Joint Family Ventures and Common Law Spouses’ Legal Claims
The word joint pops up in all the posts this week. I am sharing stories to explain the word’s different legal meanings. “Joint” now has new importance for domestic partners. Your common law partner has rights to your property if a joint family venture exists.
Are you in a joint family venture? Not knowing the answer can be dangerous and costly for you. Let’s start by defining this new term. The Supreme Court of Canada, in the Kerr case, is the source of this new law.
A court can make a finding that a joint family venture exists. The court can base this on the conduct of unmarried domestic partners. A joint family venture may be inferred where parties:
i. accepted themselves as equivalent to married
ii. held themselves out as married
iii. lived in a lengthy stable relationship and held title jointly or, if alone, showed little concern on living financially separate
iv. made plans for property distribution on death (made wills together)
v. collaborated on common goals, pooled efforts, raised children, were economically integrated.
The courts will also consider the length of the relationship. Not every common law relationship is automatically a joint family venture.
The court can award the non-owner spouse a share of the property, if a joint family venture is found. This can occur regardless of who may have purchased the property or who is the registered owner of the property.
Common Law Spousal Nightmares
In this story, Rachel purchased her home before meeting Trevor. So imagine Rachel is the sole owner of her home and she dies. What happens to her house?
That depends on what is in her will. Rachel’s will left the house to her sister.
Now, let’s say that Trevor, Rachel’s common law spouse, is living in her house. What happens then?
Well, if a joint family venture exists, then Trevor may be entitled to a monetary award from Rachel’s estate. He could also ask a court to award him a share of the house.
Trevor needs to hire a lawyer and claim unjust enrichment. He would ask for an interest in the home based on a constructive trust.
Rachel never saw this coming. She never revised her will to consider Trevor’s rights to her property. No one had warned her.
Estate Planning Options for Common Law Spouses
What could Rachel have done to avoid a lawsuit against her estate? Rachel could have considered these estate planning options:
1. Gift or transfer
Rachel could have gifted all or a portion of her home to Trevor. She could do this by a deed with a real estate lawyer.
2. Joint ownership deed
Rachel could have registered a deed to make Trevor a joint owner. He would have rights of survivorship. Trevor would inherit the home outside of the will if Rachel wanted that.
3. Cohabitation agreement
Rachel could have entered into a cohabitation agreement with Trevor. She could have agreed to a tax smart estate plan to benefit Trevor.
4. Estate waiver
Trevor could also waive any claims to Rachel’s estate in a cohabitation agreement. They could confirm that they were not in a joint family venture.
5. Spousal trust
Rachel could have created a trust in her will for Trevor. He could live in the house and pay the bills. If Trevor died or no longer wished to live in the property, it would go to Rachel’s sister.
Hindsight is perfect sight.
It was too late for Rachel to learn about joint family ventures. You do have better luck, but you must act before it is too late.
Consider these action steps:
1. Get a legal opinion about your legal obligations towards your common law partner.
2. Update your will to reflect your responsibilities.
3. Find out if you need a cohabitation agreement.
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