How does business succession work in New Brunswick?

In New Brunswick, passing on a business at death runs through three provincial Acts that each answer a different question. The Wills Act asks whether a will is valid. The Marital Property Act asks what a surviving spouse can claim from the estate, and it treats business assets differently from other property. The Devolution of Estates Act asks who takes when there is no will. BDC describes succession planning as preparing successors for key roles so disruption is minimized during leadership changes. This guide covers New Brunswick only. It reports what each Act says and where it stops; it cannot say how your own business would be treated.

A will has to be in writing

Under section 3 of New Brunswick’s Wills Act, a will is valid only when it is in writing. Sections 4 to 6 then set out the signing and witnessing rules, and section 4 is made subject to sections 4.1, 5 and 6. Section 35.1 lets a court order that a document or writing is valid, even though it was not executed in compliance with the Act’s formal requirements, where the court is satisfied that it embodies the testamentary intentions of the deceased. Section 6 allows a testator to make a valid will wholly by his own handwriting and signature, without formality and without a witness. For an owner, the practical point is narrow: the Act requires writing, and nothing in it describes how a business should be run or who should be trained to run it. That is the work of the plan around the will.

How the Act treats business assets

The Marital Property Act defines a “business asset” as property owned by one spouse and used principally in the course of a business that spouse carries on, alone or jointly with others. The definition includes shares the spouse owns in a corporation through which he or she carries on a business. Paragraph (b) of the Act’s definition of marital property covers property that is not a family asset and was acquired while the spouses cohabited, or in contemplation of marriage, except a business asset (the paragraph lists other exceptions as well, including gifts). Family assets are marital property under paragraph (a). Section 8 also lets the Court divide property that is not marital property where a spouse has unreasonably impoverished the marital property, or where the division of marital property would be inequitable having regard to the considerations the section names. So an owner’s business shares may fall outside the property the Act divides, depending on how they are held and used, but not in every case.

A surviving spouse has four months to apply

Under section 4(1) of the Marital Property Act, when a spouse dies, the surviving spouse may apply to the Court and is entitled, as against the estate, to have the marital property divided in equal shares; section 7 lets the Court divide unequally where equal shares would be inequitable. Section 4 also has its own rule for the marital home and household goods, and section 4(4) says any bequest or devise in the will, and any vesting of property on an intestacy, is superseded by the rights in section 4(1). Section 4(2) says no application may be made later than four months after the death, subject to section 4(3). Under section 4(3), where a person is prevented from applying by lack of knowledge of the death or of its date, or by circumstances reasonably beyond his control, the Court may extend the period by such time and on such terms as it considers just. An executor planning a business hand-over should treat that window as a date to know about from the day of death.

When there is no will

The Devolution of Estates Act sets out who takes on an intestacy. Under section 22(2), if an intestate dies leaving a widow and one child, the widow takes the intestate’s interest in property that is marital property of the intestate and the widow, plus one-half of the residue of the estate. Under section 22(2.1), if there is a widow and children, she takes the same marital property interest plus one-third of the residue. “Marital property” there has the meaning it has in the Marital Property Act. The Act uses the word “widow”, and section 36 applies the same rules to a woman’s estate with “widower” substituted. Whether a business asset, which is excluded from marital property, then passes under the residue is a question for a New Brunswick lawyer; this guide does not answer it.

The federal layer is separate

Tax is not a New Brunswick rule, and it is a separate question from the three Acts above. The Canada Revenue Agency says that where the proceeds of a sale are received over a number of years, a reserve may be claimed, and that a nine-year reserve period is provided for certain transfers to a child, including qualified small business corporation shares, so the total capital gain is included in income over 10 years. Conditions apply, and they are set out on the CRA’s page. If the plan is to sell to an outside successor rather than to a child, the glossary entry on a succession buyer describes that route. The wider family angle is covered in how succession works for a family business in Canada.

Questions to take to a New Brunswick lawyer

• Are the shares or assets of my business a “business asset” as the Marital Property Act defines it, given how they are held and used?
• If I die without a will, how would section 22 of the Devolution of Estates Act apply to a business asset that is outside marital property?
• Who will know the four-month date under section 4(2), and who is responsible for it after my death?
• Is my will in writing and signed in a way that meets sections 3 to 6 of the Wills Act?
• Does any transfer to a child need tax advice before the will is settled?