Common-Law relationships are on the rise, as more couples cohabitate without marrying. Many people in these relationships aren’t aware and do not understand how their rights can be impacted in a variety of legal situations. Various jurisdictions and laws treat common-law relationships differently, so it is important to understand how you may be impacted.
Under the federal Income Tax Act, common-law spouses are treated in the same manner as married spouses. Certain types of pension income and a few tax credits can be transferred between spouses to minimize taxes. However, spousal income is pooled together to determine eligibility for the Guaranteed Income Supplement, the GST credit and the Canada Child Tax Credit, potentially decreasing the overall benefit for the couple.
There are some areas of the law where common-law relationships are not recognized. Under Ontario family law legislation, common-law partners are not entitled to a division of property in the event of a relationship breakdown, unless addressed in a cohabitation agreement or the property is jointly owned. Under estate laws in certain provinces, including Ontario, if your partner dies without a will, you are treated as a complete stranger.
If you are living common-law, it is important to understand precisely how your relationship is regarded under the various areas of the law and how you are protected. While many of these limitations can be mitigated with legal documents (wills, powers of attorney, cohabitation agreements, etc.), it is always best to consult a lawyer to understand your situation fully.