Moving in Together and Beyond
Oftentimes, before we get the BIG question, we get the step 1 question: will you move in with me? After a subjectively considerably amount of time, you may choose to move in with your significant other but time shouldn’t be your only consideration. There are some specific legal concerns about moving in together, particularly when you’re investing in a property together.
The big questions:
1. If you are buying a property together, how will you hold title? Joint tenants get survivorship rights. This means that if one party departs this world, the property passes completely to the joint tenant. Tenants in common on the other hand get a split, meaning that your partner’s share will go to their estate and you will have to either buy them out to stay or sell the property for proceeds.
2. You should have a written agreement to protect any deposits put in so that if the relationship fails, you can get your money back. It can get very difficult to agree on anything after a break-up.
3. How are the proceeds to be shared if the relationship breaks down and the property sale generates a profit?
4. How to determine the fair market value option to buy out?
5. If the couple marries, the property becomes a matrimonial home and therefore subject to the Family Law Act. But common law partners do not get matrimonial home rights under the FLA. In this circumstance, it is important to have a Will and ensure you hold the property as joint tenants, if that is your intention.
6. Common law couples are treated differently under the law – they do not get a share of the estate. It is possible to make an equity argument in court but this can get costly and take up a lot of time, without guarantee of success.
7. If there is no agreement, the estate will pass to the parents unless a Will directs otherwise.
A marriage agreement or a cohabitation agreement is very useful in addressing these concerns.
When should you make a marriage contract?
This contract can actually be signed at any time! But it is better to sign it before you are married. If you sign a co-habitation agreement, it can become a marriage contract.
Even more useful is a will to govern your assets.
The usefulness of a Will
Whereas you can have mutual wills with your partner, it is advisable to have you own will. Under a mutual will, there is a joint retainer with you lawyer and no secrets can be kept by either party. Both parties will need to consent if one of them wants to change the will. There is also an obligation to tell the other party that a will have been changed if it is done unilaterally.
If you are living together for more than one year you are deemed common law married under the Income Tax Act. Depending on the length of time a couple was together, it is possible that one party may be required to pay spousal support should the relationship end. The courts will consider the age and income among other factors to determine the amount of spousal support due. If you have a marriage contract however, it can spell out the specifics of spousal support, if any, to be distributed if the marriage ends. A marriage contract can also govern issues relating to children, such as their education and moral training. Under the FLA, issues are always settled in the best interests of the child.
So you got married and want to make a will. Here are some guidelines:
It is important to note that marriage revokes a will and you will need to make a new will after getting married in order for it to be valid.
You and your partner should both agree on the same executors of your will, the same lawyers and power of attorneys. This will avoid legal squabbles over control of your estate. You should consider the items required to be done to govern your estate and the skills required of the person executing those directions. It’s no good appointing an unqualified relative to look after a complex business matter; you estate will be better served by hiring an appropriate qualified professional, if the circumstances call for it.
The same is to be said for the major issues to be governed by the will. Both parties must fundamentally agree on what is to be done to their assets. Likewise, the executors must know what is expected of them. Hollywood may think it makes for a funny comedy to inherit a bunch of kids, but in the real world, your executor must be made aware of your intentions and directions.
Babies
Another time to consider getting a will or updating your existing one is upon the arrival of a new family member. A court will usually defer to the will if it provides a direction on guardianship, should anything happen to you or your partner. It is advisable to appoint a different person to manage financial affairs for the child to prevent unnecessary spending and better investment. If there is no one named a will, or a will does not exist, anyone can apply to be the guardian of your child. Any finances that remain in the estate will go to the court and the child will need to apply in order to obtain them, if they are under 18 years of age.
In the event that a spouse has died without a will, the remaining spouse will have to share the estate with the children and if they are underage, work with the Office of Children’s Lawyer. This process can get very time consuming and emotionally exhausting. All the more reason to sort out your affairs beforehand in a will.
Pets
Under Canadian law, pets are considered property and as such can be included in a will or marriage contract. But if your former partner wants to apply to the court for visitation or access rights, they will be hard pressed to find an agreeable judge. The Ontario Courts have ruled that such actions are a waste of the court’s time.
Powers of Attorney
This is another important consideration to include in your will. It becomes effective upon signing and does not need to be filed anywhere. It is particularly important to have a power of attorney for property. Someone must be appointed to deal with your property’s bills, landlord, due rents, or any sale process. Your designated power of attorney must reside in the jurisdiction in which you have assets in order to deal with them appropriately.
A power of attorney for care is a different power altogether and it can be appointed by legislation. Contrary to a common place assumption, you spouse does not automatically become your power of attorney for property or for care.