In Quebec, what inheritance are common-law spouses entitled to?

Intro Speaker:  

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life, and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now, here’s your host, Leanne.

Leanne Kaufman:

Hello, I’m Leanne Kaufman and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. Today, I’m excited to introduce our guest host, Carmela Guerriero, vice-president of Sales and Client Experience at RBC Royal Trust. Carmela, take it away.

Carmela Guerriero:

Thank you, Leanne. Unlike legally married couples, in Quebec, common-law partners are not automatically entitled to their partner’s estate if the partner dies without a Will. The legal nuances vary from province to province emphasizing the need for proactive estate planning. Let’s explore how common-law couples can navigate their rights and protect their estates in Quebec.

Hello, I’m Carmela Guerriero and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. With me today is Maitre Marcella De Piano, a notary at BCF’s Wealth Protection Group. Marcella is well-versed in advising on estate and capacity matters. Her primary areas of practice includes Wills, protection mandates, the settlement of estates, marriage contracts, and non-contentious procedures. She’s also a member of the Executive Committee of the Association du Barreau canadien, Quebec Division – Wills, Estates and Trust Section.

Marcella, thanks for being here with me today to discuss how unmarried couples in Quebec can navigate their rights and protect their interests and why this matters beyond wealth.

Funny enough, this is actually take two because we initially recorded on March 20th and one week later on March 27th, 2024, we heard of Quebec’s tabling of Bill 56, which would amend the civil code and establish a different framework for unmarried couples. So we decided to re-record to modify our discussion and shine a light on how Bill 56 is going to be changing things.

So a big thank you, Marcella, for coming back and re-recording. I know how busy you are, so I really, really appreciate it.

Marcella De Piano:

Absolutely. I feel now like I’m a bit of a seasoned pro since this is the second time that we’re doing this. So maybe the next time we’ll change topics.

Carmela Guerriero:

Let’s dive right in. Marcella, in Quebec, it is very common to be in a common-law relationship. More than 40 percent of Quebec couples live without being married. Many of these couples mistakenly think they have the same protections as married couples. So, given Bill 56 and the coming changes, can you share the distinctions between common law today, common law post Bill 56, and married spouses in Quebec, especially concerning property?

Marcella De Piano:

Sure, absolutely. So, as you laid out, there are really three different types of unions that will exist. So, we have married spouses, we have couples who are in a common-law union today, and we have couples who are in a common-law union who in June of 2025 will qualify as part of a new regime that’s being introduced as a parental union.

So, I’ll start with married spouses. So married spouses are really part of a legal framework that is established. We have laws that are in place to outline what the obligations and responsibilities of spouses are during their marriage. There’s a civil status that changes when you are married. So, there’s a written ledger—you’re in a registry that your civil status is married. It’s a little more difficult legally speaking to untangle yourself from this union or as was a very popular term in Hollywood, consciously uncoupling or unconsciously uncoupling or whatever the case may be.

So, when it comes to property, that’s also regulated by the laws that are in place. When you’re married, you’re subject to a primary regime, which is the family patrimony. In this family patrimony, we have family residences, we have your RRSPs, we have vehicles, we have the furniture, we have pension plans. So, there are rules that are set out and set in place for how we partition and divide the value of these assets in the event of your separation. So that’s laid out in the law.

Then we have a secondary regime that either you choose to adopt via marriage contract or that apply automatically to you once you say, “Yes, I do.” It also comes with, yes, I do, and we are subject to this regime. That also lays out the legal framework in the event of a separation of how we divide the value of the assets that we accumulated during our marriage.

