Since March 18, 2013

It Changes Everything

Common-law couples will have a ½ interest in the Property of their partner after two years together

The existing Family Relations Act [“FRA”] will be replaced by the new Family Law Act [“FLA”] on March 18, 2013.

An “extreme makeover” of BC family law, the new FLA includes, for the first time in BC, a controversial change that will give a common-law partner an automatic one-half interest in the property of the other upon separation if they have cohabited for at least 2 years.

For common-law partners, the provisions of the existing FRA for equally dividing property upon separation have never applied to them- it has only applied to married couples. Under the existing law, a common-law partner can still make a claim against the property of the other after a separation, but it is a lesser claim and difficult to prove, and there has never been a legal presumption, or automatic right, to an interest in the property of a common-law partner.

Under the existing law, you can make a claim under an equitable concept called unjust enrichment, which says that if you put time, energy, money and/or labour into an asset owned by the other party and were not compensated for that contribution, you could make a claim and a court would decide if your contribution was worthy of an interest in the Property, and in what amount, based on many factors.

But under the new FLA, after common-law partners have lived together for two years in a “marriage-like relationship”, they will have an automatic ½ interest in the “Family Property” [new definition] of the other. This will include, for the first time, an automatic interest in the pension entitlement of their partner.

This is the most controversial change, as most people have believed that the choice to remain unmarried insulated them from having to automatically share property with their partner upon separation. That will change under the new law.

Traditionally, the view has been that common-law relationships were intended to be less formal and less rigidly defined than marriage, without the requirements to share property or other obligations unless the parties chose to do so by agreement or marriage. This was viewed as the “freedom of choice” to avoid the legal constraints of marriage.

But the feminist view of relationships has prevailed in the new FLA over the traditional “freedom of choice” for common-law partners, in that this new scheme is intended to protect the most vulnerable people in relationships- those who do not have the personal or financial power in a relationship [usually women in heterosexual unions] to assert themselves so as to protect their future interests and independence. Whether this accords with the view of most queers in common-law relationships is highly debatable.

For married partners, the new FLA is actually somewhat of an improvement. Under the existing FRA, a partner has a ½ interest in all of the “Family Property” [as defined] owned by the other spouse, including all of the property brought into the marriage. That is, if you presently bring a condo into the marriage, the partner obtains a ½ interest in the entire condo, simply as a result of the marriage.

But under the new FLA, a married partner will only have a ½ interest in the increase in value of property brought into the marriage [land and money], and a ½ interest in new assets acquired after the marriage.

This change in the law is a welcome change and accords with the expectations of most queer couples. Most people prefer that they maintain the wealth that they brought into the marriage, and then share the wealth created after the marriage.

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Definition of the “Family Property” that may be shared is also changing significantly

The definition of “Family Property” to which your partner may have an interest will also significantly change, and will now apply equally to married and common-law couples.

The existing FRA test for a “Family Asset”, and which only applies to married people, is any property that is “used for a family purpose”, and specifically excludes business assets. SO: if you had owned a financial investment or investment properties anywhere in the world, and your partner never contributed to their acquisition or maintenance, then the partner would not have an interest in it. And your business interests were separate property in most cases.

But in the new FLA, “Family Property” is everything owned by one partner, including business interests, unless it is then “Excluded Property”- and will apply to both married and common-law couples. “Excluded Property” is property brought into a relationship, but only as to its value as at the date of cohabitation or marriage, and certain other property deemed to be excluded such as inheritances, gifts, certain insurance, and others.

Therefore, under the new FLA: ALL property you own- anywhere in the world and no matter how long you have owned it and whether or not your partner contributed to it- will be subject to an interest by your partner from the date of cohabitation onward. Again, this is seldom intended by partners in today’s world.

And, as I said, this new definition of “Family Assets” will also apply to common-law couples after they have lived together for two years. In my experience, few clients intend or expect to share property this dramatically after just two years together.

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*** Debts ***

And for the first time in BC, and for both married and unmarried, the FLA makes parties specifically liable for the debts of the other from the date of cohabitation to the date of separation or divorce. Essentially, under the FLA, all debts incurred during the relationship in either name are to be equally shared between the parties, including personal credit card debts- and this is rarely what queer couples expect or desire. It does not even limit the debt liability to debts incurred for any family purpose- at this time, it simply refers to “debts”. Perhaps this mans any credit card debts run up by your partner, even without your knowledge or consent.

