Meanwhile, the number of years remaining on your lease can have a significant impact on the asking price of your home, should you choose to sell it, as well as making it extremely difficult to remortgage. In this article, we explain how you can maximise the value of your leasehold property.

What is a leasehold property?

When you purchase a leasehold property, you own the property itself, but not the land it is built on. As a leaseholder, then, you are essentially renting the property from the landlord (or ‘freeholder’) for a certain number of years. As a general rule, most flats are sold as leasehold properties, while most houses are freehold (although they can be sold on a leasehold basis, and usually are if purchased through the Shared Ownership scheme).

What is a lease?

Your lease is a contract between you (the leaseholder) and your landlord (the freeholder) giving you conditional ownership of the property for a set period of time. The usual length of a lease on a new property is either 99 or 125 years, although some larger developers (for example, Persimmon and Barratt Homes) are now offering much longer 999-year leases.

The lease also sets out the contractual obligations between yourself and your landlord. Generally your obligations will include the payment of ground rent and service charge, while your landlord will be contractually bound to maintain, insure and manage the building. The lease may also set out restrictions on what you are permitted to do in your property (called restrictive covenants). For example, some leases may prohibit you from keeping a pet in your flat.

Why does the length of my lease matter?

While a lease is normally granted for a period of 99 or 125 years, the length remaining on the lease can be misleading. Once the remaining term on your lease has dipped below 90 years (which may still seem like a very long time), it is likely that you’ll see the asking price of your home fall quickly, and it can even compromise your ability to remortgage your property.

Once you have 80 years remaining on your lease, very few mortgage lenders will be willing to lend against your property, meaning that those willing and able to purchase will be limited to cash buyers only. It will also cost much more to extend your lease if you let the term dip below 80 years.

What is lease extension?

Because your property becomes less valuable as your remaining term gets shorter, you have the right to extend the lease on your flat under the Leasehold Reform Housing and Urban Development Act 1993. Under the Act, you can extend your lease for a further 90 years at a ‘peppercorn rent’ – i.e. you won’t have to pay any ground rent. So, if you extend your lease when it has 85 years left to run, your extended lease would be for 175 years.

It should be noted, however, that if you allow the remaining term on your property to fall below 80 years before deciding to extend it, the process will cost much more due to a fee known as the ‘marriage value’. Essentially, this means that when you extend the lease, the freeholder has a right to be paid 50% of the value added to the property as a result of the lease extension. This could potentially run into tens of thousands of pounds, so it pays to start the process well before this point.

How do I extend my lease?

Lease extension can be a complex and expensive process, but it will significantly increase the value of your leasehold property. There are two ways of starting the lease extension process. You can take an informal approach and contact your freeholder directly to negotiate a lease extension. This works best if you have a good relationship with your landlord, and it can be much quicker and cheaper to achieve.

However, most leaseholders will have to seek legal advice and take the formal statutory route to lease extension, the steps of which are outlined below:

You must check that you are eligible for lease extension. To be eligible, you must have owned your property on a long lease (i.e. with an original term of over 21 years when it was originally granted) for two years before you are allowed to extend your lease.
You must instruct a solicitor who specialises in lease extensions. When taking the formal route, you are obliged to pay both your and your freeholder’s legal and surveyors costs. As such, you may be tempted to omit this part of the process and deal with the legalities yourself – but this is very much a false economy. Lease extensions can be highly complex, and without the support of an expert, you could end up without retaining your legal rights and ensuring the lease is legally capable of registration at the land registry.
You must also appoint a valuation surveyor with experience in lease extensions to value your property and calculate the premium you must pay to extend your lease. You are responsible for both your and your landlords surveyors fees.
To formally start the lease extension process, your solicitor must serve a ‘section 42 notice’, otherwise known as a tenant’s notice, on the ‘competent landlord’, who will usually be the freeholder. They will then have two months to respond with the terms they accept and reject.
The final step will be to negotiate the wording of your lease extension. Your solicitor will be able to handle the negotiation process on your behalf. If you cannot come to an agreement on price or wording, your case will have to go before a tribunal, which can incur further costs.

What is involved in buying the freehold? Is this better than lease extension?

