D Smith: Differences between common-law relationships and marriage

When two people enter into a relationship as a couple, responsibilities change.

When two people enter into a relationship as a couple, responsibilities change.

A couple should understand their obligations to each other in a common-law relationship, or when considering a legal marriage.

Common-law marriage is two people living together in a marriage-type relationship without being officially married.

In law, a common-law marriage is called a common-law relationship.  They are known as partners, not spouses.

The definition of law and the regulation of a common-law relationship fall under the provincial jurisdiction, provincial law and the provincial family law acts, and their equivalents apply to children of common-law spouses and the child-support obligations.

Provincial law also dictates spousal-support provisions for common-law partners.

In B.C., there is a common-law relationship when there are at least two years of uninterrupted cohabitation.

Once a common-law relationship is established, it imposes legal requirements on both partners, as specified by the province in which they live.

There are many similarities between a common-law relationship and marriage.

1. The ability to designate a partner or spouse as beneficiary on insurance policies and many government programs.

2. Child support and custody of children must be resolved when a relationship dissolves.

3. Ability to claim spousal benefits when filing tax returns and listing a partner’s name on a T-1 income tax return. This allows spousal RRSP contributions, splitting pension income and rolling over assets in registered plans when one partner dies.

4. Division of property falls under the province where you reside. If both partners are contributing towards a property, it should be jointly owned to protect the interest of each contributor.

The provision of the Family Law Act of the province in which the couple resides will apply to ensure equalization of all property occurs when the marriage ends, unless a pre-nuptial agreement prevents such equalization.

The property that is acquired is best defined as everything acquired by both spouses during the time of their co-habitation.

It is the net value of this property that will be divided upon the breakdown of a relationship.

A cohabitation agreement provides financial protection to common-law partners that otherwise does not exist; common-law partners do not have the same rights or obligations as married spouses.

A cohabitation agreement is a form of a domestic contract. It performs many of the same functions as a marriage contract.

A couple with a cohabitation agreement should review this agreement as it can become a marriage contract (commonly referred to as a pre-nup), should they proceed to marriage.

The cohabitation agreement should state it terminates upon the marriage of the partners.

This gives the couple the opportunity to redraft an agreement upon marriage.

No person is required to make a will by law.

When a will exists, your assets are distributed according to your wishes.

A will should be reviewed regularly, particularly if circumstances change, such as entering into a common law relationship, getting married, having children or getting divorced.

If a will exists prior to marriage, it will be rendered null and void by the marriage.

In a common-law relationship, romance may come first, but taxation, division of property, parenting children, and debt are all part of the package.

Shared needs and responsibilities encompass a couple’s financial life together.

Doreen Smith is a Certified Financial Planner with Capri Wealth Management Inc.




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