By Patti Ryan
Scarlett Magazine
February/March 2004 Issue
Sheila McNeely (not their real names) was not as shocked as you might expect when her common-law husband, Ernest, took away her bank and credit cards – the only ones she had – connected to their joint bank account.
Adrian Mastracci, investment counsel at
Vancouver based ‘fee-only’ KCM Wealth Management, says, "Despite the complexities, chances are if both members of a common-law couple brought the same capital to the relationship and acquired similar assets would likely be divided equally upon separation.”
“From now on I’ll give you a set amount each week for household expenses, and if you need more, you can ask me for it,” he told her, in a fit of anger.
McNeely is not elderly and helpless, and this is not a story from the 1950s. McNeely – a Gatineau, PQ mother of two – is an articulate university graduate in her thirties, and the year is 2004. But her common-law spouse makes all the money and, often in the heat of an argument, he likes to remind her of it.
Several times in recent months she has been sorely tempted to strap the children into their car seats, gather a few personal items, and leave him. The problem is: What would she live on? McNeely has been without a paying job since their first child was born four years ago and she has no idea what her rights are with regards to money.
What’s worse is that because she isn’t married, in the event of separation, her common-law husband would not be legally required to fork over half of everything.
Many women believe that living in a common-law relationship confers on them all the same financial rights and obligations as marriage. They believe that in the event of separation, they would automatically be entitled to half of everything – or they worry about being obliged to giver their partner half of everything.
However, this is a popular misconception, says Jane Berlin, a financial advisor with Thurlow and McFarlane Associates in Ottawa. While the laws for some issues – such as child support – are similar for both common-law relationships and marriages, each province has its own set of criteria for recognizing the division of property in common-law relationships, which are not usually the same as those that apply to marriages.
“People who have been living together don’t have any right to property that may have been acquired during the time of their relationship unless they’ve done something specific to make that happen, such as setting up a cohabitation agreement or a contract that defines ownership,” she says.
For instance, in McNeeley’s case, says Berlin, “If they were married, she would be entitled to half of the house. But since they’re not, she might have to work hard to prove her ownership or contributions to it in order to get half.”
For income tax purposes, couples across Canada are considered common-law if they’ve lived together for 12 continuous months or have a child together. But when it comes to matters like estate planning, child support and division of assets upon separation, legislation varies form province to province and is quite complex. For instance, British Columbia considers a couple to be common-law if they have lived together for two continuous years or have a child together; under Ontario family law, partners must generally live together for three years or have a child.
According to the Ontario government publication, Living Together: Common-law and Gay or Lesbian Relationships, Ontario common-law couples have “many, but not all” of the same rights and responsibilities as married couples. In contrast with married couples, says the guide, “There are some rights and responsibilities that people in common-law or same-sex relationships are never granted. Each benefit that they do receive is separately granted by a particular piece of legislation. Each obligation is imposed the same way.”
Adrian Mastracci, an investment counsel with KCM Wealth Management Inc. in Vancouver, says despite the complexities, chances are if both members of a common-law couple brought the same capital to the relationship and acquired similar assets would likely be divided equally upon separation. Things get stickier if one spouse has more of the assets – for instance if one has been working while the other stayed home with children, as in McNeely’s case.
“That situation is a lot more difficult,” and nothing is automatic, says Mastracci. “The courts will look at each case on its own merits.”
Be especially cautious when children – yours or someone else’s – are involved, he advises. “The courts will look after the best interests of the children, and that will usually supercede the best interests of either spouse,” he says. “All you have to do is become a step-parent and you may be on the hook.”
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