Living common-law in British Columbia: What you need to know
Although there are similarities between the laws for common-law and married couples in British Columbia, there are significant differences you should know about – especially in the areas of tax planning, family law, and estate planning.
Living common-law in BC (Frequently Asked Questions)
- What exactly does being in a common-law relationship in BC mean?
In British Columbia, a common-law relationship is defined as living with your partner in a marriage-like situation for at least two years. The federal government defines it differently, classifying you as common law after one year for benefits like Old Age Security, immigration, and taxes. This status affects various aspects of your life, including property rights, spousal support, and estate planning. Knowing your status is crucial because it impacts how the law perceives your relationship, especially if it ends or a partner passes away.
- Can common-law partners claim a portion of their partner’s pension in British Columbia?
Yes, common-law partners in BC may be entitled to a portion of their separated partner’s pension, including CPP benefits. It's important to consult a family lawyer to understand specific rights.
- Are common-law partners in BC entitled to spousal and child support?
Yes, common-law partners who have lived together in a marriage-like relationship for at least two years may be entitled to spousal support. Additionally, a common-law partner may be required to provide child support for a partner’s dependent child, even if they are not the biological parent, especially if the relationship ends.
- What are the inheritance rights for common-law partners in British Columbia?
In BC, if a common-law partner dies without a will, the surviving partner is entitled to inherit as a spouse, provided they lived together in a marriage-like relationship for at least two years and did not terminate the relationship before death. If the deceased had both a spouse and a common-law partner, they share the estate’s spousal share, either by agreement or court decision.
- Three things to keep in mind for having a common-law partner
- Record the Date You Started Living Together: It's important to note when you began living together as common-law, as many rights and obligations depend on this timeline.
- Be Aware of Jurisdictional Differences: Your rights as a common-law couple can vary significantly if you move to a different province, territory, or country. Always consult a legal advisor in the new jurisdiction to ensure your plans remain valid.
- Manage Property Across Jurisdictions Carefully: If you own property in different jurisdictions, ensure you have a well-drafted will. Without a will, your property may be distributed according to the laws of the jurisdiction where the property is located, which could affect your common-law partner's inheritance rights.
Do you have any other questions? Visit our general FAQ page.
Are you living in a common-law relationship? Do you know what that means from a tax and legal perspective? Many individuals involved in these types of relationships do not understand what their rights may or may not be. The following is a brief synopsis of some of the more important personal planning issues you should consider. However, it is always important in these situations to confer with a lawyer in your jurisdiction to ensure that you receive advice that is relevant to your personal situation. All references in this article to common-law couples will include both opposite-sex and same-sex couples.
- If your relationship is defined as “common-law” under the federal Income Tax Act, there may be advantages and disadvantages, depending on your situation.
- It is provincial, not federal, law that dictates your rights regarding your property, pensions, spousal and child support, and your will and the right to inherit.
- Understanding your rights while you are living in a common-law relationship is important to your overall financial plan. You can address these topics with a CERTIFIED FINANCIAL PLANNER® professional and a lawyer.
Tax planning for common-law partners
If you meet the definition of “common-law partner” under the federal Income Tax Act, you will effectively be taxed in the same manner as a married spouse. The definition of “common-law partner” means a person who cohabits with another person in a conjugal relationship, for either:
- A period of 12 months; or
- A shorter period of time, but while raising a child together. (Simply having a child together is not sufficient to be considered to be living common-law – you must also be living in a conjugal relationship. Also, the child has to be the natural or adopted child of both partners; if not, then the step-parent must be providing support to the child).
If you meet either of the above two tests, you must indicate that you are living common-law on your tax return. If you have filed an incorrect tax return, you may be denied CPP or other pension survivor benefits, or alternatively, you may be reassessed for unpaid taxes, interest and penalties.
There are a number of advantages and disadvantages to being considered a couple under the Income Tax Act, depending upon your situation.
Some of the advantages include the ability to allocate certain types of pension income to a lower income-earning spouse, and the ability to transfer certain types of personal tax credits in order to ensure that none of them go unused.
