Estate Complications for Common Law Couples
Couples may have many reasons for not getting married, but when a common law partner dies without a will, the living partner is left legally vulnerable. When an individual dies without a will, the will does not comprise the whole of their estate, or if the will is invalid, the estate will be divided up in accordance with the laws of intestacy. The law of intestacy will distribute the estate based on degrees of consanguinity; essentially meaning how closely related individuals are to the deceased. Here’s what you need to know:
The Succession Law Reform Act
On intestacy, the spouse of the deceased is given a “preferential share” which is determined by a regulation under the Succession Law Reform Act (SLRA). Currently, the preferential share is $350,000.00 for the estates of those who died on or after March 1, 2021. If there are no children or grandchildren, or if the preferential share is greater than the value of the estate, the entire estate will go to the spouse absolutely.
If there are children
If there are children and the estate is greater than the preferential share, then the spouse will receive a further portion of the residue after the payment of the preferential share.
If there are no children
If there is no spouse and the individual had no children, then the residue would then be divided among the living parents. If no parents are alive, then the estate is divided amongst the siblings of the deceased, and so on.
How The SLRA Affects Common Law Partners
This system may cause significant problems for those in a common law relationship. In the provisions of the SLRA relating to intestacy, the definition of “spouse” does not include common law partners; it is restricted to married couples. This means that common law partners are vulnerable to having no claim to their partner’s estate.
Additionally, if one common law partner was previously married and has been separated from their former spouse for less than three years, then, subject to a valid separation agreement, the former spouse may have a claim as the “spouse” under the SLRA.
Joint Bank Accounts
Estate issues are further complicated in cases where the couple held joint bank accounts. In these instances, the law presumes that the surviving partner is holding the account funds in trust for the estate of the transferor. This results in the surviving partner having to prove that the deceased did not intend for the funds in the account to be placed into a resulting trust and, instead, that the intention was to leave the remainder of the funds to the surviving spouse as a gift.
Dependent’s Claim as a Common Law Partner
While intestacy can cause many issues for common law partners, the SLRA does allow a surviving common law partner to make a Dependent’s Claim. The law also allows a parent, child, spouse, or sibling to make a Dependent’s Claim. Under this portion of the SLRA, a common law partner is included as a spouse. To qualify as a common law partner for the purpose of a Dependent’s Claim, the partner must have been living with the deceased continuously for a period of no less than three years, or in a relationship of some permanence with children.
A Dependent’s Claim is evaluated on a number of factors. It is not guaranteed how much an individual may receive, or if they will receive anything at all. These claims are intended to support those who were dependent on the deceased while they were alive.
Additionally, there may be an issue of competing Dependent Claims. This occurs in situations where there are multiple Dependent Claims filed against the estate, and the estate does not have the resources to effectively handle all the claims. Ultimately, these competing claims may impact the amount a claimant is eligible to receive – that is why it is very important to have the assistance of a lawyer.
Having a valid Will and Power of Attorney can be helpful in setting expectations with partners and family, decreasing vulnerability, and ensuring that your estate is distributed in accordance with your values and intentions. If you need help navigating an estate claim or making a will, please contact one of our lawyers today.