1. What Does "Common-Law" Mean in Alberta?

2. What Does Alberta Law Say?

3. What Happens if a Common-Law Partner Dies Without a Will?

4. How Property Is Treated

5. Beneficiary Designations

6. Planning for Blended Families

7. Tax Considerations

8. Building a Comprehensive Estate Plan

9. Common Mistakes

10. Costs and Considerations

11. When Should You Speak With an Estate Lawyer?

12. How Bridgestone Law can Help

Introduction

Many couples spend years building a life together without getting married. They purchase homes, save for retirement, raise children, and make financial decisions as a team. Because their lives are so closely intertwined, it is natural to assume that the law will automatically protect a surviving partner if one of them dies.

Unfortunately, that is not always the case.

Common-law partners in Alberta should not assume they automatically inherit each other's property.

Depending on the circumstances:

• your partner may not automatically receive your estate;

• a valid will remains one of the most important estate planning documents you can prepare;

• beneficiary designations and joint ownership may affect how certain assets pass after death;

• tax and probate considerations may still apply; and

• careful planning can help reduce uncertainty and family disputes.

For many couples, estate planning provides peace of mind by ensuring that property is distributed according to their wishes rather than relying solely on Alberta's default legal rules.

What Does "Common-Law" Mean in Alberta?

Although many people use the term common-law, Alberta legislation generally refers to qualifying couples as Adult Interdependent Partners (AIPs).

An Adult Interdependent Partnership may arise in several ways, including where two people:

• have lived together in a relationship of interdependence for at least three years;

• have lived together in a relationship of some permanence and have a child together by birth or adoption; or

• have entered into a valid Adult Interdependent Partner Agreement.

Whether a relationship qualifies as an Adult Interdependent Partnership can have important consequences for property rights, inheritance, and estate planning.

However, qualifying as an Adult Interdependent Partner does not eliminate the need for proper estate planning.

What Does Alberta Law Say?

Several pieces of Alberta legislation affect estate planning for common-law couples, including the Wills and Succession Act, the Adult Interdependent Relationships Act, the Estate Administration Act, and, in some situations, the Family Property Act.

These laws may provide important rights to surviving Adult Interdependent Partners. However, they do not replace the need for a properly prepared estate plan.

For example, even where Alberta law provides inheritance rights in certain circumstances, a carefully drafted will allows you to:

• choose who will administer your estate;

• determine how your assets will be distributed;

• coordinate beneficiary designations;

• address blended family considerations;

• establish trusts where appropriate; and

• reduce uncertainty for your surviving partner and other beneficiaries.

A comprehensive estate plan gives you greater control than relying solely on the default rules that apply after death.

What Happens if a Common-Law Partner Dies Without a Will?

One of the biggest misconceptions among common-law couples is that surviving partners automatically inherit everything if one partner dies.

The reality is more nuanced.

If a person dies without a valid will, they are said to have died intestate. In Alberta, the distribution of their estate is governed by the Wills and Succession Act, rather than by their personal wishes.

Whether a surviving common-law partner inherits, and how much they inherit, depends on the family's circumstances, including whether the deceased had children, whether those children are common to both partners, and whether the surviving partner qualifies as an Adult Interdependent Partner under Alberta law.

Although the legislation provides a framework for distributing an intestate estate, it cannot account for every family's unique circumstances.

A properly prepared will allows you, not the legislation, to decide how your estate should be distributed.

How Property Is Treated

Not every asset passes in the same way after death.

Understanding how different assets are owned is an important part of estate planning for common-law couples.

Property Owned Solely by One Partner

Assets owned solely by one partner generally become part of that person's estate upon death.

Examples include:

• real estate held in one person's name;

• personal bank accounts;

• non-registered investments;

• vehicles;

• business interests; and

• personal belongings.

These assets are generally distributed according to the deceased's will or, if there is no will, Alberta's intestacy legislation.

Jointly Owned Property

Some property may be owned jointly with a right of survivorship.

In many cases, when one owner dies, the surviving owner automatically becomes the sole owner without the property first passing through the estate.

