Kara Sears
The time it takes to become a common-law couple varies depending on the region. In Nova Scotia, the usual answer is two years, as defined in the Maintenance and Custody Act. However, in New Brunswick and Alberta, the answer is typically three years. In Manitoba, common-law couples can choose to register their relationships, and property laws will apply immediately, just as they do for married couples. While common-law couples may gain certain rights, such as spousal support and property division, they do not have the same rights as married couples in terms of property division upon separation. To protect assets, it is recommended to sign a cohabitation agreement.
| Characteristics | Values |
|---|---|
| Time | In Nova Scotia, the required time is two years. In New Brunswick, the required time is three years. In Alberta, the required time is three years, or less if the couple has a child together. In Canada, the required time is two years, or less if the couple has a child together. |
| Relationship | The relationship must be "marriage-like", i.e. it must resemble a married couple's relationship. Indicators include commitment to one another, sleeping in the same bed, having sexual relations, sharing meals and household duties, providing financial support or combining finances, and presenting yourselves as a couple to others. |
| Registration | In Manitoba, common-law couples may choose to register their relationship at the Vital Statistics Agency. Registration is voluntary, but if a couple does not register, Manitoba's property laws will apply once they have lived together for a certain period of time. |
| Property rights | Common-law couples do not have the same property rights as married couples. There is no presumption of equal division of property upon separation. |
| Spousal support | In New Brunswick, a couple must be in a common-law relationship for three years in order to make a claim for spousal support, unless they have children together, in which case there is no minimum timeframe. In Alberta, common-law partners are entitled to spousal support. |
| Inheritance | In Alberta, common-law partners are entitled to an inheritance. |
| Tax status | In Canada, the CRA considers a couple to be common-law after one year for tax purposes. |
| Insurance | A couple may be considered common-law for insurance purposes, depending on the wording in the insurance policy. |
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What You'll Learn
Common-law rights and responsibilities
Common-law marriage is a term often used to describe various types of cohabiting couple relationships, such as cohabitation or other legally formalized relationships. Despite the colloquial use of the term, these relationships are not legally recognised as marriages, but may be considered a "domestic partnership", "conjugal union", or "civil union".
In Canada, for example, informal cohabitation relationships are recognised, creating certain legal rights and obligations. While not legally considered married, these couples may be defined as "unmarried spouses" and treated the same as married spouses in certain contexts, such as taxes and financial claims.
In the UK, a 2008 poll showed that 51% of respondents incorrectly believed that cohabitants had the same rights as married couples. In Scotland, common-law marriage does not exist, although there was a form of irregular marriage called 'marriage by cohabitation with habit and repute', which was abolished in 2006.
Common-law marriage is a marriage that takes legal effect without the need for a marriage license or ceremony. While there is no specified time frame for a common-law marriage to take effect, it needs to be "significant". This means that a "live-in relationship" or casual relationship does not qualify as a common-law marriage.
Common law, as a legal system, is a body of unwritten laws based on legal precedents established by the courts. It is practised in countries such as Australia, Canada, the United Kingdom, and the United States, often as a dual system alongside civil law. Common law emphasises precedent while allowing some freedom for interpretation, which is particularly valuable as technology evolves and new situations arise that were not previously contemplated by the legislature.
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Common-law and property
In the United States, there are two different systems for classifying marital property: the common-law property system and the community property system. The former is the dominant property system and has been adopted by 41 states.
The common-law property system is based on the theory that each spouse is a separate individual with distinct legal and property rights. Thus, any property acquired by a married person during their marriage is considered their separate property unless they agree with their spouse to hold the property jointly. Common-law property rules can apply to both tangible assets, such as cars, real estate, and fine art, and intangible assets, like patents and trademarks.
In contrast, the community property system treats assets acquired during a marriage as jointly owned by both partners. This system is analogous to a partnership, where each spouse contributes labour (and sometimes capital) for the community's benefit and shares equally in the profits and income earned. In community property states, assets acquired in a common-law state are considered separate property, and vice versa. However, some community property states, like California, have a quasi-community property system, which converts property acquired in a common-law state into community property.
The distinction between common law and community property systems is important in divorce proceedings, wealth management, and estate planning. In common-law property states, open communication and negotiation between spouses are often required to reach a fair settlement during a divorce. Additionally, wealth managers may need to determine the rightful ownership of assets in either common or community property situations when managing high-net-worth individuals' wealth.
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Common-law and taxes
In Canada, common-law relationships have seen a significant increase over the past four decades, with nearly a quarter of couples now living as common-law partners. This shift has brought about important considerations regarding tax filings and benefits.
Definition of Common-Law Partnership
According to the federal Income Tax Act, a couple is considered common-law when they have lived together for 12 consecutive months or more. Alternatively, if the couple has a child together, they are immediately considered common-law, regardless of their cohabitation duration. It is important to note that temporary separations of less than 90 days within the 12-month period do not affect the common-law status.
Tax Implications
The Canada Revenue Agency (CRA) treats common-law couples the same as married couples for tax purposes. This means that common-law partners must each file their own tax returns and disclose their relationship status, along with their partner's information. The CRA combines the income of both partners to determine eligibility for certain tax credits and benefits, which can have both advantages and disadvantages.
