As published in “The Lawyers Weekly” magazine, April 6 2012
On the subject of common law couples rights wills and estates, and on opposite sides of the country, there are different views on unmarried partners.
For common law couples in most provinces, the reality is they aren’t married in the eyes of the law when it comes to Wills and Estates. For common law couples in a few provinces, that reality is changing.
Nova Scotia exemplifies the status quo.
“Legally married couples have statutory entitlements to property. Common law couples do not. They simply don’t,” said Janet Stevenson, a partner with Beveridge MacPherson & Buckle in Halifax, told The Lawyers Weekly in an interview.
In a session Stevenson co-presented to the Nova Scotia Branch of the Canadian Bar Association late last year, she said: “The division of an Estate on intestacy creates significant difficulties for common-law partners who are not recognized as spouses for the purposes of the Intestate Succession Act. Often absent careful planning, a common law partner is left with no legal rights in their partner’s estate upon death.
“While relying on intestacy provisions to determine the division of an estate is inadvisable for any person, for common-law partners the implications of such a division are ruthless.”
In British Columbia, the legal pendulum has swung in the other direction, under legislation that was passed last year and is to be implemented over the next two years.
“One of the key provisions is that persons in a marriage-like relationship who have resided for more than two years will be treated as married for the purposes of property,” said Lorne MacLean, founding partner of the MacLean Family Law in Vancouver. “This has huge implications for property division.”
Those implications take on greater significance in a province that has traditionally treated estate claims by common law spouses very generously under the law. In one case, the common law spouse was awarded 55 per cent of the estate after a six-year relationship, MacLean said. “That’s potentially more than you would get in a trust claim if the person was alive and you’re separated.”
He pointed to a common scenario that often occurs following the death of a common law partner: a dispute over the extent of the relationship. Did the individuals present to the outside world as a couple?
It is these nuanced elements that determine whether a couple was, in fact, legally a couple. “In general, common law relationships are very fact-specific, and when you’re arguing in front of a judge, it may be harder to demonstrate, “ Stevenson said.
Because a common law partner in Nova Scotia is not entitled to any share of the Estate, this often results in the Estate being divided among the deceased’s children, siblings or parents, to the exclusion of the common law partner. “As a result, a common-law partner who has contributed significantly to the property may be forced to pursue a claim of unjust enrichment in order to receive compensation for their contributions,” Stevenson said.
Prior to Kerr v Baranow, a common-intention resulting trust could be used in cases where the common law spouse could demonstrate a common intention to share the property,” she added.
“While this approach is no longer available, the restated test of joint family venture has been provided surviving common-law partners with some protection, but only in certain circumstances.”
Case will ‘send shock waves’
A new case out of BC demonstrates how common law couples under existing provincial law may be deprived of a claim on their partner’s Estate.
“The British Columbia Court of Appeal, in Mawdsley v. Meshen (2012 BCCA 91), held that the transfer of a substantial portion of Ms. Meshan’s wealth into an alter ego trust was not a fraudulent conveyance intended to defeat the claims of her common law spouse,” MacLean wrote in a recent blog.
“Additionally,” he said, “a spouse who does not have a claim during his or her spouse’s lifetime, and whose only claim arises on the death of the parent or spouse under the Wills Variation Act, is not a ‘creditor or other’ with standing to challenge a transfer by their spouse under the Fraudulent Conveyance Act.”
The case, MacLean said in an interview, “is going to send shock waves. It points out that if you have any inkling the relationship is going sideways, you should probably start an action right away.”
British Columbia has also changed its rules for division of property. So while common law couples will soon be entitled to that division as with married couples in the province, they will also be getting less. It’s no longer the value of the entire property that’s taken into account, it’s only the gain on the value of the property since the couple has been together, MacLean said.
