Statistics Canada recently reported that Canada leads the G7 for couples living as common-law spouses. Naturally, this has major implications for estate law. Unlike legally married couples, common-law partners may lack the same automatic rights when it comes to inheritance and property division. In this new reality, understanding the nuances of estate planning becomes paramount. This blog will unravel the intricacies of estate planning legislation to unravel a common-law spouse’s legal entitlements.
Several pieces of legislation govern the rights of common-law spouses in estate law, the details of which are set out below.
The Family Law Act in Ontario includes various relevant provisions, but most importantly, the Family Law Act defines “spouse” as a couple that “(a) are married to each other, or (b) have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right.” It is clear that the Family Law Act intends that any rights provided to spouses under the legislation are only intended for married individuals.
For example, in the event of a partner’s death, the surviving spouse can elect to (1) take the surviving spouse’s entitlement under the will or (2) receive an equalization payment as contemplated in the Family Law Act. An equalization payment is a financial adjustment made during the division of property upon the dissolution of a marriage or the spouse’s death. These payments are designed to ensure that each spouse leaves the marriage with an equal share of the increase in their net worth that occurred during the marriage. The common-law spouse does not have such equalization rights.
This may result in unequal property distribution, child support inequality, and financial uncertainty. Most importantly, this places greater importance on the provisions of the will of the common-law couple.
The Succession Law Reform Act adopts the definition from the above legislation (except section 57); a “spouse” is interpreted only to include married couples. As such, the entitlements of common-law spouses are further reduced.
Under this legislation, when an individual dies intestate (meaning they have passed away without having made a valid will or without leaving clear instructions regarding how their assets and estate should be distributed after their death), the surviving spouse is entitled to the “preferential” and “distributive” share:
- Preferential Share: Under the legislation, the surviving spouse is entitled to inherit $350,000, whether there was a will or not.
- Distributive Share: After the preferential share is allocated, the remaining estate is distributed among the surviving spouse and other eligible family members based on specific rules outlined in the SLRA.
Since a common-law spouse is not included in the definition, it would mean they may not have a claim to their partner’s estate if they died without a will. Having drafted a valid will that ensures a common-law spouse’s share is protected is extremely important.
However, in section 57, the Succession Law Reform Act does contemplate that spouses include “either of two persons who are not married to each other and have cohabited.” This section provides that a common-law spouse may make a claim for support of a defendant, even where they were not married to the deceased partner. Therefore, even if a common-law spouse may not be entitled to the deceased’s estate, they may still be entitled to support for dependents, regardless of never having been married.
Unlike the legislation above, the Estates Act grants common-law spouses some rights. Specifically, section 29 allows for a “person with whom the deceased was living in a conjugal relationship outside marriage immediately before the death” to have presumptive priority to become the estate trustee where there is an intestacy. If granted by the court, this would allow the common-law spouse to control estate administration, ensure fair distribution, and ultimately honour their loved one’s wishes.
Whether or not Ontario’s laws grant a common-law spouse entitlement to their partner’s estate, the common law has developed some protections in this regard. The doctrines of unjust enrichment, constructive trust, and quantum meruit may provide the relief sought.
As demonstrated above, Ontario’s legislation can be unfavourable to common-law spouses in the estate context. Many of the same rights enjoyed by a married spouse are not available, particularly when it comes to intestacy. In order to protect their interests, it is with utmost importance that common-law spouses ensure that a will is validly drafted that guarantees a fair distribution of assets to their surviving partner.
The importance of a well-thought-out estate plan cannot be overstated. Without a valid will in place, a person has no control over the distribution of their assets after their death. At Bader Law, our wills & estates lawyers has considerable experience providing insight and legal guidance on the estate planning process and working with estate trustees and beneficiaries throughout the entire probate process. We work with clients throughout Mississauga and the Greater Toronto Area on simple and highly complex estate planning and probate matters. We also advise on a range of business matters, including start-up and reorganization, corporate transactions, shareholders agreements and more. Contact us online or at (289) 652-9092 to learn how we can help you.