Advantages
Common-law partners can access certain tax benefits, credits, and deductions due to their relationship status. They can claim the spousal amount tax credit if one partner financially supports the other, and they may be able to transfer unused tax credits to reduce their household tax rate. Additionally, they can combine receipts for medical expenses and charitable donations to maximize credits and pay less tax.
Disadvantages
One notable disadvantage is the potential loss of certain tax credits that were available when filing as a single person. As the CRA combines the family income, eligibility for benefits such as the GST/HST credit, the Canada Child Benefit, and the eligible dependant credit may be impacted. Consequently, the benefit amounts may decrease or be lost entirely.
While common-law partnerships offer certain tax advantages, it is crucial to carefully consider the potential disadvantages and their impact on overall tax obligations. It is important to stay compliant with the CRA by promptly updating any changes in marital status and accurately reporting tax filings to avoid penalties and interest on unpaid taxes.
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Common-law and insurance
Common-law employees differ from independent contractors in that contractors have more control over their work. Common-law employees have a more structured work schedule, and the business owner has more control over how their work is executed. This distinction is important for health insurance purposes.
According to the Internal Revenue Service (IRS), if a business owner can control the work performed and how it is done, then the worker may be classified as a common-law employee. The term "common-law employee" is used by some insurance companies to refer to individuals who are not independent contractors but also may not fit the traditional definition of an employee.
In the context of insurance law, common law refers to the substantive law of insurance developed by judges, which has largely remained unchanged, especially in commercial, non-consumer business contexts. Common law jurisdictions in former members of the British Empire, including the United States, Canada, India, South Africa, and Australia, ultimately originate with the law of England and Wales. These jurisdictions are characterized by judge-made law and the principle of stare decisis, which means courts are bound by the previous decisions of higher courts.
At common law, a commercial insurance contract is defined as a transfer of risk freely negotiated between counterparties of similar bargaining power. The underwriter drafts the policy terms, while the insured knows the precise risk proposed to be insured. Most legal systems worldwide apply common-law principles to commercial insurance disputes, treating the insurer and the insured as equal partners in sharing the economic burden of risk.
In the context of health insurance, common-law employees are typically eligible for different insurance plans than independent contractors. For small business health insurance plans, there is usually a requirement to have at least one common-law employee working full-time (at least 30 hours per week). This employee can often be enrolled in a group plan. It is important to note that the business owner and their spouse are typically not considered common-law employees and do not qualify for group plans.
Additionally, in the context of family medical plans, common-law spouses and their children may be eligible for insurance coverage as dependents. This recognition varies by state and jurisdiction, with some states, like New York, recognizing common-law marriages contracted in other states that allow them.
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Common-law and wills
In the UK, common-law marriage is not recognised by English law. It is a common misconception that after a certain period of cohabitation (often believed to be around five years), an unmarried couple will gain the same legal rights as a married couple. This is not the case, and if one partner dies without leaving a will, the surviving partner will not automatically inherit their estate. In such cases, the deceased has died intestate, meaning that their property will be distributed according to intestacy laws, which favour the deceased's next of kin, usually their children, parents, or siblings.
Unmarried partners can bring a legal claim against the estate for adequate financial provision, but this can be expensive and stressful. To avoid this, it is recommended that unmarried couples write a will naming their partner as a beneficiary. This ensures that their estate is distributed according to their wishes.
In Canada, common-law relationships are legally recognised and influence various aspects of legal practice, including wills and estate planning. Common-law principles help to interpret and fill in gaps left by legislation, particularly in provinces like Ontario, where the Succession Law Reform Act (SLRA) governs wills and estates. One key principle of common law in wills is testamentary capacity, which requires that an individual has the mental capacity to understand the consequences of their actions when making a will. Another important aspect is the doctrine of undue influence, which addresses situations where a person in a position of power or trust abuses that position to exert influence over the testator, resulting in a will that does not reflect their true wishes. Common law also provides guidance on interpreting wills, determining the presumed intention of the testator, and who can challenge a will.
In summary, while common-law marriage is not recognised in the UK, it is an important part of the legal system in Canada, where it plays a significant role in interpreting and shaping legislation related to wills and estates. For unmarried couples in the UK, it is essential to create a will to ensure that their wishes are carried out, whereas in Canada, common-law relationships provide some legal protection in the absence of a will.
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Frequently asked questions
In Nova Scotia, a couple is generally considered common-law after living together for two years in a marriage-like relationship. However, the required length of time can vary depending on the specific context, such as tax purposes or insurance claims.
In New Brunswick, the general rule is that a couple needs to live together in a marriage-like relationship for three years to be considered common-law.
In Alberta, there are a few ways to qualify as common-law or Adult Interdependent Partners: living together in a relationship of interdependence for at least three years, living together with some permanence and having a child together, or entering into an Adult Interdependent Partner agreement.
No, common-law partners do not automatically have the same rights as married couples. Common-law relationships are generally recognized for certain purposes, such as spousal support and property division, but the specific rights and requirements vary depending on the province.
