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Common-law vs. marriage

In the complex world of romance and relationships, there can be some typical misunderstandings when it comes to the rights of common-law couples versus married couples.

While common-law relationships are treated the same as married ones under the Income Tax Act, there are key differences when it comes to the emotional hot points, such as property and finances.

Property rights
Richard T. Bennett, a barrister and solicitor in Mississauga, Ont., with three decades of experience and 3,000 divorce cases, sees "all kinds of misconceptions out there."

The major difference falls under statutory rights and in Ontario this is governed by the Family Law Act. It's important to note that all property law is under provincial jurisdiction and may vary according to province.

We'll start with the rights of married couples: starting the day you get that marriage certificate, unless you have a prenuptial agreement or a marriage contract, you are governed by the Family Law Act and you obtain rights pertaining to that Act.

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In a nutshell, that marriage certificate means that, with certain exceptions, you get property rights. You and your spouse are entitled to share equally the increase in the net worth of each party between the date of marriage and the date of separation.

Property rights differ in common-law situations, depending on the province. "In Ontario, there is no statute that gives common-law spouses any interest in the property of the other," says Bennett. "That is a huge misconception, because people believe that if you're together for a year, three years, whatever, you get property rights, and that is not true."

"The huge difference," is that married couples have a "statutory claim based on the Family Law Act," whereas common-law couples do not, adds Bennett. Common-law couples may have a trust claim, which is either based on the "resulting trust," a promise to share in assets owned, or a "constructive trust," meaning that you contributed to the assets and therefore you should get something for your contribution.

Get a co-habitation agreement
Based on Bennett's experience, when it comes to property (usually a house), it is usually owned by one person or the other. The couple may live together for years, sharing expenses like the mortgage, taxes and utilities, and the non-property owner assumes they have some property rights. "They assume that they have a right, but they don't," says Bennett.

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-- Posted August 31, 2012
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