Under the Leasehold Reform, Housing and Urban Development Act 1993, leaseholders are entitled to join together and purchase their freehold for a fair market price. This right was further reinforced by the Commonhold and Leasehold Reform Act 2002. The process of buying the freehold is called ‘collective enfranchisement’. You’ll own a share of the freehold along with your fellow residents, and although you’ll still have a lease on your flat, you and the other residents who participate will be able to extend it for free.

Buying the freehold costs around as much as extending your lease but can be much more complex because you have to get at least 50% of the residents in your block involved. If the only reason you’re looking to buy the freehold is because of a short lease, it makes more sense to simply take the lease extension route.

However, some flat owners are trapped by unfair leases and expected to pay extortionate ground rent and service charges to their freeholder. They may also find that they’re being charged huge amounts of money for routine maintenance and services to their building. In this case, many residents take the path of buying the freehold, in order to take back control of their block and the money being spent on it.

As with extending your lease, you’ll still have to factor in legal costs and professional valuation fees, which will need to be considered before proceeding with either option. Don’t leave it until the last minute

Whether you’re looking to extend your lease or buy the freehold, it can be a lengthy process and leaving it until the last minute could significantly impact the value of your home.

When you instruct the property conveyancing team here at Tees, we’ll deal with all the legal aspects of extending your lease, providing regular updates throughout the process and dealing with any problems that may arise.

Considering a Buy to Let? Here’s what you need to know

Posted on 12 June 202027 March 2025 by Sarah O'Sullivan

There’s a lot to consider when deciding on whether to invest in a buy to let property. Eleanor Burroughs, Partner in the residential property team at Tees, outlines here some of the risks and benefits along with some key legal considerations.

What is a Buy to Let property?

Generally, Buy to Let refers to property which has been bought solely as an investment for letting to tenants whether that is single families or a group of students, but that is not always the case.

Sometimes a buyer may become a landlord by default, for example, they want to purchase the property for themselves to live in at a future date but must let it out in the meantime.

What are the benefits of a Buy to Let?

Landlords generally look for two things, capital growth and rental yield. In some areas of the country one of these may outperform the other so it is important you decide what you are looking for in terms of either a regular income or long-term gain and chose a property accordingly.

For some, being a professional landlord is their job and all their income derives from what they make on their rental properties, others may have just one property which they may have purchased as a pension for the future. Whatever your situation it is important you do your homework thoroughly before taking the plunge.

What are the risks in buying to

What are the risks in buying to let?

As with any investment, buying property does not come without risk and is not something you should engage in on a short-term basis as property prices go down as well as up.

You need to ensure you have enough capital behind you to pay for repairs to the property as and when they are needed
Ensure you can meet your obligations in void periods -when a property is empty
As well as loss of rent, keep in mind that you will still have to pay any mortgage costs
You must also pay council tax and utility charges in the absence of tennants

This is not always easy if the property is empty for some time. There are also the risks of tenants not paying the rent or causing damage and legal action being needed to gain possession.

You also need to be available to carry out repairs to the property. If that isn’t possible for you then you need to factor in the cost of employing someone to manage the property and for professionals to carry out repairs. These costs can quickly erode profit if your margins are tight.

What property should I buy?

The important thing is to take your time in deciding what is right for you and what is right for your potential tenants. Being a landlord is a business decision and you need to approach it that way.

You need to think about the type of tenant that would be attracted to the location and how adaptable the property is to the needs of the tenant group you are looking to attract.

There is no point buying a student let miles from a university or aiming to attract families with a one bedroom flat on the top floor of a tower block.

If you want something lower maintenance, a new build property or a flat in a professionally maintained block may be the answer.

Are there restrictions on the type of property I can let?

In order that you can let a property it must meet certain energy performance ratings. There are certain exceptions, but they are few and far between. For most properties, you can only let where the energy rating is E or higher.

If you are thinking of buying a leasehold property it is important that the terms of the lease are checked carefully to ensure there is no restrictions on lettings. Even if the lease does allow lettings to take place the landlord may have restrictions on the length of the term and is likely to require notice of this which may involve you paying a fee each time a new tenancy is agreed.