So, when we take that and we juxtapose it with common-law unions, we see that those two worlds couldn’t be further apart. So, when you have a common-law union, you can choose to subject yourself to certain rules by having a written agreement that outlines how you intend to divide your assets or the value of assets in the event of your separation. But it’s really the will of both parties to subject themselves to these rules because otherwise what applies is, automatically, what’s mine is mine, what’s yours is yours. So it makes it difficult in the event of a separation where we don’t have an agreement. And if you’re separating, sometimes it’s very difficult to come to an agreement because you’re already, emotions are running high, there’s tension, other factors cloud our sometimes our reasonable judgment and we are left without legal protection. So maybe if we didn’t buy the furniture, but we contributed to its upkeep and we then find ourselves with nothing to our names at the end of the dissolution of our union, we could have otherwise agreed when times were good and we were happier how we would separate those assets.

Now the good news is that in June of 2025,a reform is coming and there will be the introduction of a new regime that helps protect spouses who are in a common-law union provided that they meet certain criteria. So, if at that time you are in a common-law union, that means that you are in a couple with someone, you present yourselves to your entourage as being in a couple and that you have a child born once the law comes into effect, then you will benefit from certain protections.

So, this means, however, that if you and your neighbor had some sort of arrangement where you agreed to have a child together and co-parent this child, you would not necessarily reap the benefits of this new type of regime that’s being introduced. In this new regime that’s being introduced, they’re trying to import the rules that apply to married spouses as regards to family patrimony and creating a patrimony that would apply as well for couples who qualify for this parental union.

So, in this patrimony, the assets that we’re trying to protect for the spouses in the event of a separation are the family residence. In married couples, in the family patrimony, we’re not limited to one residence, it’s all of the residences that are used by the family. So that means that if you have a cottage, that cottage also falls into the family patrimony. For the time being, the way that the current bill is drafted, it uses the singular and it seems like it is just the family residence, so your primary place of dwelling.

We have the furniture that also falls into this patrimony for the parental union, and we also have the vehicles. Now, unlike in the family patrimony for married spouses, we do not automatically find RRSPs and pension plans. However, there is nothing that prevents spouses who are already subject to the parental union to make upgrades to what applies to them. So they can choose which assets they would like to add on to what’s already existing. Kind of like you get the base flavor of ice cream and then you add on the sprinkles and the chocolate chips. It’s there for the taking.

And the way that this new regime works is it will automatically apply to couples who qualify. This means that if there are couples who qualify who wish to disqualify themselves, there is an opportunity to opt out of this union in the same way that for couples who are not subject automatically to this new regime, they can decide to opt in as well.

Carmela Guerriero:

So very interesting, such an evolution in the law. So we’ll look forward to seeing how it evolves before it takes effect next June, it’ll be very interesting.

What significant differences exist in spousal support rights between married couples and common-law partners, specifically now with Bill 56?

Marcella De Piano:

Right. So, for married spouses, the concept of being able to request spousal alimony is something that is accessible to spouses. And alimony, what is usually taken into consideration, we look at your age, your education, your financial autonomy, your financial dependence on your spouse. We can also look at your lifestyle, so if your habits were that annually, you would vacation on a yacht on the French Riviera, and then that is also taken into consideration as part of your lifestyle.

Now for spouses who are not married, so common-law spouses, they do not have access to alimony. Now they could have in an agreement decided to provide certain compensations in the event of a separation for a spouse who is in a lesser financial position, but there’s no automatic spousal support that is available to them. There are other recourses that are available.

So common-law spouses who are not subject to the parental union can have access to claim an unjust enrichment if they feel that they made certain sacrifices that impoverished them and that benefited financially their spouse. So usually the classic example is someone in the couple decides that they’re going to take a backseat in their career and stay home and take care of the home, raise a family while their spouse goes off and either establishes themselves in a business or advances in their career and up the corporate ladder. So that’s one recourse that common-law spouses have.

The problem with unjust enrichment is that it’s not specific to spousal relations. It is a type of recourse that’s also open to anyone else who feels that they have had their patrimony affected, that there’s been a detriment to them, and someone else was economically advantaged by their impoverishment. So could be business associates, it could be any number of situations.

Now with the parental union, there is a new opening for the couples who find themselves qualifying for that new regime, and that is that they would have access to a compensatory sum if they feel like they have made certain contributions that should not go unnoticed or should not go uncompensated. This is something that married spouses have access to.

