Free Union: What is the financial impact?

The Bank of Canada blacked out most of the news on July 13 when it announced a 1% hike in interest rates. On the same day Statistics Canada provided a number of interesting data from the last census (2021).

Let’s give them the attention they deserve. They will be the subject of not one, but two chronicles.

Recent demographic data reminds us that Canada tops the G7 in terms of proportion of cohabitation. She owes that title largely to Quebec, where we find 42% of the country’s “adjacent” couples (we make up 22% of Canada’s population).

What does that mean financially?

marriage down

Before we get into the question, let’s push the statistical aspect further.

First, although we are the proponents of common law cohabitation, Quebec has a growing number of married couples: 58% of spouses are married, versus 42% of those living in simple cohabitation.

The proportion of married people continues to decrease. These represented 60% of couples in 2016, the year of the last census. Young people formalize their union less than in another era, I won’t tell you anything. Married couples will soon be in the minority.

A separation agreement

However, there are young people who get married. A friend told me how her son asked for his girlfriend’s hand the other day… with her parents.

The lovebirds have been a couple for a number of years, this staging was no doubt meant to be humorous, as if to underscore their outdated aspect.

Here is a gesture of “love” or commitment that the parents of the two clans did not fail to make; the event promises to be a party without being extravagant.

Clearly we must remember that this is a financial gesture, probably even stronger, and I am not referring to the bill for the possible open bar.

Marriage creates commitments that, unlike feelings, don’t run the risk of evaporating over time. On the other hand ! Basically what is a marriage if not a contract setting out the terms of a separation (or what happens after a death).

This contract regulates how the assets saved during the marriage are distributed in the event of separation. Marriage automatically creates the family inheritance, which must be divided equally in the event of separation. Depending on the matrimonial regime selected (separation of property or partnership), the division obligations can be extended.

civil association

There is nothing quite like it for cohabiting couples. In Quebec, common law unions are less framed than elsewhere, although they are a champion in this field.

After the separation, the former spouses do not meet any requirements other than maintenance for a common child. If one of the two exes got rich at the expense of the other, so much the worse for the latter. In the event of death, the surviving unwilling spouse is not entitled to the estate of the deceased, other than pension plans (excluding RRSPs).

However, the “pension funds”, tax authorities and the Quebec Pension Plan (QPP) all recognize “de facto spouse” status in one way or another. But still not the Civil Code, no matter how long you live together.

I understand couples wanting to keep it simple, but too many lovers, convinced that it’s for life, ignore the consequences of a breakup or death without a prenup.

A reform that is still ongoing

In the first term of office of the Coalition Avenir Québec, a far-reaching reform of family law was expected. Still in preparation, it promises better protection for de facto spouses, especially if they have a child together.

With François Legault’s party seemingly waiting for four more years in power, let’s hope the next government is born.

The other options:

If they do not marry, couples who live together can sign a cohabitation contract. This provides for the conditions of a separation; how, among other things, are the goods and the debts divided?

Life partners must at least draw up their will.

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