This commonly applies to jointly owned homes and some joint bank accounts.

However, joint ownership is not appropriate for every couple or every asset. It should be considered alongside your overall estate planning goals, tax planning, and family circumstances.

Property Owned as Tenants in Common

If property is owned as tenants in common, each owner's share forms part of their estate upon death.

The deceased's share does not automatically pass to the surviving owner.

Instead, it is distributed according to the will or Alberta's intestacy laws.

This distinction becomes especially important where couples wish to leave part of their estate to children from previous relationships.

Beneficiary Designations

Many common-law couples hold significant assets that allow beneficiary designations.

Examples include:

• RRSPs;

• RRIFs;

• TFSAs;

• life insurance policies;

• segregated funds; and

• certain pension plans.

A valid beneficiary designation often allows these assets to pass directly to the named beneficiary rather than through the estate.

This can simplify administration and, depending on the asset, may reduce the amount of property requiring probate.

However, beneficiary designations should never be viewed separately from the rest of your estate plan.

Your beneficiary designations, will, property ownership, and tax planning should all work together to achieve your intended result.

Planning for Blended Families

Estate planning becomes significantly more complex when either partner has children from a previous relationship.

For example, one partner may wish to:

• ensure the surviving partner can continue living in the family home;

• provide financial security during the surviving partner's lifetime; and

• ultimately leave the remaining estate to children from a previous relationship.

Without careful planning, these objectives can conflict.

A will, trust, or other estate planning strategy may help balance the interests of both the surviving partner and the children.

Because every blended family is unique, these situations often benefit from legal advice before documents are prepared.

Tax Considerations

Many common-law partners assume that leaving property to one another is automatically tax free.

While certain tax rollover provisions may be available for qualifying spouses and Adult Interdependent Partners under the Income Tax Act, tax consequences can still arise depending on the nature of the assets and how the estate has been structured.

Potential tax issues include:

• capital gains on investment properties;

• taxation of RRSPs and RRIFs;

• business succession planning;

• investment income earned after death;

• final income tax returns; and

• ongoing tax obligations during estate administration.

Because tax rules are separate from Alberta estate law, many executors work closely with both an estate lawyer and an accountant when administering an estate.

Building a Comprehensive Estate Plan

A will is only one component of a complete estate plan.

For many common-law couples, a comprehensive estate plan should also include:

• a properly drafted will;

• an Enduring Power of Attorney;

• a Personal Directive;

• updated beneficiary designations;

• a review of property ownership;

• consideration of trusts where appropriate;

• tax planning;

• business succession planning, if applicable; and

• regular reviews following major life events.

Preparing these documents together helps ensure that each one supports the others rather than creating unintended conflicts.

For example, a will leaving your estate to your partner may not achieve your intended outcome if your largest assets have outdated beneficiary designations or are owned in a manner inconsistent with your overall plan.

A coordinated estate plan provides greater certainty for your partner, reduces the likelihood of disputes, and can make estate administration significantly more efficient.

Practical Examples

Example One: A Long-Term Common-Law Relationship

Emma and Jason have lived together in Calgary for 18 years. They own a home together, have retirement savings, and have named each other as beneficiaries on their life insurance policies. However, they never prepared wills.

When Jason unexpectedly dies, Emma learns that although she has important legal rights as an Adult Interdependent Partner, several aspects of Jason's estate still require legal administration. Questions also arise about his personal bank account, investment portfolio, and the appointment of a personal representative.

Had Jason prepared a comprehensive estate plan, he could have appointed the person he wanted to administer his estate, provided clear instructions for distributing his assets, and reduced uncertainty for Emma during an already difficult time.

Example Two: Children From a Previous Relationship

Mark and Sarah have lived together for ten years. Mark has two adult children from a previous marriage, while Sarah has no children.

Mark wants Sarah to remain in their home for the rest of her life but ultimately wants the property to pass to his children.

If Mark simply leaves the house outright to Sarah, she may later decide to leave it to someone else through her own will.