This new provision causes a great deal of concern to most people.

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Agreements

Fortunately, for all couples, all of these problems can be overcome by a properly written Agreement as to your agreed terms of the relationship. The change in the law requires you to be pro-active to protect your interests, or the automatic provisions for sharing property and sharing debt will apply when the FLA comes into effect.

And as the FLA will require determination of the values of properties and financial assets brought into a relationship for both married or common-law couples, an Agreement at the beginning of a relationship will be important to clearly state the values of the properties and the financial assets when cohabitation began.

One related, excellent change that will benefit the queer community is that there is now going to be greater deference shown by the court to written Agreements. While queers have historically protected themselves with Cohabitation or Marriage Agreements, the existing FRA has too easily allowed judges to overturn Agreements. But the new FLA will limit the intervention that can occur with Agreements, resulting in greater certainty and enforceability for written Agreements.

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How is “Spouse” defined- married or common-law?

No substantial change except where children are involved.

“Spouse” includes:

  • a) persons married to each other
  • b) persons who have cohabited in a marriage-like relationship for at least two years; and
  • c) persons who have cohabited in a marriage-like relationship for less than two years but have a child together.

[NOTE: in BC Provincial Law: the word “spouse” applies to both married and unmarried persons. You are a married spouse or a common-law spouse [if together more than two years. The confusion in terminology arises in Federal law- for Income Tax, CPP and the like. For federal purpose, only married persons are “spouses” [straight or gay]. Unmarried persons are called “common-law partners” for federal law purposes].

The law decides if you are spouses- you can’t simply live together and decide “we are not spouses”. If you live together, you probably are spouses whether you like it or not. And that means that consequences may flow from that. Such as: you MUST declare to be “common-law partners” on your income tax returns after you have lived together for just 12 months [not 24 months]. Failure to do so may have legal consequences in the future. For most people, it is actually an advantage to do so [or at least neutral]. But some lower income people may lose out some money by being “common law” for income tax purposes- people who receive GST/HST quarterly payments; people who rely on Pharmacare for deduction of medical expenses; people who receive federal disability benefits; and some people with children.

It is interesting to see how the law will develop re non-traditional families- partners who do not live together, for example. But the court generally assumes that a relationship is spousal, if you live together as a couple. They look at the reality of the relationship, for the most part.

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Parentage Re-Defined for the Creation of Families

A major victory for the queer community is the total re-definition of “Parentage” in a way that accords with the actual expectations of most queer families, especially those using Assisted Reproduction. The FLA will even allow, for the first time, the potential recognition of multiparent families.

In the new FLA, a donor of sperm or an egg will be presumed in law to not be a “parent”, and therefore have no legal liability or responsibility, unless all parties choose to sign a contract in advance giving him or her parental rights and obligations.

A woman who gives birth is presumed to be a parent, unless all parties choose to sign a contract in advance to the contrary, thereby allowing a woman who is a surrogate to sign a contract prior to the birth so that she is not a legal parent of the child upon its birth.

The most interesting change is that the parties to a conception and birth can also sign a contract to make more than two persons a “legal parent” of the child, if they so choose. The “parents” may include up to two “intended parents”; a sperm donor; an egg donor; and/or a surrogate who carries the child- giving a possibility of up to five legal parents, but only if the parties so choose.

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There will also be significant other changes under the new FLA, including Spousal Support, Child Support and Guardianship, Mandatory Mediation of Disputes, and other areas.

Spousal Support:

May now require insurance to protect the payment of Spousal Support and Orders can now bind an estate so that payments continue after the death of the Payor. This was not the law or the practice in the past and is controversial.

Mandatory Mediation [or other recognized means of avoiding court]

This is a welcome change in the law for the most part. It requires parties to see if Alternative Dispute Resolution is possible before court proceedings are initiated. On the other hand, it may just result in unnecessary expense for those cases which are high conflict and unlikely to resolve by Agreement. But as Court should always be a last resort, it may be a welcome change to avoid court for many couples and families.

Child Guardianship:

The concepts of Custody and Access have been changed to Guardianship generally, and “Parenting Time” [custody] and “Contact” [access]. Whether this actually results in any change to how these concepts work will be determined over time.

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Dennis Dahl is a Family Law lawyer at Dahl & Connors Law Firm, with 30 years experience in Family Law, Wills & Estates, Advocacy for the GLBT Community, and other areas of the law. dennisdahl@imag.net tel: 604-687-8752