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May 29, 2013
British Columbia changes its common-law property rules

The year 2013 is turning out to be the year of the common-law couple.

In January, Ontario led the way with a Court of Appeals ruling stating that common-law partners may not qualify to receive survivor pension benefits, even if they are living with their deceased partners at the time of their death.

In February, the Supreme Court of Canada upheld Quebec’s laws mandating that common-law spouses do not have the same rights and responsibilities as married spouses and may not be entitled to alimony or a division of spousal assets on relationship break-up.

In March, it was British Columbia’s turn when it implemented its new Family Law Act.

Under that province’s new legislation, those living in a common-law relationship for more than two years, or who have had a child together, will be required to split their assets and debts on a 50-50 basis on break-up.  In effect, those living in common-law relationships will have the same responsibilities and risks as married couples.  The one major exception will be that pre-relationship or pre-marital assets will be protected from spousal claims at break-up.  As a result, those who enter a relationship with a wealthier person will not be able to claim assets that the wealthier partner brought into the relationship.

Lawyers throughout the province are urging couples to formally list their assets or enter pre-nuptial agreements within two years of entering common-law relationships to avoid confusion or property division claims on break-up.

The new act is designed to encourage couples to settle such disputes outside of the courts.  Post-marital property disputes were taking up as much as one-quarter of all court time in British Columbia.

For plan sponsors and administrators, the new law reinforces the need to be familiar with asset division rules on relationship break-up as each province adds its own interpretation to this contentious family law issue.

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