Vancouver Sun Article: Do Gay Couples Understand The Serious Financial Burdens Of Marriage?

It’s Pride week, a time to recognize the strides that have been made by Canada’s LGBT (lesbian, gay, bisexual and transgender) community over the years. One victory was the right for same-sex couples to get married, which they’ve been legally allowed to do in British Columbia since 2003.

But just because you can, should you?

Getting married, or choosing not to, can be one of the biggest financial decisions made in a lifetime, yet many people don’t even think about how taking that step, or choosing not to, affects their financial future.

“I think it’s kind of ironic that same-sex couples fought for so many years for the right to get married when so many opposite-sex couples just don’t even understand what that really means from a legal perspective,” said Christine Van Cauwenberghe, director of tax and estate planning at Investors Group. “And I’m sure a lot of the reason for the fight was symbolic and philosophical, but same-sex couples also do in many cases seem to be a little bit more familiar with what it means from a property perspective.”

In most provinces, getting married brings with it additional property rights and obligations, rights and obligations that may not kick in when a couple chooses to live together instead, Van Cauwenberghe said.

Earlier this month the B.C. government released its White Paper on Family Relations Act Reform proposing that couples who have lived together for two years, or less time if they are raising a child together, be treated the same as married couples.

“But who knows how long it could take before those proposals are enacted, if ever,” Van Cauwenberghe said.

As it stands now, being married and living common-law mean different rules about what happens to family property when the couple splits up.

In B.C. — and each province is different — common-law couples can’t apply for a division of family assets under family law legislation like they can if they were married, Van Cauwenberghe said.

So if you have a situation where one person works and earns all the income, builds up all the savings and acquires all the property in his or her name and the other stays at home and hasn’t any assets in their own name, that person needs to understand that if the relationship ends, they will not be entitled to half the other person’s assets like they would be if they were married, she said.

While the partner can go to court to seek a share of property using what’s called a constructive trust claim, the government’s White Paper called these claims “complex, expensive and often unsuccessful.”

“That still seems to come as a surprise to many people,” Van Cauwenberghe said.

One reason for the confusion may be that some laws treat common-law couples like married couples, while others don’t. For example, under the Income Tax Act, couples living together for 12 months have to file income tax returns as a couple, Van Cauwenberghe said. So many people are under the false impression that since they are treated as married for income tax purposes they must be treated as married for all purposes. “And that is not at all the case,” she said.

People who choose to get married should also understand their rights and obligations, especially if it’s a later-in-life marriage where both parties have assets of their own, Van Cauwenberghe said. For example, if one party owns the house that becomes the family home after marriage, that could be considered family property that gets split 50-50 upon divorce.

“And that’s a huge impact on the person who brought in the home,” she said. “That’s just one example of what a huge impact marriage can have.”

Because it’s complicated and different rules apply in different cases, Van Cauwenberghe believes it’s important for all couples to seek advice — financial or legal — when they are starting a relationship.

“Because a lot of people are just making very dangerous assumptions [about their rights],” Van Cauwenberghe said.

Next week: What happens if one partner dies and other things to think about.