It is vital that you tell your solicitor of your intentions so as they can make sure everything is in order.

What are my legal obligations as a landlord?

There are many and they change regularly which is why a lot of buy to let landlords choose to use the services of a professional letting agent to manage the property for them and keep them updated of any changes.

If you don’t, then you need to ensure that you not only know the legal implications of letting when you first let the property but that you continue to stay abreast of changes throughout the entire letting period.

Amongst other things, you must ensure that the gas and electric are safe to use and that the property is well maintained. Additionally, you must ensure that your tenant has a right to rent and that any deposit provided by the tenant is properly protected and held in a government-approved scheme

Letting to students or letting a house in multiple occupation (HMO) requires licencing and there are more stringent controls on letting. Some local authorities now require you to have a licence even if letting to a single household.

What if I fail to comply with my obligations as a landlord?

This will depend on the type of breach, but failing to comply with your obligations can result in financial penalties and in the worst case a prison sentence so it’s important to seek the right advice and get it right!

Do I need a different type of mortgage for a Buy to Let?

The answer to this is yes. The fees and interest rates on buy to let mortgages tend to be higher than for a standard mortgage. You will need to advise the lender if you intend to let to students or on an HMO basis.

You can obtain interest only loans on buy to let as lenders will accept that the capital can be repaid on the sale of the property. Do remember if prices fall and the sale price does not cover the loan, you will have to make up the difference.

You will also generally need a higher deposit and your lender will want to ensure that the rental income you are likely to obtain will cover at least 125% of the mortgage costs. If the property is being bought by a company the legal costs for dealing with the mortgage are also likely to be higher. Buy to Let mortgages require properties to be let on an Assured Shorthold Tenancy basis.

Are the costs of buying to let higher than for buying my main home?

When you are buying a property for the purposes of letting it out there are tax implications you need to be aware of. Firstly, you will generally have to pay a stamp duty land tax surcharge of an extra 3% on the entire purchase price. Stamp Duty Land Tax is a complicated area but we can guide you to the right advice. Your rental income must also be declared in your annual tax return and there are capital gains tax implications when you come to sell if you have made a profit.

If you have chosen to set up a company to own the rental property, there are different tax considerations to consider. The rules around reporting and paying capital gains tax have recently changed and the timeframe is now limited to 30 days from completion of the sale.

How to protect your property from fraud

Posted on 9 June 202027 March 2025 by Sarah O'Sullivan

Property fraud is on the increase and fraud methods change all the time. You should look out for anything that seems unusual or suspicious, as usually there will be more than one sign that fraud is being committed.

What are the types of property fraud?

Identity theft and impersonation

Criminals may impersonate anyone involved in a property transaction, including owners, buyers, borrowers, lenders or conveyancers.

One of the ways that property fraud can occur is where a fraudster has used forged documents to claim they are the owner of a property. They then apply for mortgages against that property and the mortgage is registered against the title to the property at the Land Registry. The fraudster then pockets the proceeds of the mortgage and disappears leaving the owner of the property with a debt they know nothing about until the lender claims they have defaulted on the mortgage.

If a property already has a mortgage secured against it, then the consent of the original lender is required before additional borrowing can be completed which makes any fraud harder to undertake.

If you do not have a mortgage or do not live at the property and therefore do not receive any notices or letters that are sent there, you can protect yourself in several ways.

We would recommend that you make sure that you notify the Land Registry of any change of address you may have so that they have up to date records of where to write to you. You can have up to three addresses listed including an email address, so if you travel frequently you will be able to choose the most appropriate addresses for you.

It is possible to register a restriction on your legal title. This requires the consent of a third party before a mortgage can be completed and registered against the title to your property. You can apply for a restriction if you live in the property but you have to pay a fee. If you don’t live in the property but own it privately, it is free.

Buyers

Criminals may use false ID to pretend to be a buyer and make an offer, then withdraw before exchanging. They can then use the information they’ve learned during the process to commit title fraud on the owner of the property. They may also continue with the transaction and steal any money raised from the lender.

Sellers

Criminals may attempt to sell or mortgage a property by impersonating an owner using false or stolen ID.

