Can a Prenup Protect an Inheritance or Gift in British Columbia?

If you expect an inheritance or a family gift, you may want to be sure it stays with you if your relationship ends. In British Columbia, a written agreement between spouses can address this, working alongside the default rules in the Family Law Act.

This article explains what an agreement can say about an inheritance or gift, how to make it more reliable, and where the court can step in. How the default rules treat a specific inheritance or gift depends on the facts, so that is worth confirming with a lawyer.

This article covers the law of British Columbia.

How the default rules and an agreement fit together

Spouses are presumptively entitled to family property and responsible for family debt, and each has a right on separation to an undivided half interest in family property as a tenant in common. This is expressly subject to an agreement or order that provides otherwise.

Spouses may also make agreements about dividing property and debt despite the usual Part 5 rules, subject to the court's power to set those agreements aside. In practice, the default rules are the starting point, and a valid agreement can change the result.

An agreement can remove that uncertainty by stating clearly how the asset is to be treated.

What an agreement can say about an inheritance or gift

• Include an item that would not otherwise be family property, for example an inheritance, if both spouses agree.
• Exclude an item that would otherwise be included, if both spouses agree.
• Value family property or debt differently than the default valuation would.
• Divide family property and debt equally or unequally.

If your goal is protection, spouses may agree under s. 92 to exclude as family property or family debt items that would otherwise be included, such as a business or a home. If you are the partner of someone expecting money, you may instead want certain items included, which the Act also permits.

It helps to describe the asset clearly, and to say what happens if it is mixed with other property, such as being used to buy a home. These drafting details are best settled with a lawyer.

Making the agreement reliable

A written agreement is one in writing that is signed by all parties. The court's set-aside regime applies to a written property agreement with each spouse's signature witnessed by at least one other person, and the same person may witness both signatures. The Act does not require notarization, a commissioner or a lawyer's signature.

If the agreement is signed but not witnessed, the court may still apply the set-aside rules if satisfied it is appropriate in all the circumstances. The Province's guidance advises getting legal advice before any final decisions about division of property and debt.

Limits: when a court can change the agreement

The Supreme Court may set aside or replace all or part of a witnessed property agreement only if certain circumstances existed when it was made. They include a spouse failing to disclose significant property or debts, taking improper advantage of the other's vulnerability, or not understanding the nature or consequences of the agreement. Other circumstances that make a contract voidable at common law also count.

The court may decline to act if it would not replace the agreement with an order substantially different from its terms. It may also set aside or replace an agreement that is significantly unfair, considering the time since it was made, the spouses' intention to achieve certainty, and the degree to which they relied on its terms.

If you expect a gift or inheritance, disclosing that expectation to your partner before signing can reduce the risk of a later argument about non-disclosure.

What to do next

• Write down what you expect to receive, and from whom, as far as you know.
• Decide whether the agreement should exclude it, include it, or treat it in another way.
• Share relevant information with your partner and encourage them to get advice.
• Sign a written agreement and have each signature witnessed.
• Ask a lawyer how the default rules would treat your specific inheritance or gift.

If you are not married, the property division rules apply only once you have lived in a marriage-like relationship for at least two years, and a written agreement can opt out of the default rules.

Frequently asked questions