‘Love and trust won’t cut it’: Couples need to clear up common-law confusion

Melissa Leong, The Financial Post


About a year ago, a conversation between Kristy Maurina and her good friend veered toward relationships.

“My boyfriend and I have been living together for six months, I’m going to owe him half of my stuff,” the friend said to Ms. Maurina.

That’s wrong, Ms. Maurina told her and she is in a position to know as a Toronto-based family law lawyer.

“She is not different from so many of the clients who come in and meet with me,” Maurina says. “The people coming into my office have all of these misconceptions. It’s always the same thing: a friend of a friend told me that I was entitled to this.”

I’ve also heard horror stories: a friend of a friend, for example, is facing legal bills in the tens of thousands to fight her ex-boyfriend who is suing her for spousal support and payments to her mortgage. In my own ignorance years ago, I thrust a rental agreement in my boyfriend’s face, thinking if he signed it that my condo would be protected if the relationship imploded.

Widespread confusion is understandable.

Having a do-it yourself, namby pamby approach is not going to get you where you need to go

The legislation is ever changing and varies from province to province. The Supreme Court ruled in January that Quebec does not have to give common-law spouses the same rights as married couples; meanwhile, beginning March 18, British Columbia will give common-law couples who have lived together for two years the same property rights as married folks.

In this climate of change, experts say, now is a good time to figure out what your rights are as a common-law spouse and to have the “talk” with your partner about money.

“There is just so much misunderstanding. There are so many people taking short cuts. Having a do-it yourself, namby pamby approach is not going to get you where you need to go,” Christine Van Cauwenberghe, assistant vice-president of tax and estate planning, at Investors Group says. “There are risks for the person who doesn’t have any assets and there are risks for the person who does. The lack of information and the lack of planning is what’s dangerous.”

It’s incumbent on women to also engage in the process. According to a recent TD poll, men remain more likely to manage investments and long-term financial planning; but a third of married Canadian women are out-earning their partners.

Whether you’re managing a posse of kids like Angelina Jolie and Brad Pitt, shacking up like Robert Pattinson and Kristen Stewart, or going the long haul like Goldie Hawn and Kurt Russell, love won’t protect you from financial hardship — and depending on where you live, neither will the law. And while common-law unions may outlast the average Hollywood relationship, they do have a higher break-up rate than marriages.

“It may be naive, but I refuse to live my life expecting the worst to happen,” says 37-year-old nursing student Charlynn Cox. The Cape Bretoner divides all of her assets and expenses with her common-law husband of 18 years; their daughters are seven and 12. Nova Scotia does not give common-law couples the right to an equal division of property.

“I love him and want to share my life with him, expecting him to cheat me of my share if we were to separate just doesn’t occur to me at all.”

While discussing money can be as off-putting to romance as cutting your toenails at the dining table, it is a necessary conversation as more Canadians forgo formal nuptials. Between 2006 and 2011, the rate of common-law climbed 13.9% in Canada, while marriages increased by only 3.1%, according to Statistics Canada. Quebec is home to the most common-law unions — more than a million live in common-law relationships — but spouses have no rights to what was accumulated during the relationship, the family home or alimony upon separation.

“B.C., Saskatchewan and Manitoba have legislation that does give common-law partners quite a lot of rights…Once you get east of the Manitoba border, there are very few rights at the time at separation,” Ms. Van Cauwenberghe says.

“The real growth in common-law couples is in older cohorts because you see a lot of people who were married, separated or divorced, widowed and they’re entering into a second relationship. They’re bringing in significant assets,” she says.

Do you want to keep everything separate? If you’re in a province that gives your spouse the right to half of your assets upon separation, you might consider putting something in writing to protect yourself.

“Have a cohabitation agreement. Don’t think that just because you’re shacking up that you’re going to be exempt from any repercussions if the relationship doesn’t work out. Two years passes so quickly and legal rights accrue,” said Pauline Duncan Bonneau, a family law lawyer based in Regina.

I must emphasize that love and trust won’t cut it

“You can only start over so many times in life. I’ve got clients who are hit three or four times with relationships that don’t work out. It’s the productive person who hooks up with a not-productive person and they lose assets every time they have to divide them.”

A once-soaring real estate market has inflated the value of many Canadian homes; that increase in value is sharable in some provinces, warns Winnipeg resident Susan L. Misner, co-founder of GoldenGirlFinance.com.

On the flip side, if you live in a jurisdiction where you don’t automatically get half, do you want to put your assets and investments in joint ownership?

“I’ve seen common law couples put assets in joint names. Particularly in Toronto, you just put your million dollar home in joint names. Now if you separate, it’s going to be split 50/50,” Ms. Van Cauwenberghe says. “They’ll say, ‘That’s not what I wanted. I just wanted him to get it at the time of death.’ Well, that’s what a will is for.”

In Ontario, the common-law relationship will not generate property rights and will not revoke a prior will, says wills and estate lawyer Barry Fish.

“I must emphasize that love and trust won’t cut it,” he says. “Here’s why. The husband has no will. The guy’s got three kids from his prior marriage. He has a heart attack — DOA at the hospital. What does the law say? She’s not married. The kids have full title to the house.

“The position of the common law spouse is like a ticking time bomb, if he does not do that will. The romantic element has to be accompanied by the practical element.”

Corina Newby and her partner, who are 32 and 33 respectively, consider themselves both romantic and practical. They have discussed their finances and have agreed upon savings strategies. They keep their investments and real estate assets separate.

“Trust and security are closely tied to finances,” said the Toronto-based media manager for Orderit.ca. “It’s less about planning for a separation, and more a matter of making decisions that bring the least amount of inconvenience down the road. If you have the option of keeping finances separate, it can make things easier, provided you are aware of your partner’s financial situation and you are both working towards a common goal. This common effort is what makes practical financial planning kind of romantic to me.”

9 frequently asked questions about common-law unions

1. What if I want the rights of a married couple but I don’t want the certificate or the whole wedding thing?
Some provinces allow you to register your coupledom as a “civil union” or a “domestic partnership.” In Nova Scotia, for example, you just fill out a form for $22.68 and get the same rights as married couples under the law. If the relationship goes to crap, a Statement of Termination costs $30.29. (How cold would that be? A Dear John letter accompanied by three tens and three dimes.)
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