People are choosing to live together in common law relationships in ever greater numbers. Although these relationships very much resemble legal marriages in day-to-day life, the law does not treat them quite the same way. When one spouse dies, the surviving partner can be left in a vulnerable position if proper planning is not in place.
There is a common misconception that common law couples have the same rights as married couples. Unfortunately, this often means that individuals in common law relationships fail to plan properly for what will happen when one spouse passes away. In reality, there are important distinctions between the rights of married spouses in Ontario and the rights of common law spouses.
One key distinction is that under Ontario's Family Law Act, on the death of a married spouse, the survivor may elect for an equalization of net family property. Essentially, he or she can choose to divide property in a divorce-like fashion rather than to accept what he or she might be entitled to under the deceased's will or what he or she might receive under the laws of intestacy. This right is not available to surviving common law spouses.
Another distinction comes into play when there is no will in place, or when there are assets that are not covered under a will. These assets would normally be distributed under the intestacy rules in the Succession Law Reform Act. While married spouses are entitled to inherit on an intestacy, common law spouses do not have this right. If there is no will, they may be left with nothing.
There are, however, a number of claims available to common law spouses. A spouse, married or not, may claim support as a dependant of the deceased under Part V of the Succession Law Reform Act. A number of equitable claims are available to common law spouses as well, including constructive or resulting trust claims, claims for unjust enrichment, and claims on the basis of quantum meruit.
An ounce of prevention is worth a pound of cure, as they say. Careful planning can spare a grieving partner the difficulty, expense and emotional strain of litigation.
A domestic contract or cohabitation agreement in writing can be a useful tool for delineating the rights of each spouse towards the other's estate. These agreements can be entered into before cohabitation begins, or at any time during the relationship. The agreement can be updated as the circumstances of the parties evolve and the relationship grows and changes.
Other estate planning tools play a critical role in protecting common law partners. A will is one way to address the needs of an unmarried spouse. Trust arrangements can be another invaluable tool for setting aside assets for the benefit of a spouse. A common law spouse can be designated as a beneficiary of a life insurance policy as well. Whatever arrangements are made, an estate plan should be revisited every few years or upon a significant change in circumstances like the birth of a child.
The key to avoiding future litigation is good communication. People in common law relationships should be open and transparent with one another in discussing their estate plans. A lawyer should be consulted as well, to ensure that misconceptions of the law do not lead to unintended results. The parties should carefully document their intentions with respect to estate planning steps. This will be of some assistance to the survivor if disagreement or litigation arises after one spouse's death. Communication may also help other family members feel included in the process.
Despite the similarities between common law and married couples, it is not safe to assume that they are the same in the eyes of the law. The process of going through a legal marriage can have a substantial impact on the entitlement of the surviving spouse to the other's estate. Couples should take the time to think these issues through and to talk about them. A careful and current estate plan can prevent the unintended heartbreak of a surviving spouse who is inadequately protected.
*Ian Hull and Suzana Popovic-Montag are partners at Hull & Hull LLP, an innovative law firm that practices exclusively in estate, trust and capacity litigation. To watch more Hull & Hull TV episodes, please visit our Hull & Hull TV page.