Can a Prenup Keep Assets Out of Property Division in Manitoba?

You may be planning a marriage or moving in with a partner, and you want to protect a business, an inheritance or a home you already own. Or you may be wondering whether an agreement you signed years ago still controls what happens if you separate. Either way, the question is how far a prenup can go.

In Manitoba, property division is mostly governed by The Family Property Act. This article explains the default rules, what an agreement can change, and the points that people often miss. It is general information, not advice on your own agreement.

This article covers the law of Manitoba.

The default rule without an agreement

Under The Family Property Act, each spouse and common-law partner has the right, on application, to an accounting and, subject to s. 14, an equalization of assets. The combined value is divided into two equal shares unless s. 14 orders otherwise.

The Act separates assets into two groups. A family asset is one owned by one or both partners and used for shelter, transportation, or household, educational, recreational, social or aesthetic purposes, and it includes the family home and certain savings or chequing accounts. A commercial asset is any asset that is not a family asset.

What a prenup or relationship agreement can do

The Act does not apply to an asset that is disposed of by a spousal agreement or common-law relationship agreement, or that is made inapplicable by its terms. An agreement can also make a provision of the Act inapplicable or vary how it applies.

In practice, that means an agreement might say that a business, an inheritance or a pre-relationship property is not part of the equal sharing. Or it might keep the sharing in place but change how it works for a particular asset. How well it does that depends on its wording.

• It can take an asset that it disposes of out of the Act.
• It can make a provision inapplicable or vary how it applies.
• It cannot cover what it does not mention: assets the agreement does not address remain subject to the Act.

Assets the agreement forgets

This is the most common gap. If your agreement protects your business but says nothing about a cottage you buy later, the cottage is still subject to the Act. Vague wording, or an agreement drafted years before your circumstances changed, can leave large assets outside its protection.

A good agreement is specific about what it covers and considers future assets such as new property, savings and business interests. A lawyer can check whether your wording really reaches the assets you care about.

Family assets, commercial assets and agreements that are not complete

Even where equal sharing applies, a court can sometimes depart from it, and the threshold depends on the type of asset. For family assets, the court may alter equal sharing only if equalization would be grossly unfair or unconscionable. For commercial assets, the threshold is lower: the court asks whether equal sharing would be clearly inequitable, considering factors such as length of cohabitation, length of separation and any agreement.

Conduct during the relationship is generally disregarded in dividing property unless it amounts to dissipation.

Common-law partners and the family home

Common-law partners are covered by the same equal-sharing accounting once they meet the Act's definition, which means they registered under The Vital Statistics Act or cohabited in a conjugal relationship for at least three years. The Family Law Act uses a different test, which includes a one-year period if the partners are together the parents of a child, so which test applies depends on which statute your claim falls under, and a lawyer can confirm how it applies to you. There is also an exception for some couples who separated before s. 2.1 came into force.

Homestead rights are a separate layer. An owner may not dispose of the homestead during the owner's lifetime unless the spouse or common-law partner consents in writing in the prescribed form. A spouse may release those rights in writing in the prescribed form for valuable consideration, after which the land ceases to be that spouse's homestead. These rights exist whether or not the non-owner is on title. So a prenup that deals with the home may not, by itself, replace the homestead consent or release.

What to do next

The formal requirements for an agreement, such as how it must be made, signed and disclosed, and the grounds for setting one aside, depend on the law and your facts, so it is worth confirming them with a lawyer before relying on any agreement. An agreement can change how The Family Property Act applies to your assets, and Manitoba guidance on separation agreements says it is important that both parties have independent legal advice because the agreement is a binding contract.

• List every significant asset and debt, now and expected later.
• Decide which assets you want treated differently from equal sharing.
• Each get independent legal advice before signing.
• Ask whether the home needs a separate homestead consent or release.
• Keep signed copies and review the agreement after major life changes.

Frequently asked questions