Taking that next step in your relationship can be an exciting time. House/Condo showings, choosing furniture, decorating, housewarming parties etc. However, before you take that step, you need to think about the practical and legal consequences of moving in with your partner.
Tax:
The CRA considers you to be common law after you have lived together for more than twelve consecutive months*. The CRA will look at your combined income to determine your eligibility for the GST/HST Credit. Therefore, if you are receiving the GST/HST credit as a single individual, your eligibility may change if your common law partner’s income causes you to both exceed the limit. On the up side, you can now pool some tax credits, such as medical expenses and charitable donations. You may want to speak to a tax lawyer or an accountant about your specific situation and any other potential tax implications of moving in together.
Property:
Family law considers you to be common law after you have lived together for more than three consecutive years*. In Ontario, there are no property division rights for common-law couples. Simply put, if you want to have a claim to an asset or property, make sure your name is on it. Likewise, if you don’t want to be liable for a debt, don’t put the debt in your name. A common example is when an individual moves in with their common-law partner who already owns a home. If you are contributing to the home and you expect to own part of it, make sure your name is on title. Similarly, if you want to protect your accounts or investments, keep them in your sole name. Although a verbal agreement may adequate while you’re in a happy relationship, it’s simply not enough upon separation.
Spousal Support:
Common-law partners may be required to pay, or may be eligible to receive, spousal support. The specific circumstances of the relationship will be considered, including the earning capacities of the parties on the date that they started living together, the roles of each party during the relationship and the effect on their careers and incomes, and the earning capacities of the parties on the date of separation. Parties with large income disparities or situations of financial dependency should be aware of a possible spousal support claim. Consult a family law lawyer to discuss spousal support and how to protect your property.
Decision-making:
Unlike married couples, common-law partners have no standing to make decisions on your behalf. Consult a wills lawyers if you would like your common-law partner to have the ability to make property decisions on your behalf (power of attorney for property) or to make health decisions on your behalf (power of attorney for personal care).
*Other rules may apply for parties who have children together.
About the Author
Dana Lue is an Associate with Ricketts Harris LLP, practicing exclusively family law. She is the Vice-Chair of the YLD Central Executive.