On November 14, 2011, the Provincial government introduced Bill 16, which features a comprehensive revamping of the property law regime in the province. One significant change is that Property Division, which did not previously apply to “common law” spouses under part 5 of the old Family Relations Act, will now apply “common law” spouses.
The bill has not yet been passed, and of course there may be amendments or it may not pass at all. However, now is the time to take a serious look at your situation if you are in a “common law” relationship.
Of particular relevance to those in “common law” relationships is the proposed transitional section 252 of Bill 16. Section 252 provides that if you have an executed agreement regarding property, or if you have started a court proceeding regarding property division, before the act comes into effect, then the old Family Relations Act will apply to your case. If you are in a common law spouse with the lion’s share of the property and considering separating, get to a lawyer to discuss your options as soon as possible. Delaying could be very costly.
Yesterday, BC Attorney-General Mike deJong released a White Paper, which contains proposals and recommendations for a revised Family Relations Act. Family law in BC is regulated primarily by the federal Divorce Act and the provincial Family Relations Act. The Family Relations Act has not been extensively reviewed since the 1970′s. There are, naturally, hundreds of recommendations made in the White Paper, but one that is causing quite a stir is the proposed change in the treatment of property in common-law relationships.
Currently under the Family Relations Act, persons who have cohabited in a marriage-like relationship for a period of two years are deemed to be in a common-law relationship. This provides them with certain rights upon separation, although those rights are nowhere near those afforded to married couples. Primarily, persons in a common-law relationship can claim spousal support within one year of separation and of course child support in the event there are children; however, there are no rights to the other person’s property unless a claim for trust is brought by way of litigation. Trust claims are complex and fact intensive, making them expensive to litigate.
The new proposals would change the rights of common-law spouses in a significant way. Once the couple has passed the two-year cohabitation mark and become officially common-law, the parties’ property, pensions, presumptively belongs 50/50 to each of them, save and except in particular circumstances, most notably that pre-relationship property would not be subject to this division. In addition, the parties’ post-cohabitation debts, irrespective of who incurred them, would also be split 50/50.
In addition, another category of cohabitating spouses is proposed in the event a common-law couple has a child, but has yet to reach the two-year milestone. In the White Paper, this is described as a couple who have a child and are in “a marriage-like relationship of some permanence”. They would then become subject to the 50/50 division on separation. What exactly that means is not set out in the White Paper, but is sure to be litigated early on if adopted in the changes to the Family Relations Act.
What does this mean? Obviously it is too early to tell, but our initial suspicion is that many couples intent on cohabiting will be proactive and engage in written agreements contracting themselves out of these provisions. We envision that these agreements would be similar to marriage (aka pre-nuptial) agreements, in an effort to protect assets from the new provisions of the Family Relations Act.
Certainly the proposed changes to the Family Relations Act as they relate to common-law spouses indicate that the legislature intends to treat cohabiting spouses as something more akin to married spouses than in the current state of affairs.