Criminals often target:

sole owners, especially of unmortgaged properties
owners who have died
owners living overseas
absent owners, especially landlords
owners who are in a hospital or care home
owners who have built up equity in their property

Conveyancers

A criminal may pretend to be a conveyancer or to act for an authorised firm of conveyancers. You should check the details of the conveyancer acting for the other party to make sure they’re correctly registered.

Lenders

Criminals may submit forged discharges – a formal recognition that a mortgage has been paid off.

Be wary if the source of the discharge is not a lender regulated by the Financial Conduct Authority, or where the lender itself does not give you the discharge.

Am I at risk of property fraud?

Anyone who owns or is in the process of buying a home could potentially be targeted by scams, but some homeowners are more at risk than others.

If your property is empty or rented out, it is more vulnerable to fraud. Properties that aren’t mortgaged are seen as more high risk, as are those that are not registered with the Land Registry.

Properties most likely to be unregistered are those that haven’t been mortgaged or sold since 1990.

What can I do if I think I’m at risk?

The first thing you should do is to sign up to the Land Registry Property Alert service.

Alerts are sent to you via email when official searches and applications are received against the property you want monitored.

If someone tries to make changes to a property you have registered – such as applying to change the registered owner of your property – a notification is sent to you via email.

It won’t automatically block any changes to the register but it will tell you what is happening so you can take appropriate action if necessary.

It’s a good service for landlords too, as you can monitor up to ten properties at one time free of charge.

More than one person can monitor a property at the same time, which is useful if you and your siblings are looking after a property for parents in care.

Ensuring your protection during a property transaction

As professional property conveyancing solicitors, we actively engage with our clients to ensure that your data and monies are well protected. We insist that your bank details are only sent by post and will alert you to potential scams such as ignoring emails or phone calls that claim last minute changes of bank account details.

We would also advise:

Do not send your bank details by email to anyone, either phone them through or take them into their office – if this is possible
Choose your conveyancing solicitor carefully. Tees (incorporated under the name Stanley Tee LLP) is registered with the Law Society and the Council for Licensed Conveyancers
Read anything sent to you by your conveyancing solicitor very carefully. We provide our clients with our bank details at the outset, by post and we stress that those details will not change
If you are being pushed to proceed very quickly, be careful. Fraudsters often use this tactic so that emails are used and corners are cut

As simple and stress free as possible

Whether you’re buying your first house or expanding your buy-to-let portfolio, we keep in touch regularly and try to keep the process as simple and stress-free as possible.

Our property solicitors are members of the Law Society’s Conveyancing quality scheme. When you’re ready to make your move, call us to get a conveyancing quote.

How to succeed at property auctions: Expert tips for buyers

Posted on 8 June 202027 March 2025 by Sarah O'Sullivan

So you have seen an auction advertised in your local paper and as you have nothing else to do with your time you decide to go along and have a look to see what is available.

You don’t need a solicitor before the auction – or do you?

Well the answer to that is an emphatic “yes”. You should ensure that you do all of your research before going to the auction as, in the event of you bidding successfully, contracts are exchanged when the gavel goes down and you will have a contract which binds you to purchase the property on the date specified in the contract.

What is more, you should make sure that all of the searches and surveys are carried out before contracts are exchanged, just as you would if you were going to purchase a property in the usual way (which is known as by Private Treaty).

A purchase by auction should not be viewed any differently.

How do I start the process of buying at auction?

After seeing the advert you should get a copy of the catalogue. Most of these are now available online. You should then consider which particular properties you might be interested in.

The catalogue will show a guide price for the property. This is not the price for which the property will actually be sold but the agents guide of their estimate of the price the property may achieve. The property may sell for significantly more than that although it may also sell for less. Do not however make the mistake of believing that you will be able to pick up a bargain.

Properties do on occasion go for significantly higher than the guide price. It only takes a number of people to be bidding for the property to go significantly higher than anyone thought possible. The seller may well have set a reserve on the property which means that the property cannot be sold at the auction for anything below that figure.

What about a survey?

When you have selected properties that you would like to look at then you should arrange to visit them if at all possible and you should also arrange for a proper survey of the property to be conducted by an appropriately qualified surveyor. The surveyor will be able to advise you about the state and condition of the property ensuring that it is structurally sound and also advising on any work that may need to be carried out. This will enable you to obtain quotes if necessary as you do need to go into the auction with all of the relevant costings available.