Alternatively, if Mark leaves the property directly to his children, Sarah could be forced to move shortly after his death.

With careful estate planning, Mark creates a trust allowing Sarah to live in the home during her lifetime while preserving the ultimate inheritance for his children.

Example Three: Outdated Beneficiary Designations

David and Michelle entered into an Adult Interdependent Partnership several years ago.

When David reviews his estate plan, he discovers that his RRSP and life insurance policy still name his former partner as beneficiary.

Although his will leaves everything to Michelle, those assets may still be paid according to the outdated beneficiary designations.

After reviewing his estate plan with his lawyer, David updates the designations so they are consistent with his current wishes.

Common Mistakes

Estate planning for common-law couples often involves assumptions about legal rights that do not always reflect how estates are administered.

Assuming Common-Law Couples Have Exactly the Same Rights as Married Couples

Many people believe that living together for several years automatically gives them identical legal rights to married spouses in every situation.

While Alberta law recognizes Adult Interdependent Partners in many important ways, estate planning issues can still arise depending on how assets are owned, whether a will exists, and whether beneficiary designations have been updated.

A comprehensive estate plan provides greater certainty than relying solely on the default legal rules.

Not Preparing a Will

Some couples believe they do not need wills because they jointly own their home or have named each other as beneficiaries on certain accounts.

However, a will serves many purposes beyond distributing property. It allows you to appoint an executor, provide instructions for your estate, coordinate with beneficiary designations, and address assets that do not pass automatically to your partner.

Ignoring Beneficiary Designations

Beneficiary designations should always be reviewed whenever there is a significant change in your relationship.

An outdated designation naming a former partner, family member, or another unintended person can result in assets passing differently than your will provides.

Overlooking Property Ownership

Many couples do not realize that the way property is owned can dramatically affect what happens after death.

Whether real estate is owned solely, jointly, or as tenants in common can determine whether the property passes automatically to the surviving owner or forms part of the estate.

Ownership arrangements should be reviewed alongside your will and other estate planning documents.

Failing to Plan for Incapacity

Estate planning is not only about death.

Without an Enduring Power of Attorney or Personal Directive, your partner may face additional legal hurdles if you become unable to manage your finances or make personal decisions during your lifetime.

Preparing these documents together creates a more complete plan for the future.

Costs and Considerations

The cost of preparing an estate plan is often modest compared with the financial and emotional costs that can arise from inadequate planning.

Depending on your circumstances, your estate plan may involve:

• preparing wills;

• Enduring Powers of Attorney;

• Personal Directives;

• reviewing beneficiary designations;

• updating property ownership;

• trust planning;

• tax planning;

• legal advice regarding blended families; and

• future probate or estate administration costs.

The complexity of your family, the nature of your assets, and your long-term objectives will all influence the planning required.

Rather than viewing estate planning as a single document, it is helpful to think of it as a coordinated strategy designed to protect both partners and those they wish to benefit after death.

When Should You Speak With an Estate Lawyer?

Professional legal advice is particularly valuable if:

• you have recently entered an Adult Interdependent Partnership;

• you have children from a previous relationship;

• you own a home or investment property;

• you have significant RRSPs, RRIFs, TFSAs, or life insurance;

• you own a business;

• you wish to provide differently for your partner and your children;

• you have beneficiaries living outside Canada;

• you are uncertain how your property is owned; or

• you want to ensure your entire estate plan works together.

An estate planning lawyer can review your will, beneficiary designations, property ownership, and incapacity planning documents to help ensure they reflect your wishes and your family's circumstances.

How Bridgestone Law Can Help

Estate planning for common-law couples involves much more than preparing a will. It requires careful coordination between your will, beneficiary designations, property ownership, tax planning, and incapacity planning documents.

Bridgestone Law assists individuals and families throughout Calgary and Alberta with wills, estate planning, probate, and estate administration. We work with common-law couples and Adult Interdependent Partners to develop estate plans that reflect their unique family relationships, protect their loved ones, and reduce the likelihood of unnecessary disputes or uncertainty after death.