On January 1st, 2020, the law on how property is divided for common-law couples will undergo significant changes. Many common-law couples will suddenly have the same property rights and obligations as spouses who are married. This has implications for people currently living in a common law relationship.
The old law
Under current legislation and case law, the division of property differ greatly depending on whether a couple is married, or not. The division of property for married spouses is primarily outlined in the Matrimonial Property Act, which provides a clear-cut formula for matrimonial property to be divided. Under this formula, married spouses can generally seek to have a property assets divided without proving their entitlement based on contribution.
The Matrimonial Property Act formula is currently inapplicable to common law relationships, which results in a great deal of confusion and uncertainty. In order to assert entitlement, common law spouses must commence a court action under the legal principals of constructive trust, or unjust enrichment. This requires evidence of contribution or entitlement to a particular asset. Proving this in court often makes finding legal solutions to property division problems more difficult, longer, more unpredictable, and ultimately more expensive.
The new Family Property Act
On January 1, 2020, the Family Property Act will come into effect, and the formula for dividing the property of married spouses will also apply to common law spouses that fit the definition of an Adult Interdependent Partner. An Adult Interdependent Partner is defined as, two people who have:
- Lived together in a relationship of interdependence for at least three years;
- Lived together in a relationship of interdependence for less than three years and have a child together; or
- Have entered into an Adult Interdependent Partner Agreement
If a relationship does not meet one of these three conditions, it is not an Adult Interdependent Relationship, and the changes to the law will not apply to it.
The general principles that will apply to Adult Interdependent Partners will include:
- Property acquired after the relationship began will be divided between the parties;
- Property acquired prior to entering the relationship will be generally exempted from division;
- Gifts and inheritances will generally be exempted from division;
- Any increase in value of exempted assets will be divisible property; and
- Previous Matrimonial Property Act rules relating to division any possession of the matrimonial home, will also apply to Adult Interdependent Partners.
Married and common-law spouses may choose to substantially opt-out of the changes to the law with an agreement which meets specific requirements, including receiving independent legal advice.
For more information outside of this short summary, we encourage you to contact the lawyers at Stillman LLP to ensure you are property prepared for this large change to this complex area of law.
By Nick Kunysz
Note: This article provides general commentary and is in no way intended to replace the need to consult with a legal professional concerning the specific circumstances of your situation. This article should not be construed or relied upon as legal advice.
