Estate Lawsuits with Common Law Spouses

Let’s look at lawsuits between common law spouses over property. In my thirty years of experience, these cases are bitterly contested. I will explain how a lawyer can attack or defend an estate.

The Kerr decision gives a template for common law spouses to resolve their property disputes. You will find a summary about the case in a number of my posts. Here is a link to one of my posts on the Kerr decision.

In my last post, I explained the word joint in joint family ventures for common law spouses. I used a story about Rachel owning her house and suddenly passing away.

Let’s change the facts slightly. Instead of Rachel owning 100 percent of the home, let’s say they own the house as tenants in common.

Tenants in Common

Let’s say Rachel had invested $225,000 to buy the house. Trevor only paid 25% of the purchase price. He and Rachel are tenants in common. They have no automatic survivorship rights to their home by their deed.

Rachel and Trevor live in a jurisdiction where there is no statutory protection for common-law spouses’ property. They have no cohabitation agreement.

However, Rachel has a will. She named an estate executor (an estate trustee in Ontario with a will).

Rachel’s executor, Ronny, wishes to recover her investment in the real estate. He wants to sell the house with or without Trevor’s co-operation.

Rachel’s estate is prepared to go to court.

Trevor was devasted when Rachel passed away. Rachel’s family told him they must sell the house. He must move out of the home he and Rachel lived in for 12 years.

Constructive Trust Claims

Trevor just finished remodeling the home from top to bottom. He did this over the six-month period while he was an unemployed carpenter.

Rachel’s family had given Trevor 30 days to make a decision. Can Trevor afford to buy Rachel’s interest in the property? If so, the estate executor will sell it to him.

Trevor is unable to arrange a mortgage because he has been unemployed for the last 6 months.

The couple had originally purchased the house for $300,000. But Trevor renovated the house when he owned it. The property’s value has also appreciated over the years. The house is now worth $600,000.

Trevor would have to mortgage the property for over $450,000 to buy out the estate. He cannot afford to do that.

So what happens?

Trevor Hires a Lawyer

The lawyer builds Trevor’s claim.

Trevor paid cash for all building materials for the renovations. He had not kept receipts to demonstrate what his time and materials were worth. He must show he improved the value of the property.

He also did not have enough money to purchase an alternative property to live in.

Dependants’ Support Claims

Did Trevor have a claim to support from Rachel’s estate?

Trevor’s children from his first marriage visited on weekends. They were planning to attend a local high school. Rachel had wanted them to move in with them.

That’s why they had renovated the house.

Now that Rachel had passed suddenly these plans had disappeared in a flash. Trevor could not make ends meet. He spent his savings on the renovations.

Trevor asked for more time from Rachel’s family.

Trevor was hoping to get back on his feet. Then he could borrow money from a bank or relatives.

Rachel`s executor, Ronny, asked Trevor for the going rent for the house. Ronny wanted $3500. Ronny told Trevor to pay rent for every month, and he could stay for six months (max).

Trevor decided to seek legal advice. He went to court to make an unjust enrichment claim. He was asking the court to give him 50% of the house’s value based on his contributions.

Ronny hired a lawyer to sell the property by court order.

The judge made an order that the parties could not sell the property until after a trial. The court also had to decide how much support Trevor should receive.

Estate Mediation for Disputes

Trevor’s case took three years to negotiate a settlement with Rachel’s executor. Trevor’s legal bill was in excess of $50,000.

Ronny’s costs were unknown but no less expensive.

If Rachel and Trevor had a cohabitation agreement, they could have avoided this heartache. They also would not have to pay a $100,000 legal bill.

A proper estate plan could have taken advantage of tax smart benefits for Trevor.

Going to an early mediation could also have reduced costs.

You can learn more about the benefits of mediation with my free guide Estate Mediation: Answers to 10 Most Frequently Asked Questions.

Are you an estate executor dealing with a common-law spouse?

Contact my Toronto law office to get a free telephone consultation. Put my experience to your advantage. Call 416-769-9800. You need expert legal advice to solve your properties.

Are you a common-law spouse with a claim against an estate?

Call my Toronto law office at 416-769-9800