BLOG | APRIL 20, 2020
It is common assumption that the rights of the legally married couples and those that reside as a common law are identical. The practice shows that people enter into long-term relationships without any clear understanding on how their rights and interests can be affected in case the relationship breaks down.
The most important misconception that is prevalent among the public is that the property rights for the common law spouses are the same as for the married couples. In fact, in Ontario common law spouses do not have automatic property rights. The example of it is the following, if a property where the couple is residing (matrimonial home) is owned by one of the spouses that are legally married, in case of a divorce the value of their matrimonial home will be divided on 50/50 basis and each spouse would receive an equal share. In contrast, in the analogues situation the common law spouse, whose name is not on the title of the property, would need to argue the monetary entitlement for the share in the matrimonial home by means of a trust claim.
Despite the length of the relationship it is often difficult to be fully successful in arguing trust claim. The concept of the trust claim is based on the idea that the spouse who is not listed on title has to prove that he or she made contributions towards the acquisition of the property either directly or indirectly. Also, if one of the common law spouses has contributed to the home throughout the relationship, he or she may have a claim for some division of the equity in the home. However, this is not an inexpensive court process, which might take years until you get a court judgment.
A simple way to avoid this issue is by preparing a cohabitation agreement, which would outline how the family assets should be divided in case of a break down in the relationship. Lots of couples find the idea of signing a cohabitation agreement uncomfortable for a number of reasons. However, in order to make a firm decision as to whether you are ready to enter into a long term relationship without any agreement that can protect your financial interests, it is highly important at least to get a legal consultation on how your rights might be affected and what liabilities the relationship might entail. Often people assume that they would not be required to pay spousal or child support if they not legally married. This is another misconception, as the Ontario legislation provides for the identical support obligations for the married and common law spouses.
Therefore, we highly recommend for every person who is looking to enter into a long-term relationship to obtain a legal advice and to consider an option of preparing a cohabitation agreement that might alleviate serious financial disputes that might result from separation or divorce.
Ramachandran Law © 2019
All Rights Reserved
Ramachandran Law © 2019. All Rights Reserved