Estate Planning For Common Law Spouses

If you are in a common-law relationship, it is important to review your estate plans and prepare your estate planning documents so that you can control how your assets will be distributed upon your death. This is especially true if you intend to include your common law spouse in your estate plans.

Section 29 of the Family Law Act (FLA) defines a common law spouse as two people who are not legally married but have cohabitated in a conjugal relationship for not less than three years, or have cohabitated for at least one year if they have a child together.

Without proper estate planning, common-law spouses can find themselves in difficult and disappointing circumstances when one of them dies. Whether you want to leave your common law partner with some or all of your estate, or you are recently separated and wish to exclude them from your estate plans, unless you clearly express your intentions in formal documents, such as a Will and/or a domestic contract (like a cohabitation agreement or a separation agreement), the end result may be very different than anticipated.

PROTECTING A COMMON-LAW PARTNER THROUGH ESTATE PLANNING

1. Having a Will If a common law spouse wants to protect their partner and ensure they receive a portion of their estate when they die, it is important to have a Will. Unlike legally married couples, common-law spouses do not have protected rights to property upon death. When someone dies without a Will, the Succession Law Reform Act ("SLRA") provides the distribution scheme for an estate, which includes the deceased's married spouse and closest blood relatives, in a specific order. Common law spouses are not included in this list. This means that if someone dies without a Will, their common law spouse could receive nothing from the estate. See here our article here for more information on the importance of making a Will.
2. Asset Ownership Another way to protect a common law spouse is to review how assets are owned and, where appropriate, make them joint. If common law spouses own assets jointly with a right of survivorship, then the surviving spouse will generally receive those assets upon the first spouse's death. Some assets, like registered investments or life insurance policies, can designate a beneficiary directly through the investment/policy and doing so allows the funds to flow directly to the beneficiary upon death outside of the estate.
3. Domestic Contracts

Domestic contracts can also play an important role in estate planning.

Domestic contracts are legally binding agreements between two individuals in a family relationship that define specific rights and responsibilities. These contracts often address finances and property ownership in the event of separation and in the event of one spouse's death.

Two kinds of domestic contracts that are most common in estate planning for common law spouses are Cohabitation Agreements and Separation Agreements.

A Cohabitation Agreement is a legal contract between two people living together, or plan to live together. They can be drafted to reflect a couple's intention to get married as well. Cohabitation Agreements can outline the rights and obligations of each person with respect to their assets (and other issues, of course) in the event of a separation or death. A couple can have different plans depending on whether they separate or in the event of a death.

A Separation Agreement is a legal contract between two people separating from one another. A Separation Agreement does not revoke a Will, but it can change financial obligations and specify the terms of property division. Additionally, a Separation Agreement can help safeguard the rights of one partner by including clauses that ensure the ex-partner waives any potential claims against the estate.

It is important to note that although these types of domestic contracts are very helpful, spouses should still ensure they structure the ownership of their assets correctly, and draft their Wills correctly, so that the entire estate plan, including the domestic contract, can take effect without any issues for the estate and surviving spouse.

POTENTIAL CLAIMS AVAILABLE TO COMMON LAW SPOUSES

If a common law partner dies without a Will, or with a Will but does not provide a fair share of the estate to the common law spouse, there are claims that can be made by the surviving spouse to recover their interest in the deceased partner's estate. The following are two common claims a common law spouse could make to recover parts of the estate, although they are both very fact specific and will depend on the individuals and the estates.

1. Dependant Support Claim If the surviving spouse was financially dependent on the deceased spouse, they may make a dependant support claim against the estate. Support claims are separate from inheritance claims and are a claim that must be made by way of a court application. To successfully make a dependence claim against an estate, the claimant must first be considered a "dependant." The definition of a "dependant" in Section 57 of the SLRA includes a common law spouse to whom the deceased was providing support or was under a legal obligation to provide support immediately before his or her death. If there was a Will, the Will must also be determined to not to have made adequate provision for the dependant's support. Section 62 of the SLRA also provides a list of factors that the Court will consider when determining the amount and duration of dependant support for a spouse. This list includes factors like:
   1. The dependant's current and future assets and means;
   2. The dependant's needs and accustomed standard of living;
   3. The dependant's capacity to contribute to their own support and the measures available for the dependant to become able to provide for their own support;
   4. The dependant's age and physical and mental health;
   5. The proximity and duration of the dependant spouse's relationship with the deceased and how long they cohabitated;
   6. The contributions made by the dependant spouse to the deceased's welfare and property;
   7. Any contribution by the dependant to the realization of the deceased spouse's career potential;
   8. Whether the dependant spouse took on the responsibility of caring for children, housekeeping or other domestic service and any effect this had on the spouse's earnings and career development;

   A common law spouse will not be successful with a dependant support claim just by virtue of them being a spouse. They will have a positive obligation to show the Court that they were financially dependant on the deceased immediately before the deceased's death and that they would not receive adequate support from the Estate.

2. Constructive Trust

A constructive trust is an equitable remedy used when there has been an unjust enrichment. Three elements are required. There must an enrichment, a corresponding deprivation, and a lack of juristic reason for the enrichment.

For instance, if one spouse has contributed to the property (i.e. maintenance, labour, paying for the mortgage, property taxes, etc.) with the understanding that it was something they would continue to receive a benefit from, but the deceased spouse has left the property to another beneficiary as a part of their estate, the surviving spouse could bring a claim for unjust enrichment as the estate has been enriched by the asset the surviving spouse deprived of the asset, and if there is no legal justification for that having happened.

Like the dependant support claim, a claim for a constructive trust requires a court application by the surviving spouse against the estate.

CONCLUSION

It's important to consult with a legal professional who specializes in estate law to determine your rights and the steps you can take, if any, to make claim against an estate. Furthermore, it is important to seek legal advice and proper estate planning so that loved ones, especially common law spouses, don't end up disappointed and on the sidelines of your estate. Engaging in these conversations and planning ahead is vital step to ensure that your wishes are properly addressed and documented. Our team of legal professionals specializing in Wills and Estates at SorbaraLAW can provide guidance and support throughout the estate planning and administration process, or any litigation that may involve an estate.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.