So again, we’re trying to mirror rules that apply for married spouses to couples who are in a common-law union but are subject to the parental union as well. So, we’re opening more doors for couples who would qualify for that regime or who also want to opt into that regime.

Carmela Guerriero:

Well, it sounds like there’s progress, which is great, it’s getting better, and particularly for children. I read recently in 2021, 65 percent of babies born in Quebec are born from couples that are not married. So, this is progress, this is progress for them as well.

Marcella De Piano:

Yeah, it really seems like with this new bill that has been introduced is that we’re trying to align today’s societal norms with the law. So we’re just trying to make up for lost time, but we still have [a] way to go. We still have to look ahead and see what is the actual societal landscape.

The statistic that you bring up is indeed very interesting, and it would also be interesting to see, well, what is the statistic of people who find themselves in relationships where there are blended families? And so the couples don’t share a common child, but are raising children from previous unions together. So the current bill does not address that family situation, but that is something that we should be making some efforts to try to address as well in the future.

Carmela Guerriero:

The evolution will be interesting, and as you said, it’s somewhat a long time coming, certainly for a province like Quebec. So it will be very, very interesting.

We’ll shift over to the estate planning piece here, and as you already know, you know that 50 percent of Quebecers still have no Will. So what challenges are imposed if the non-married couple have no Wills? Who would inherit? How is it all determined? I guess pre bill 56 and post, if you can share that with us.

Marcella De Piano:

Yeah. So, everyone’s heard the story of their cousin’s brother’s uncle’s best friend’s daughter-in-law who found themselves in a situation where her spouse passed away and she was under the impression even if he had no Will that because they’d been together for so many years and because they share children together that she would automatically inherit the entirety of his estate. Only to be informed much to her great dismay that that is not in fact the case.

So, the way the current law stands is that when we are in a common-law union and we do not have a Will, we unfortunately do not automatically inherit from our spouse. So we can find ourselves in a bit of a predicament, especially when the people who do inherit are our children. That would mean that let’s say our spouse owned the family home and we had children together and that spouse passes with no Will, we’d now find ourselves living in the home of our children even if those children are minors.

In fact, in my early days of practice, I actually did encounter a similar situation where there was a couple, unmarried, they had two young children who weren’t even [in] preschool, they were barely preschool age, and they owned a rental property together that they lived in. The house at that point was in such a state, the roof needed to be repaired urgently, and they were waiting on financing from the bank and tragedy strikes. And so, one of the spouses passes away and he did not have a Will.

So his spouse found herself in a situation where she had two very young children who had just lost their father, she lost her spouse, and she had a home that was becoming increasingly unsafe because of the roof situation and had no means to rectify it immediately. And then to add insult to injury, she finds out that the home that she co-owns with her deceased spouse now devolves to their two young children. So she becomes co-owners with her two minor children, and from there ensues a very lengthy estate liquidation process where the two young children inherit. They’re minors, so we have to set up a tutorship council so that she can oversee the value of their assets. Then not only that, now she’s going to find herself in a position where she has to refinance her home with her two young children who have no income, no means. So, it’s a very difficult situation, and that’s on top of the tax liability that she found herself faced with because of the fact that there was no tax planning that was done with the estate planning. There was tax on capital gain that was payable upon her spouse’s death for the portion of the home that was rental. So, a lot of unfortunate incidents that just unfolded from this one little factor that could have completely changed the course of their future, which is a Will.

Now, you might think, “Well, if I’m married, I’m protected. I’m safe.” I’m here to tell you that unfortunately that is not fully the case. So even if we are in a situation where we are married in the event that our spouse passes and the spouse has no Will, we could find ourselves in a situation where we inherit one-third of the assets and our children two-thirds of the assets.

