Are you and your partner looking to become common law in Nova Scotia? You are not the only one! Common law partnerships have increased exponentially over the last few years. Nearly 40% of couples decide to live as common law before marriage.
To consider a relationship as common law in Nova Scotia, two people need to live in a marriage-like relationship for at least two years. This means that the couple refers to themselves as partners in public, live together, and share financing.
Keep reading to learn more about common law relationships!
How to Prove to CRA that We Are Common Law?
The CRA may require several documents for you and your partner to prove that you are common law.
Some of these documents can prove that you share the financial responsibility for your living arrangements, like joint leases, rental agreements, or shared ownership of your home. They can also include gas or electricity bills of the property.
Another way to prove common law is to have a shared address of important documents like a driver's license or credit card.
The last proof that the CRA may request is identification documents to prove that the addressee listed in the above documents are the correct identities.
How Long After Living Together Are Considered Common Law in Nova Scotia?
The common law definition by the federal government in connection with the Income Tax rules is that you need to be living together for at least one year. However, the Partnership Act in Nova Scotia requires a minimum of two years.
Common law benefits of insurance companies, employer's benefits, and medical benefits can differ with each company. Therefore, be sure to check your policy when you submit a claim.
Alternatively, you can register a domestic partnership and immediately receive many of the same rights as a married couple.
What Is a Cohabitation Agreement?
A cohabitation agreement is a contract between you and your partner to agree to the rights of each spouse if separation is necessary. It is similar to a pre-nuptial agreement in a marriage.
Is It a Good Idea?
Many couples do not like to think that a relationship may end, but it is essential to expect and prepare for the worst-case scenario. Much like a prenup, a cohabitation agreement is not required by law. However, it is wise to discuss the terms of ownership, child care, financial support, and custodial responsibilities when or if the relationship ends.
Can I Make One Before My Spouse Moves In?
The short answer is yes! It is highly recommended for couples entering a new phase of their relationship, like moving in together, to draw up an agreement in case of separation.
You can make a cohabitation agreement between two spouses at any time in the relationship before marriage.
How Much Does It Cost?
The costs for a cohabitation agreement in Nova Scotia can be upwards of $5,000, although it usually costs around $2,000. This might seem like a hefty price. However, it will prevent further lawyer costs further down the road in case of separation.
Lawyer costs and taking a case to court can easily cost between $5,000 and $15,000.
Do I Need a Lawyer for One?
To make an agreement legally binding, you will need to involve a lawyer. The lawyer will write up the contract properly and make sure it contains the agreed-upon items. In addition, each partner should consult a lawyer individually to ensure a fair agreement.
You can also make a written, verbal agreement with your partner, such as a letter or email, but these are not as ironclad as a legal contract. Again, you will need a thorough knowledge of your rights and your children's rights before you can set up a fair agreement between you and your common law spouse.
Do Common Law Partners in Nova Scotia Have to File Taxes Together?
According to the Income Tax Act, a person considered common law in Nova Scotia has been living with their partner for 12 continuous months, has a child together, or has custody of a child who is dependant on your partner's support.
If you qualify as a common law partner, you must declare that on your tax return. If you claim your taxes as a single person, you may face several consequences, such as being denied CPP or other pension survivor benefits and be guilty of filing a fraudulent tax return. Additionally, you could be reassessed for unpaid taxes, penalties, and interest.
In Canada, tax returns must be filed separately. However, you must mention your partner's name, income, and SIN number on your return.
You must also change your marital status within a month with the CRA once you have entered a common law relationship, as well as after separation. The reason for this is that your taxes and benefits change depending on your relationship status. Failure to do so can result in the same consequences as filing as a single on your income taxes.
What If We Have Children Together?
As a common law couple, you will have the same rights and obligations as a married couple when it comes to supporting and raising children.
You are both required to provide for your children and have shared custody. However, the courts may decide upon separation which parent has custody, depending on the agreement you and your spouse made in connection to your children.
Since the CRA does not allow for the joint filing of income tax, only one parent may claim the child as a dependent. Raising children can become costly no matter what situation you find yourself in. Make sure you and your partner receive all the support you are entitled to by filing your taxes correctly.
What Not to Do In a Common Law Relationship
It is important to note that being in a common law relationship does not give you the same rights as a married relationship. Unfortunately, one of the most common mistakes common law couples make is the assumption that they have the same rights as a married couple.
For example, you are not entitled to half of your spouse's assets and are not required to take on half of their debt.
Suppose there is no formal or written agreement between the two parties to cover the differences, such as property division, custody of children, and more. In that case, it can become a costly mistake for either party involved.
This can especially create a negative impact on the children involved in the relationship.
What Is My Partner or Spouse Entitled To?
One of the main differences between a marital relationship and a common law relationship is that upon separation, the assets are not split 50/50. In Nova Scotia, the couple is entitled to whatever they put into the estate before and during the relationship.
This means that if the house is in your name, your partner is not entitled to it. This goes for any other assets or debts that you have brought into the relationship. However, if your partner is not on the house's title but helped pay for the mortgage, they qualify for compensation.
Your partner is entitled, however, to spousal support if you are common law in Nova Scotia.
What Happens if We Separate?
Suppose you separate without a cohabitation agreement in Nova Scotia. In that case, you may have to go through court to separate your finances, determine custody of your children, and separate the assets of your joint estate.
The separation process is more straightforward than divorce, as you are not required to live separately before starting the process. A couple can draw up a separation agreement to determine who gets what. However, in Nova Scotia, you get what you put into the estate.
If you are the sole owner of the house, for example, you are entitled to kick your spouse out and keep the house for yourself.
If you did not draw up a cohabitation agreement but instead entered into a verbal agreement, it still holds up in court. Depending on that the terms are fair and reasonable to each party. You will need to prove your agreement with letters, text messages, emails, payments, etc.
You will also keep in mind that your tax return will look different if you separate.
Are You Ready to Enter Into a Common Law Relationship?
Entering a new phase of life can be exciting and scary. Understanding your rights before you take this step is essential. Every province has different laws and regulations when it comes to relationships and children.
To become common law in Nova Scotia is easier than you might have thought. But, first, make sure that you, your partner, and your children are safe and protected in any situation.
At Insurdinary, we care for the well-being of your family. Get a quote today to ensure the security of your future.