To Marry or Not To Marry – The Financial Difference Between Common Law & Legal Marriage

As more and more Canadians opt out of marriage, or just never seem to get around to it, you have to wonder, are they putting themselves at a financial disadvantage? What is the real difference between marriage and living as common law? Could you be risking your financial future by not getting married?

Like some relationships, the answer is complicated.

It’s important to understand that while a legal common law relationship does, in the eyes of the law, tie you to your partner, it does not include all of the same rights as marriage. They are distinct and the differences might surprise you.

We already know that forming the legal relationship is different. With marriage, you need to get a license, be married by a qualified official, and register your marriage. A common law couple need only live together for a certain period of time before they are considered legally joined.

If you want to end the relationship, common law is definitely easier and cheaper than divorce. All you have to do is stop living together. Walking out the door seems like a way better deal than lawyers, courts, and judges, doesn’t it?

After the relationship is dissolved, both the formerly married and formerly common law can claim spousal support, but via different methods, depending on the province you live in.

When it comes to assets beyond that, however, common law couples lose out unless they’ve both agreed to and signed a contract stating otherwise. When married couples divorce, each is entitled to an equal share of the property and assets accumulated during the course of the marriage. Common law couples have no such entitlement and can only walk away with what is in their name. That means that if you’re a common law couple and you buy a house in only one of your names, the other will have no claim to the house should you break up. It doesn’t matter how much you contributed to mortgage payments, or how much work you put into the home, if it is in your ex-partner’s name only, you have zero claim to the home. The same goes for cars, boats, summer homes, and anything else you’ve acquired during the relationship. You can circumvent this by drawing up a domestic contract, and agreeing on how you’re going to break up the division of property, but even then, there is room for dispute. The only real way you can protect yourself and the property you’ve helped pay and care for is to be married.

Another difference between common law and married couples occurs when one of the partners passes away. With marriage, you are technically the next of kin and, in the event your partner left no will, you will be able to inherit the majority of his or her estate by default. This is not so with a common law relationship. Even if your common law partner has a will when he or she passes, his or her family can dispute the disbursement of the estate with more ease. With no will, you will get nothing by default. The entirety of the estate will go to living blood relatives before you.

So, while there are definite disadvantages to marriage, ultimately, with the current laws in place, remaining in a common law relationship could be putting your financial future at risk. As a common law couple, one of you could find yourself homeless and without assets should anything happen to the relationship or your partner. Sure, you have to navigate the bureaucratic red tape to get officially married, but really, what are a few processing fees, a couple of forms, and a tiny ceremony if you're truly committed to each other? It’s just another step on the road to financial security.

Do you think there should be an alternative to marriage so you can secure your assets? Let us know in the comments!