Or the doomsday scenario, and I say doomsday because personally speaking, I think this would be a catastrophe. You have no children, and so you find yourself inheriting half of your spouse’s estate and the other half devolving to either his parents, so your in-laws, or his siblings. Which could also be another colossal disaster, especially if you have siblings who live abroad, they’re not Canadian residents. So, you find yourself not only co-owning perhaps your home with your in-laws, so talk about awkward family dinners. You might also find yourself in a real quagmire internationally speaking if you have non-residents.  If I live abroad, I don’t want 50 percent of a home in Montreal, I might want to be bought out. So, there’s a lot of tricky legal situations to navigate even when we are in a married union.

Carmela Guerriero:

What if you don’t get along with your in-laws or you don’t get along with your sister-in-law or brother-in-law, you add in another layer of emotional complexity to all that as well, right?

Marcella De Piano:

Absolutely, and at that point, they are your parents-in-law, and then you sever the in-law portion because now your situation has changed, your civil status has changed, you find yourself married and now you are a widow. You’re already grieving the loss of your husband, we don’t want to necessarily add to that and grieve the loss of your sanity. So that’s an extra factor to consider, if you needed a motivator to do your Will, let that be one of them.

Carmela Guerriero:

That would be one.

Marcella De Piano:

So, if we look ahead to the parental union that is going to come into effect, the rules again that are perhaps subject to change as they currently stand are that the couples who are in a parental union would have similar rules to the rules that apply to married spouses. But even in the parental union, there’s a bit of a tier system where we come to look at the duration of the union in order to determine whether or not you would be entitled to inherit automatically under the law in the absence of a Will.

So, if your union has been short and you haven’t made it to your first anniversary yet, you haven’t celebrated. Then you would unfortunately under the way the current bill is drafted, find yourself in the same situation as common-law spouses who are not subject to the parental union, which would mean that you would not automatically inherit.

For those who are in a union that has withstood, not the test of time necessarily, but that you have at least hit that one-year mark, you would find yourself currently eligible for at least a portion of the inheritance.

So, if we look across the board, married spouses, spouses who are in a common-law relationship, or spouses who are subject to the parental union, the common thread here is that there is no protection for the spouse that is a 100 percent if we find ourselves in a situation where there is no Will.

Carmela Guerriero:

So that leads me perfectly to the next question is what estate planning advice would you share for common-law spouses in Quebec? And I’d add even if you can comment on advice you would share on incapacity planning, [within] the protection mandate for common-law spouses.

Marcella De Piano:

Yep, so this advice is good for common-law spouses, it’s also fully applicable to spouses who are married, is get your Will done. There’s no better protection than a Will. It is the expression of your last wishes, and you can protect your family by doing your estate planning. You can also try to minimize tax as well, so there’s some tax planning to be done there in addition to just looking at the “who gets what.” You’re no better served than when you try to serve yourself.

The same goes for the protection mandates. It’s really the best tool to ensure that you have the power to appoint the person or the people that you would like to make decisions on your behalf in the event of an incapacity for anything that regards the protection of your person. So, from housing to treatment plans, to whatever the case may be, and the administration of your property. They both go hand in hand, if you’re planning for your death, you should also plan for your incapacity. Where there’s a Will, there’s a way, and I mean that full pun intended. It is the best tool that you could have in your toolbox.

Carmela Guerriero:

Thanks, Marcella. I totally agree.

If you hope listeners just remember one thing from our conversation today, what would that one thing be?

Marcella De Piano:

Protect yourself, get informed, reach out to your notary or your lawyer and plan for the unplannable. Don’t put yourself in a situation where your heirs are left struggling. The best defense is a good offense, so be proactive and get your Will done, get your mandate done as well.

Carmela Guerriero:

Thank you, Marcella, for joining me today to discuss how common-law couples can navigate their rights and protect their interests, and why this matters beyond wealth.

Marcella De Piano:

Thank you so much for having me back.

Carmela Guerriero:

You can find out more about Marcella De Piano at bcf.ca or on LinkedIn. If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and review. Until next time, I’m Carmela Guerriero standing in for Leanne Kaufman. Thank you for joining us.

Outro speaker:

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