Division of Property for Unmarried Couples

Constructive Trust

When common law couples separate, the legislation in Parts I and II of the Family Law Act don’t apply to them. These parts of the legislation only apply to spouses, which means that the people actually have to be legally married.

Nevertheless, it has been acknowledged that in cases where there has been a relationship of some length, a common law spouse may have some right to a share of the property not otherwise in their name. In order to do this, the partner seeking a share of the property has to make a constructive trust claim. If the partner can show that Jim received a benefit from Jane, Jane suffers a loss as a result of giving this benefit, AND there is no reason under the law why Jim should benefit at Jane’s expense, then the court may say that Jim holds some amount in constructive trust for Jane. All of the criteria listed above must be met in order for there to be a claim of constructive trust; if any are missing, then the claim will fail.

The parties do not need to have agreed that one would hold property in trust for the other, but the person making the trust claim must have reasonably believed that they would get an interest in the property, not just some financial compensation. Also, the contribution does not have to be toward obtaining the property; a claim can be based on the person contributing to the upkeep or improvement of the property. Household and childcare services can be considered to be a contribution for the purpose of a constructive trust claim.

While a claim can be made for a part of the value held by the other partner, the courts will not equalize property between the two, and divide the value of the property equally between the partners. Contributions may entitle a person to a part, but not every contribution entitles the person making the claim to 50% of the value. In some cases, rather than being a percent of the value that is awarded, the court will decide on a specific sum that should be paid to the person.

A resulting trust is created when it is found that the parties had a common intention (express or implied) that one party would hold property in trust for the other. There is a presumption of resulting trust in family law, in that if one spouse purchases property in the name of the other, it is intended that the title holder is keeping the property in trust for the spouse that paid the money.

In order to rebut this presumption, the party wishing that the property not be held in trust must show that the property was a gift to them. If this is found to be so, it rebuts both resulting trust claims and constructive trust claims as set out above. In some situations, spouses “gift” property to one another to avoid creditors. While the law is not completely firm on this point, the general attitude is that if this can be shown, one cannot designate something as a gift when it is profitable, and later try and claim that this was not a gift because it is now better for it not to be a gift.

Generally, trust claims can be complicated and detailed claims to make. You are strongly advised to consult a lawyer if you believe you might have a claim under resulting or constructive trust.

Please feel free to contact us at info@jnmlaw.com or call 416-929-6821