Is an Inheritance Divided on Separation in Manitoba?

You may have received an inheritance, or expect one, and you are now separating. The natural question is whether your spouse or partner can claim part of it. The honest answer is that it depends on the details, and those details are worth getting right before you make any decisions.

This article does not try to set out every rule on inherited property in a separation. Instead it explains what facts tend to matter, how agreements fit in, and how separation interacts with wills and estates when someone dies. A lawyer can then apply the rules to your situation.

This article covers the law of Manitoba.

The short answer: it depends on the facts

There is no one-line answer to whether an inheritance is divided when spouses or common-law partners separate. The outcome turns on the exact property involved, where it came from and what has happened to it since you received it. Anyone who tells you it is always safe, or always shared, is skipping over those details.

If you are separating, treat an inheritance as something to raise with a lawyer early. Do not assume it is protected, and do not move or spend it in a hurry. Changes to how an asset is held can affect how it is treated later.

Facts that usually matter

When a lawyer reviews an inheritance in a separation, these are the kinds of questions that tend to come up. Gather the answers and the paperwork behind them.

• Who left you the inheritance, and when did they die?
• Was it money, a home, investments, a business interest or something else?
• Has it been kept in an account or title in your name alone?
• Did you deposit it into a joint account or put a spouse or partner on title?
• Was it used for the family home, debts or family expenses?
• Has it grown in value or earned income since you received it?
• Is the estate still being administered, so that you have not actually received anything yet?
• Do you and your spouse or partner have any written agreement about property?

Growth, mixing with other property and the timing of receipt are the points most often argued over. How each is treated is a legal question that depends on the facts, so confirm it with a lawyer rather than relying on a general rule.

Agreements can change the picture

Spouses and common-law partners sometimes sign agreements about their property. In the death context, The Family Property Act does not apply to the accounting rules on death if the spouses divided their assets before death under a spousal agreement, a common-law relationship agreement, or the Act itself. An earlier agreement does not bar those rights unless the survivor specifically waived or released them.

If you have signed anything about property, bring it to your lawyer. Its exact wording matters, including whether it mentions inheritances and whether any rights were specifically released.

When separation and a death overlap

Sometimes a separated spouse or partner dies before property has been sorted out. Manitoba has rules for this, and they are different from the rules for a living couple.

• A surviving spouse is treated as having died first for intestacy purposes if the spouses were living separate and apart at death and a divorce or Family Property Act accounting or equalization application was made during the separation, or they divided their property to finalize the breakdown.
• A surviving common-law partner is treated the same way if a registered relationship was dissolved by registration before death, if three years had passed since an unregistered couple began living separate and apart, if an accounting or equalization application was made, or if they divided their property.
• A survivor who gets no intestate share because of separation may still apply for an accounting and equalization of assets under The Family Property Act if property matters were not already settled, and may also have rights under The Homesteads Act.
• A separated spouse's Family Property Act rights take priority over rights under The Intestate Succession Act, and are in addition to rights under The Homesteads Act.
• After divorce, annulment or the end of a common-law relationship, gifts to the former partner in a will are revoked and the will is read as if that person died first, unless the will shows a contrary intention.

The death-side accounting rules apply to married spouses and equally to common-law partners. Only the survivor may apply, and the deceased's personal representative may not make the application. The survivor's limitation period is six months from the grant of probate or letters of administration, though the court may extend it in certain situations.

On that accounting, the survivor's own assets are exempt, including jointly held property passing by survivorship, life insurance on the deceased's life, and registered plans payable to the survivor. The equalization payment is also reduced by any share the survivor takes under The Intestate Succession Act and, subject to s. 43, by gifts to the survivor under the will.

What to do next

Do not make big moves with an inheritance until you understand where you stand. A lawyer can tell you how it is likely to be treated and what evidence to keep.

• Keep the inheritance documents, such as the will, estate correspondence and bank records showing where the money went.
• Avoid mixing the funds into joint accounts or joint property until you have advice.
• Collect any marriage, cohabitation or property agreements.
• Note the dates of separation and of the death of the person who left you the inheritance.
• If a spouse or partner has died, watch the six-month limitation period from the grant.
• Ask a lawyer how your will and beneficiary designations are affected by the separation.

Frequently asked questions