What will my solicitor do?

The catalogue will show that a legal pack is available and that is what the solicitor needs to look at. This should contain copies of the title deeds to the property and any searches that the seller’s solicitor may have completed. Most catalogues should be available several weeks before the actual auction and you should give your solicitor as much time as possible to check through the documents for you.

Properties which are going to auction often have some form of problem with them. This can be either a legal problem or structural one. Your solicitor will check any legal issues for you and will ensure that there are no problems evident in the title deeds or searches.

Common problems include:

Issues with rights of way or rights for services to be connected
Boundary issues
Missing or inaccurate title deeds
Planning restrictions

Regarding the last point, if the property is being sold with planning then the contents of the planning documents should be checked carefully to make sure that there are no hidden concerns.

You may find that you have to carry out further investigations in relation to such matters as contamination on the site particularly if you are going to convert something to residential use. Make sure that you give yourself enough time to carry these out. “Marry in haste repent at leisure” applies equally to this situation.

Financial considerations

Before attending the auction you must make sure that you have enough money to complete on any purchase. Remember that as well as the amount that you bid for the property the auction house will add a percentage as their fee. You should also take into account any stamp duty that you have to pay and the land registry fee that you will have to pay to register you as the owner of the property if you are successful.

The cost of any searches that have been provided by the seller is often added to the price that you will have to pay and on occasion, the seller also makes it a term of the auction that their solicitor cost have to be paid by the buyer.

Offers in advance of the auction

If you are particularly keen on the property then you may well be able to make an offer before the actual auction. If that offer is successful then the seller is likely to require that you exchange contracts in the conventional way before the auction takes place at which point they will withdraw it from the actual auction.

Auction day – what happens when the day arrives?

Once at the auction try not to get carried away with the excitement of the situation. It is vital that you set a limit on the amount that you can pay for the property. Do not bid more for the property than you can afford or that it is worth to you. This may sound obvious, but it is all too easy to get caught up in the moment and get carried away.

The auction house will ask you to provide them with proof of funds and ID before issuing you with a number which is used to identify you when are bidding. This is required to comply with the Money Laundering Regulations so make sure that you take these with you or you will not be able to bid.

It is possible to bid in a number of different ways. You can bid on the telephone, the internet or via a proxy bid. You will need to comply with the Money Laundering Regulations whichever method you use to make your bid.

Success! Now what happens?

If you are successful you will have to pay the deposit there and then and the bringing down of the gavel signifies exchange. You cannot refuse to complete the transaction on the basis that you find something out after the auction that you should have known before.

The completion date will be set in accordance with the conditions set out at the back of the catalogue and will usually be 20 working days after the auction although this time frame may vary.

If the property is not sold at the auction it may still be possible for you to purchase it as the agents tend to approach any underbidders to see if they would be interested. You will often see agents in a huddle after the auction trying to secure a deal if the highest price offered is very close to the reserve that was set.

Remember auctions can be a very stressful environment but can also be a great deal of fun. Also remember to consult your solicitor as early in the process as possible to make sure that you know all the ins and outs of the property that you want to bid for.

Fast and efficient service

Our Residential property solicitors are members of the Law Society’s Conveyancing quality scheme and experts in dealing with transactions involving property purchased at auction.

We understand that speed of service is an important factor when buying at auction and will take care of all the legal formalities as quickly and efficiently as possible right through to completion.

Farming divorce: Protecting your family farm

Posted on 3 June 202023 March 2025 by Sarah O'Sullivan

A farm is usually a family business, but it’s more than simply an income. It’s an all-consuming occupation and a way of life. Divorce has become part of everyday life, and farming families are as susceptible as any other to a marriage failing. However, farming divorces are more complex, so it’s vital that you seek expert legal advice.

Clare Pilsworth, Partner in the Family Law team at Tees, outlines the challenges faced in a farming family divorce and identifies steps that can be taken to ensure that the farming business is protected from the outset.

If the worst were to happen and your marriage hits troubled times, we will provide you with the expert legal guidance and support you need.

