To protect your business assets in Manitoba, a marriage contract can specifically exclude your corporate shares and future business growth from being classified as family property. This ensures your company remains yours alone in the event of a separation.
Building a successful business requires immense dedication, late nights, and financial risk. 🚨 If you are an entrepreneur planning to get married, it is completely natural to want to protect the company you have worked so hard to build. Without a formal agreement, a separation could force you to pay out half the value of your business to your ex-partner, potentially bankrupting the company.
Under Manitoba law, the growth in value of any asset during a marriage is generally subject to equal division. Fortunately, a strategically drafted marriage contract allows you to opt out of these default rules. This guide explains how entrepreneurs can shield their commercial assets. To secure your enterprise, we strongly advise hiring a corporate-minded family lawyer from our directory to draft your contract.
Step-by-Step Process in Manitoba
In Manitoba, the division of marital assets is governed by The Family Property Act. 📜 Whether you own a local retail store in Selkirk, a tech startup in Winnipeg, or a large farming operation in Dauphin, a marriage contract allows you to customize how your commercial assets are treated. Here are the steps to safeguard your business.
Step 1: Value Your Current Business Assets
You cannot protect what you have not accurately quantified. Before drafting the contract, you must determine the fair market value of your business at the date of marriage. This often requires hiring a Chartered Business Valuator (CBV). You must provide this valuation in your financial disclosure so your partner knows exactly what they are agreeing to exclude.
Step 2: Define Excluded Property Clearly
Your lawyer will draft specific clauses to ensure your business is categorized as “excluded property.” 📂 The contract must explicitly state that the shares of your corporation, any holding companies, and the physical assets of the business will remain yours alone. This prevents the business from being thrown into the general family property calculation.
Step 3: Address Future Growth and Income
It is not enough to just protect the current value of the business. Your marriage contract must clearly state that any future growth in the value of the shares during the marriage is also excluded. Furthermore, you should specify how income retained within the corporation (retained earnings) will be treated regarding potential spousal support claims.
How Much Does it Cost in Manitoba?
Protecting a business is more complex than a standard prenuptial agreement, so you should expect higher legal and professional fees. 💵 However, spending a few thousand dollars now is incredibly cheap insurance compared to losing half your company’s value.
- Drafting the Marriage Contract: A family lawyer with experience in complex corporate assets generally charges between $3,000 and $7,500 CAD to draft the agreement.
- Independent Legal Advice (ILA): Your partner’s lawyer will need to review the complex business terms, which usually costs $1,000 to $2,500 CAD.
- Chartered Business Valuator (CBV): Getting an official valuation of your company before signing the contract can range from $3,000 to over $10,000 CAD, depending on the size of the enterprise.
| Professional Service | Purpose for Business Owners | Estimated Cost (CAD) |
|---|---|---|
| Corporate Family Lawyer | Drafting exclusionary clauses | $3,000 – $7,500 |
| Partner’s ILA Lawyer | Ensuring binding consent | $1,000 – $2,500 |
| Business Valuator (CBV) | Establishing base value of company | $3,000 – $10,000+ |
How Long Does the Process Take?
Protecting commercial assets requires careful planning and coordination between your family lawyer, your corporate lawyer, and your accountant. ⏱️ Just getting a formal business valuation from a CBV can take 4 to 8 weeks, as they must review years of financial statements.
Once the valuation is complete, drafting the contract and allowing time for your partner’s Independent Legal Advice can take another 2 to 3 months. Therefore, business owners in Manitoba should begin the marriage contract process at least 4 to 6 months before their wedding date.
Frequently Asked Questions (FAQ)
What happens to my business if I don’t have a marriage contract?
Without a contract in Manitoba, the increase in the value of your business during your marriage is generally considered family property. If you separate, you may have to pay your ex-partner half of that growth, which sometimes requires selling business assets or taking on massive corporate debt.
Can I protect a business I plan to start after we are married?
Yes. A well-drafted marriage contract can include provisions that exempt any future businesses or corporations you create during the marriage from being classified as family property under The Family Property Act.
Does my partner have to agree to exclude the business?
Yes. A marriage contract is a mutual agreement. You cannot force your partner to sign away their statutory rights to property division. They must voluntarily agree to the terms after receiving full financial disclosure and Independent Legal Advice.
Can my spouse claim spousal support from my business income?
Yes, even if the business itself is excluded as property, the income you draw from it (or sometimes the income retained inside it) can still be used to calculate spousal support. You must explicitly address spousal support in the marriage contract to limit this exposure.
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