However, some of the disadvantages include the loss of the eligible dependant credit, which one or both partners may be claiming if they are raising a child, as well as the potential loss of some social assistance benefits, as the income for both partners must be pooled for the purposes of determining eligibility for certain amounts, including the Guaranteed Income Supplement and the Allowance (offered under the Old Age Security program), the GST credit and the Canada Child Benefit. If both partners are earning an income, the ability to receive these amounts or claim these credits will decrease more quickly.
Family law issues with being common law
Many common-law couples assume that since they are treated the same as married couples under the Income Tax Act, they will be treated the same as married couples for all purposes. However, that is not the case. The ability to make certain family law claims against a former common-law partner is determined by provincial legislation, not the federal Income Tax Act.
FAMILY PROPERTY
In British Columbia, a common-law partner will be entitled to apply for division of family property where he or she lived with another person in a marriage-like relationship for a continuous period of at least two years, if they separated on or after March 18, 2013 (couples who separated prior to that date are not entitled to apply for a division of family property). Otherwise, common-law couples will only be required to divide their property if they have agreed to a division of property in a domestic contract, or if they can pursue an alternative legal remedy as discussed below.
PENSIONS
Depending upon the jurisdiction, common-law partners may be entitled to a division of their separated partner’s pension. Individuals in common-law relationships should speak to a family lawyer about what rights they may have to a former partner’s pension, including CPP benefits.
UNJUST ENRICHMENT
If you have not lived together for the required period of time or you have not signed an agreement which gives you any right to a division of family assets at the time of relationship breakdown, this does not mean that you will not be entitled to any of your partner’s property under any circumstance. You may be able to file a lawsuit arguing that there has been an “unjust enrichment” on your partner’s part, and therefore you should either be awarded damages, or a part of the property, using the argument that your partner is holding the property for you under what the courts refer to as the “constructive trust” doctrine. For example, you may be able to rely on this principle if you have contributed towards the mortgage payments for a home which is in your partner’s name. However, since litigation is a very uncertain process, relying on a future lawsuit is generally not advisable. Even if you do “win,” it will generally only be after a long and expensive legal process. If you want to protect your property, it is usually better to have a written agreement setting out your rights and responsibilities
JOINTLY-HELD PROPERTY
Common-law couples should also carefully consider how to hold title to their assets. Adding your common-law partner as a joint owner to an investment or property will generally make the property shareable upon separation, which may or may not be what you intended. In some cases, a couple may decide to take title to real property or financial investments in joint names simply to save probate fees at the time of death. However, probate fees in British Columbia are relatively small and generally should not be a major consideration in your financial plan. Understand that by adding your common-law partner as a joint owner to your assets, you could be making what might otherwise be a nonshareable asset, shareable.
SPOUSAL SUPPORT
In British Columbia, individuals who lived with another person in a marriage like relationship for a period of at least two years may be entitled to receive spousal support, although the amount ordered will vary depending upon the facts of the case. Speak to your lawyer if you feel you are entitled to apply for spousal support or would like to protect yourself from having to pay spousal support.
"Speak to your lawyer if you feel you are entitled to apply for spousal support, or would like to protect yourself from having to pay spousal support."
CHILD SUPPORT
Individuals who enter into a common-law relationship with a person who has a dependent child must be prepared for the possibility that they may be required to provide ongoing support to that child (even if they are not the biological or adoptive parents of the child), even if the relationship ends. Common-law partners must be prepared for this responsibility, as in some cases, the obligation can extend into the child’s adulthood.
COHABITATION AGREEMENTS
The above discussion illustrates the reasons why individuals in common-law relationships are well advised to enter into a cohabitation agreement with their partners to ensure that disputes are minimized in the event the relationship breaks down. However, you may not be able to contract out of all of these obligations, particularly child support, as a court is likely to overlook any contract which is not in the best interests of the child. Individuals should seek the advice of a licensed professional with experience in the area, and in all cases, each partner should receive independent legal advice.
Estate planning for common law partners
Your ability to make a claim against a deceased partner’s estate is also generally governed by provincial legislation. In British Columbia, partners who had lived in a marriage-like relationship with another person for a continuous period of at least two years have many of the same rights as married spouses. However, if prior to the deceased partner’s death, one or both of you had “terminated the relationship”, you would no longer be considered to be “spouses” and would no longer have the same rights as married spouses to make a claim against the estate. Here’s a good article on Common Law Partners Rights After Death in BC.