What factors are considered in a farming divorce?

The primary aim in a divorce separation is to establish what the needs of each party are and how these needs may be met.

The courts have very wide discretion to reallocate assets within a marriage to ensure that both parties’ needs are met for the future. This could mean being forced to sell off land or property in order to raise cash, which will raise some important issues for your farming business.

The first step is to define the assets and decide how to share assets built up during the marriage. The Courts will then seek to ensure each party receives a ‘fair share’. A fair share, however, does not necessarily mean equal, and farming cases merit special consideration, including:

Inherited assets which are not subject to the sharing principle in the same way
A farm owned by the wider family, for example, with siblings, parents or both, will require careful thought as Courts are reluctant to damage the livelihoods of other third parties.
Provided there are sufficient liquid assets, the Courts can disregard equality in favour of protecting any inherited element

Whilst for non-farming divorces, an equal division of assets and wealth accumulated during marriage could be considered a fair divorce outcome, this may not always be achievable for farming families because of the need to preserve assets that were owned long before the marriage.

‘Fairness’, however, still requires financial needs to be met.

What about family members living on the farm?

You may have passed certain farming properties to your adult children or have allowed them to live in them to ensure that the needs of the farm can be met.

Where an adult child has received financial support or housing from a parent during the marriage which is then subject to divorce the Court can make an order against the child effectively forcing them to prevail upon parents or the extended family, to provide support in relation to financial settlement.

It is therefore important to be aware of the potential implication of deciding to financially assist children during their marriages. This is particularly relevant where a family’s wealth has been built through the farming generations, and the family want to prevent the farming business being broken up during divorce proceedings.

Do I need to go to court?

Contesting financial matters in Court within a divorce can be very costly and is not the only option open to you. The Courts are, therefore, placing more and more emphasis on non-court dispute resolution as a means of solving disputes because of the significant delays and expenses that come with court proceedings.

Non-court dispute resolution options, such as mediation, collaboration, and arbitration, are alternatives to court proceedings that seek to resolve matters as efficiently, cost-effectively, and amicably as possible.

How can I protect my farm?

Careful planning in advance is extremely important. By doing so, you can structure your arrangements taking full account of the specifics of your farming business and individual family circumstances.

There are several ways you can seek to protect your farming business along with future income streams:

Partnership Agreements

Partnerships are the most common business structure within the farming industry – they are relatively simple and a flexible way to run a farming business. By drawing up a partnership agreement, you will be able to ensure that it is made clear in writing exactly which assets belong to the partnership and which are owned by each partner as individuals.

Family Trusts

One way to protect the family farm is through a family or discretionary trust. This trust not only protects family assets but can also divide farm income to minimise tax.

A trust “owns” your family assets, such as the farm, investments, home, shares, or business, while you, your family members, or others might be beneficiaries under the trust.

Trusts can play a key role in protecting family wealth on divorce and can provide a means to assist adult children without risking farm assets. However, trusts should always be considered as part of a long-term strategy to protect family wealth, as a trust set up when a marriage is on the verge of breakdown is unlikely to withstand the scrutiny of the courts.

What about a prenuptial agreement?

Prenuptial agreements are an effective way of legally protecting your farming business, together with property and money acquired before a marriage. Entering into such an agreement before marriage allows you and your future spouse to plan how you will divide current and future assets should you divorce in the future.

However, there is something to be said for ensuring that the spouse marrying into the farming family does not feel excluded through entering a prenuptial agreement and, through the marriage, feels invested in the future success of the farm and business.

If a prenuptial agreement might be considered, it should be done so in light of the joint commitment of the marriage. It is that commitment which will make the farm succeed as well.

It is important to take expert legal advice from a family lawyer who specialises in dealing with farming assets on divorce to ensure that the terms of the prenuptial agreement are sufficiently robust to be upheld by a court.

Certain criteria must be fulfilled for the agreement to be upheld and it is important for both parties to receive independent legal advice.

Expert legal advice for over a century

Tees’ heritage and culture has been rooted in the local farming community in and around East Anglia for well over a century, and its legal experts, many of whom are from farming families themselves, have decades of experience in dealing with all aspects of legal farming matters.