Written by Rebecca Jaremko-Bromwich
The American dark comedy Succession, that has aired since 2018 on HBO, centres around the dysfunctional battles between members of a family for control of a family business. The show clearly resonates with the viewing public. It is popular, has received rave reviews, and has been renewed for a fourth season in 2023. As funny as it is, the show provides a sobering reminder for business owners. Closely held and family businesses are vulnerable to disruption when the families who own them experience changes, such as illness, death, generational succession, and shifting family dynamics in the context of separation and divorce.
Future planning for family and closely held businesses is challenging to undertake and should contemplate eventualities including divorce. Consequently, it is useful for the principals of closely held and family businesses to seek advice from family lawyers proactively, before problems arise.
In the Province of Manitoba, The Family Property Act  is the legislative instrument setting forth rules applicable when dividing the value of family property as between spouses or common-law partners. Basically, family property is defined as any property that either or both spouses have acquired while married and cohabiting (living together), or that either or both common-law partners have acquired while cohabiting. If partners cohabit immediately before their marriage, property they acquire together during that period of cohabitation is also family property. Essentially, spouses and common-law partners are entitled to equal shares in the value of family property when they separate, regardless of the ownership or location of that property.
Notably, business assets fall within the range of assets that are equalized under the Family Property Act in Manitoba. In addition to the couple’s family home, as well as the money they hold in any bank accounts, their insurance policies, other forms of property, such as stocks and corporate shares, and real property, are assets may be subject to equalization. This family property law also covers instances where business assets which are not obviously family property on the basis of ownership alone. Where an asset is technically owned by corporation, partnership, or trustee, and would, if it were owned by a spouse or common-law partner, be a family asset, it may still be subject to equalization under the Act.
Breakdown of a marriage or common law union can destroy a business. Businesses often have to be valued and, in many instances, dissolved and sold off as a consequence of separation and divorce. The Family Property Act applies to all married persons living in Manitoba, no matter where they were married or how long the marriage lasts. Since 2004, the Family Property Act, and certain other property laws, like The Homesteads Act, have applied to common-law partners who have either registered their relationship or who have lived together for a specified period of time.
Through use of domestic contracts such as “pre-nups” and “post-nups,” parties do have the right to privately order the financial implications of their personal relationships by putting contractual agreements into place that govern what will happen to a business in the event a relationship breaks down. Optimally, such an agreement can be entered into before the relationship begins, but they can be signed after the marriage or common law relationship is underway. Such agreements can be crucial to preserving businesses.
Accordingly, it would be difficult to overstate the importance of seeking family law advice when establishing a closely held or family business, or when entering a common law or marital union while owning or running a business in Manitoba.
 Divorce of spouses is dealt with under the Divorce Act, RSC 1985, c 3 (2nd Supp)
 CCSM, c F25
 Ibid, s 1(1) and s. 2(1)
 Ibid, s 1(1).
 Ibid, s 13.
 Ibid, s 1(1) and s. 13
 The definition of the term “family home” is found in the Family Property Act, ibid, s 1(1)
 The definition of the terms “asset”, commercial asset”, and “family asset” is found in the Family Property Act, ibid, s-s 1(1).
 Family Property Act, ibid, s.1(1), paragraph (c) of the definition of “family asset”.
 Family Property Act, supra note 3, s 17
 Ibid, s 2.
 CCSM, c H80
 Family Property Act, supra note 3, s 5.
 Ibid – domestic contracts are permitted whether entered into before or after cohabitation
 Ibid, s 5.
 Ibid, s 5.
The views and opinions expressed in the blogs and case reporter are the views of their authors, and do not represent the views of the Desautels Centre for Private Enterprise and the Law, the Faculty of Law, or the University of Manitoba. Academic Members of the University of Manitoba are entitled to academic freedom in the context of a respectful working and learning environment.