RIGHT TO INHERIT
If a common-law partner dies without a will, the surviving partner will be entitled to inherit in the same manner as a surviving spouse, if at any point they lived together in a marriage-like relationship for a continuous period of at least two years and they had not terminated the relationship prior to the time of death. In British Columbia, if you die without a will and you are survived by both a spouse and children, your surviving spouse will receive all the household furnishings plus a “preferential share” of the estate (which will be $150,000 if you are survived by children who are not also your spouse’s children or the first $300,000 where all the deceased’s descendants are also descendants of the spouse), along with half of the remainder. If the deceased had both a spouse and a common-law partner at the time of death, then they will share the spousal share of the estate either as they agree upon, or as determined by a court if they cannot agree. In certain cases, separated partners may not receive anything upon intestacy.
If a common-law partner dies with a will which does not make adequate provision for their surviving common-law partner, the survivor may be able to make a claim against the estate under B.C.’s wills variation legislation.
“Keeping a record of when you began to live common-law can help to avoid disputes.”
EFFECT ON PREVIOUS WILLS
Unmarried couples should also be aware that if you currently have a will, it will continue to be in effect and will not be revoked simply due to your common-law relationship, meaning that an estate could go to a former spouse, if they are still the person indicated as being entitled to the estate.
CPP SURVIVOR BENEFITS
A surviving common-law partner will be entitled to receive survivor benefits under the Canada Pension Plan to the same extent as a married spouse if they lived with the deceased in a conjugal relationship at the time of death, and had been living with the deceased in a conjugal relationship for a continuous period of at least one year.
EMPLOYER PENSION PLANS
In most jurisdictions a surviving common-law partner will also be entitled to receive a survivor pension from a deceased partner’s pension. However, the definition of “common-law partner” varies across the jurisdictions, and the terms of your pension may not be governed by the jurisdiction that you currently live in. You should speak to your pension administrator to confirm whether or not the survivor is entitled to receive survivor benefits at the time of death of the plan member.
Things to keep in mind for having a common law partner
MAKE A NOTE OF THE DATE WHEN YOU STARTED LIVING TOGETHER
It may be important to determine the date on which you began to live common-law, since many rights and obligations start once you have lived together for a specified time. Keeping a record of when you began to live common-law can help to avoid disputes.
MOVING TO ANOTHER JURISDICTION
You need to be aware that your rights as a common-law couple could change every time you move to a new province or territory, let alone to another country, so be sure to consult with an advisor in your new jurisdiction to ensure that the plan you currently have in place is still consistent with your goals, and the governing legislation of that jurisdiction
PROPERTY IN OTHER JURISDICTIONS
If you have property in more than one jurisdiction, it will be very important for you to have a properly drafted will. If a common-law partner dies without a will, then all of your personal property will be distributed according to the laws of the jurisdiction where you were domiciled when you died, and real property will generally be distributed according to the jurisdiction where the property is located. Therefore, if you have real property located outside of British Columbia, your common-law partner may or may not be entitled to receive it at the time of your death if you die without a will
Conclusion
Common-law relationships in British Columbia come with complex legal, financial, and tax implications that require careful consideration and planning. Whether you're dealing with property division, pension rights, estate planning, or tax obligations, the rules can vary significantly from those applying to married couples. Don't leave your financial future to chance – consult with a qualified financial advisor and legal professional who can help you navigate these complexities and create a comprehensive plan tailored to your unique situation. Contact our team today to ensure your rights and assets are properly protected as a common-law partner.
Investors Group Financial Services Inc.
Written and published by IG Wealth Management as a general source of information only. Edited and reviewed by Coby Blystone. Not intended as a solicitation to buy or sell specific investments, or to provide tax, legal or investment advice. Seek advice on your specific circumstances from an IG Wealth Management Consultant. Trademarks, including IG Private Wealth Management, are owned by IGM Financial Inc. and licensed to its subsidiary corporations.