You might be familiar with the name Stieg Larsson. I haven't read any of his novels, but lots of people have; he has sold more than 27 million copies in 41 countries.
I'm as much of a fan of a good detective novel as anyone, but it wasn't Mr. Larsson's writing that caught my attention. It's his estate.
Mr. Larsson passed away in 2004 at the age of 50 from a sudden heart attack. He left behind his common-law spouse of 30 years, Eva Gabrielsson. Mr. Larsson's estate is still growing due to posthumous book sales and movie rights, and might be worth about 50 million dollars when all is said and done.
Of this, Ms. Gabrielsson is entitled to ... nothing at all.
Mr. Larsson died without a will, and under Swedish laws, his estate goes to his father and brother, and his common law spouse of 30 years has no status.
Swedish law is one thing, but this couldn't happen in Canada. Or could it?
Family law in Canada is a provincial matter, and the rules can change from one jurisdiction to the next. I'll be referring to BC law in this column.
In BC you are considered to be in a common law relationship if you have lived in a marriage-like relationship for at least two years. Under the Family Relations Act people who are spouses and/or parents have certain rights and responsibilities; child support, spousal support, and the right to be involved in the parenting of children. In BC, the laws are virtually identical for same-sex couples as they are for opposite sex couples.
But living together isn't being married. You don't have to be married to have a kid, buy property together, or have a life-long relationship. But you aren't married.
I heard a law professor tell a story about how each year she would ask her incoming students to make a list of reasons to get married. The answers would be fairly predictable; a statement of commitment to each other, tradition, keep the in-laws happy, etc. But one thing that the law students always missed is that people should get married to protect their property rights.
In a 2003 case the Supreme Court of Canada said that regardless of how similar the parties' relationship appeared to a married relationship, they had nevertheless made the choice not to become married, and the fact that they chose not to marry meant that they had also chosen not to have the benefits of legislation available only to married people.
So what are the differences between the legal rights of married couples, common law couples, and unmarried parents?
Married couples have rights and obligations when it comes to divorce, care of children, child support, spousal support, sharing family assets, trust claims to assets, government benefits, wills and estate rights, and pension rights.
Common law couples have some of these rights and obligations, but most notably they do not have rights when it comes to divorce and sharing family assets. They may or may not have rights to pensions depending on the circumstances.
Like common law spouses, parents that are neither married nor common law also have no rights under divorce or sharing family assets, but also lack for spousal support, government benefits, wills and estate rights and pension rights.
The biggest difference between how the law treats married couples versus common law couples is if the couple calls it quits and it is time to split up the stuff. The Family Relations Act entitles married spouses to an equal division of all family assets and property, regardless of who owns the asset. Generally speaking, this means that everything splits 50/50, but this can be adjusted if that split happened to be unfair.
In a common law relationship though, the law looks at whose name the property is in and who put up the money to buy the property. If you bought it, it's yours. If your spouse bought it, it's theirs. If you don't like the sounds of that, then you have to turn to the law of trusts for remedy.
The most common claim under the law of trusts is a claim for a constructive trust. This is how a common law spouse can try to argue unjust enrichment. To be successful, a person would have to show that one party has gained a benefit from the other party, that the other party has been deprived in some way related to the benefit, and that there is no legal reason why the first party gained the benefit.
Although constructive trusts are the most common way to make a claim for a bigger piece of the pie, in practice these claims are difficult to prove and the results can be disappointingly small. While a claim under a constructive trust is an option, it just isn't as predictable as a claim under the Family Relations Act. The bottom line is that the best way to have a claim on the assets is to be married.
The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI. Brad Brain is a Certified Financial Planner with Manulife Securities Incorporated, Member CIPF and with Manulife Securities Insurance Agency in Fort St John, BC. Brad Brain can be reached at firstname.lastname@example.org or www.bradbrainfinancial.com.