Marv and Estelle were as surprised as anyone to find companionship again in their late 60s after losing their spouses. They bypassed marriage out of respect for cherished memories and moved in together.

Their co-habitation agreement set out a 60-40 split of all living expenses and a 70-30 split for travel, country club membership and a kitchen renovation for Marv’s condo where they wanted to live.

Estelle sold her small bungalow, moving from small town to city lights.

Read: Advise common-law clients to plan for split

Things proved happy over the next 15 years. They enjoyed golf, bid euchre at the community centre and trips to California and Italy.

Today, though, dementia is robbing Marv of his dignity: he’s legally incapacitated at 82. Everyone agrees selling the condo, his biggest asset, will cover his specialized care. Luckily, it’s a hot seller’s market.

Estelle digs up the co-habitation agreement and meets with a lawyer. He says she may have no share in the condo: common-law couples do not have the same property rights as married people.

A major difference

Legislation frequently equates common-law with married couples. But the lawyer says property brought into a common-law relationship usually belongs to the registered owner.

Estelle is not on title, and the cohabitation agreement doesn’t mention property rights. So she cannot share in the condo sale proceeds. That leaves her without a place to live, and not enough cash to buy another property or pay rent.

Read: Marriage contracts protect assets

She explains that 15 years ago, they figured they’d sell when the condo proved too much and downsize to a seniors residence with a meal plan. They agreed – but not in writing – to split the remaining profits.

Marv wanted a simple agreement: his wife’s battle with cancer had exhausted him, and there was no hidden agenda. It was too painful for Marv and as uncomfortable for Estelle to negotiate end-of-life care and death in drafting the agreement.

Estelle wonders, “Where will I live? What can be done to ensure Marv’s care won’t deplete his resources? What will happen to the estate of the first one who dies?”

She needs a place to live immediately, so she moves in with her daughter for several months. Years ago, Marv had executed a simple Power of Attorney-Property while preparing a basic will, naming his son. With this, Marv’s son sells the condo.

Read: Protecting clients in second marriages

Estelle could sue Marv for ownership share in the condo, which would hold up everything. She doesn’t, and there are no other clear legal alternatives. With little money to fund an uncertain lawsuit, it’s the best decision for everyone.

Fortunately, the graciousness is returned: Marv’s family gives Estelle $300,000 from the condo sale proceeds to fund a solid investment strategy.

Inadequate agreement

Toronto lawyer Leslie Giroday says the co-habitation agreement failed to diagnose inevitable future problems.

“Nobody sat down and coordinated the financial and legal dimensions — and this failure happens far too often,” she says. She adds there’s greater willingness today among lawyers and advisors to co-ordinate planning efforts, which helps avoid such issues.

Read: Getting couples on track

Giroday also recommends that each member of the couple retain separate counsel to ensure their own interests are protected.

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