Farm and ranch divorces face a few more unique complexities than a typical divorce. The first question often asked is, “What will happen to my ranch and livestock in or after my divorce?”  The ranch and/or livestock may be for business or for pleasure, but either way, the complexities exist. 

When dealing with a divorce involving a ranch, cattle and/or horse business, the spouses, and possibly other family members, are usually highly involved in the day-to-day operations of the business as each family member brings something unique to the operation. 

If you are enjoying reading this article, please check out Southwest Farm Press Daily and receive the latest news right to your inbox.

It’s not uncommon for one spouse to run the financial side of the business while the other spouse runs the actual operation such as—training and showing the horses, buying, raising and selling the cattle, managing the ranch itself etc.  Customers add an additional layer of issues to be discussed and resolved.  It could be that some customers are more loyal to one spouse or the other, and this issue cannot be overlooked.

The first step in a ranch divorce is to evaluate how the business operates, to identify the key employees and to identify the customers.  If the spouses are considering co-owning the ranch business post-divorce, they will need to ensure that the employees as well as the customers are on board. If not, the spouses may want to dissolve or divide the business, or in some cases sell it.  In the event that they want to co-own the business after the divorce, they will need an operating agreement(s) and to legally reform the business.  Reformation is vital to the business running smoothly in the future.

Like any other business, a ranching operation has to be taken apart one layer at a time so it can be divided without destroying its integrity or to package it for sale.  Either way, special knowledge of farm and ranch operations is vital when a divorce is imminent.  It could be that the business is dissolved but the spouses agree to jointly own livestock post-divorce.  If so, it is important that things such as expenses, breeding rights, showing rights, and training are addressed. 

Property Issues

Most post-divorce litigation in ranch divorces arise from issues like the fund money from the breed organizations, prizes, winnings, showing rights, breeding rights, training, semen, embryos. Also, with cloning on the rise, the division of DNA is an entirely new area to be addressed.

If the ranch and/or livestock need to be valued, special experts’ skill and knowledge will be required. For example, if the ranch is to be sold, resurveying may be in order to enhance the value.  In other circumstances, the parties may wish to parcel it amongst the two of them, or one party may buy the other party out. 

With livestock valuation can come great subjectivity, especially with horses.  Outside experts are often needed to value ranches and livestock if the spouses cannot agree on the value.  With cattle, the market usually drives the value, unless the operation includes breeder bulls, which would need to be valued by an expert.  Frozen semen can also be quite valuable and must be valued as well.  In addition, other assets such as equipment, trailers and vehicles need to be valued if being divided or sold. 

Texas is a community property state, meaning that absent an agreement to the contrary, everything a husband and wife own at the time of divorce is considered community property and may be divided by the court.  However, if a party can prove property is separate property, the court cannot divide it.  Simply put, separate property is property that was owned prior to the date of marriage, or that was obtained by gift, devise or descent. 

Once property is established as community property or separate property, complex rules may come into play for property division.  For example, if land is a party’s separate property, then such things as crops or timber must be characterized as separate or community property, and there are special rules for which these can be divided.  With livestock that is proven to be separate property, someone must determine whether the offspring, semen, embryos, and in some cases DNA, are separate or community property. 

As a ranch, cattle and horse owner, I have a deep background and understanding of ranch assets.  I am board certified in family law by the Texas State Board of Legal Specialization and have practiced family law in the state of Texas for 20 years.  It is important to have a working knowledge of ranch assets and the division of such assets when representing a spouse in a ranch divorce.  I have conducted many ranch, cattle and horse divorces (and post-divorce litigation) across the state, and fully recognize the complexities and uniqueness of a ranch divorce.

There are many questions to be addressed and this article represents a few starting points to help gain a better understanding of what is involved when dealing with livestock assets in a divorce.  This article is for informational purposes only and does not constitute an attorney / client relationship.

 

Charla Bradshaw is an accomplished family law attorney and KoonsFuller, P.C. Denton Managing Shareholder known for successfully summarizing some of the most difficult cases. She was listed among the Top 50 Women Lawyers in Texas (2005) and rated one of the Best Women Lawyers in North Texas by D Magazine in 2010.

Charla Bradshaw has made the list of Texas Super Lawyers published now by Thomson Reuters each year it has been chosen and is AV Peer Review (Top) Rated by Martindale-Hubbell.

She earned her bachelor of science degree, Summa Cum Laude, from Texas Woman’s University and her Juris Doctor from the Dedman School of Law at Southern Methodist University in 1993.

 

Other Southwest Farm Press stories of interest:

Farm business plan can determine success

Don’t bet your farm: An estate plan can help preserve assets

Contingency plan vital for farm risk management