Same-sex marriage simplifies estate planning

(February 8, 2005) Debate has raged over rights and discrimination ever since former prime minister Jean Chrétien unveiled draft legislation addressing the definition of marriage back in July 2003. The question of constitutional rights aside, same-sex marriage may actually simplify estate-planning laws across Canada, says Winnipeg estate-planning lawyer John Poyser.

Unless they are personally affected, the issue may not at first glance mean much to financial advisors. In fact, even some people who are personally affected haven’t given it a lot of thought, since common-law couples have nearly the same legal rights as married couples in many provinces, the Canada Revenue Agency recognizes unmarried couples including same-sex couples, and several private benefit plans have followed suit.

But the provincial laws governing property rights are not uniform across the country. In Ontario, for example, succession legislation specifically gives property rights to married people, meaning gay, lesbian and heterosexual common-law couples do not have the right to equalization of family property or the right to inherit property if one spouse dies without a will. Similarly, in Nova Scotia, common-law relationships are not recognized unless couples register with the province, regardless of how long they have been living together.

“Marriage is an important thing for property rights,” says Toronto-based estate-planning lawyer Robert Coates. “Two parties who are not married, but live together for 20 years, if one of them dies in Ontario, do they have the right to the property that is in the other person’s name alone? The answer is probably no.”

Marriage simplifies property rights somewhat by bringing the issue into an area also governed by federal laws, such as the Divorce Act. In addition to giving same-sex couples the legal option to marry in Canada, the proposed new Civil Marriage Act includes amendments to several statutes to create consistency in existing laws.

Across the country, provinces began to amend their property laws when, in 2001, it looked like the Supreme Court of Canada would declare it unconstitutional to discriminate against common-law couples. Surprisingly enough, the court’s 2002 decision, Nova Scotia Attorney General v. Walsh and Bona, concluded that provinces were not in violation of the Charter of Rights by giving more rights to married people than common-law people. The reasoning behind the decision was couples have the choice to marry and attain all of the rights of married partners.

Provinces continued making amendments to their legislation, however, because existing laws continued to discriminate against same-sex couples who do not have the choice to marry. A 1999 decision by the Supreme Court, M v. H, found it was unconstitutional to discriminate against same-sex couples.

“To most people, legal marriage carries with it, in every province across Canada, a collection of property rights that are of great economic significance on breakup or death for the poorer of two partners,” says Poyser. “The same benefits were not afforded to common-law couples. The Supreme Court of Canada said it was completely OK to discriminate against common-laws. You did not have to offer common-laws the same collection of rights, but you can’t discriminate on the basis of sexual orientation.”

He says marriage simplifies the issue because regardless of which province a married couple moves to in Canada, the Divorce Act is going to apply. “If you choose to remain common law, you’re going to be stuck in this patchwork quilt of complicated laws with differing legislative responses to the issue.” At the same time, however, financial planners should know that in most cases, marriage makes any existing wills void, and should advise clients accordingly.

In a written statement, the Department of Justice says the Civil Marriage Act, if passed, will give same-sex partners who decide to marry, the same civil legal recognition of their commitment as other married couples enjoy, while at the same time respecting religious freedom. “The Supreme Court of Canada has said — and the government agrees — that it is preferable that Parliament create uniformity of law across the country. Federal legislation is the best way to provide a clear, Canada-wide approach.”

Filed by Kate McCaffery Advisor.ca, kate.mccaffery@advisor.rogers.com