Common-Law Couple in BC with $750K in Joint Assets and No Will: What Deemed Disposition and Intestacy Rules Actually Cost the Surviving Partner in 2026

The Scenario: A Vancouver Common-Law Partner Dies with $750K and No Will

David and Lisa did what most common-law couples in BC do: they assumed that eight years together, a shared mortgage, and joint household expenses made them legally equivalent to married spouses. They were partly right — BC's Wills, Estates and Succession Act (WESA) does treat common-law partners of two or more years as “spouses” for intestacy. But WESA recognition and CRA recognition are different hurdles, and without a will or beneficiary designations, every dollar of David's $750,000 estate now flows through the most expensive path available.

BC Intestacy Rules for Common-Law Partners: What WESA Actually Says

Under WESA (in force since March 2014), a common-law partner who has lived with the deceased in a “marriage-like relationship” for at least two years qualifies as a “spouse” for the purposes of estate distribution. Lisa qualifies. On paper, she receives the same intestacy share as a married spouse:

The distribution looks reasonable. The problem is what happens to the assets before they reach Lisa — specifically, the tax triggered on David's terminal return and the probate fees on the full estate.

Tax Event #1: The RRSP Collapses as Income

David's RRSP has no named beneficiary. Under section 146(8.1) of the Income Tax Act, the entire $300,000 RRSP balance is included as income on David's terminal T1 return. This is not a capital gain — it's ordinary income, taxed at full marginal rates.

If David had named Lisa as the RRSP beneficiary, the $300,000 would have flowed directly to Lisa's own RRSP as a “refund of premiums” — a tax-free rollover with no income inclusion on David's return and no probate. Without that designation, the estate pays the tax first, then distributes what's left.

For a deeper walkthrough of what happens when an RRSP collapses at death without a surviving spouse, see our $500K RRSP at death guide.

Tax Event #2: Deemed Disposition on the Non-Registered Portfolio

Under section 70(5) of the Income Tax Act, David is deemed to have sold every capital property he owned at fair market value immediately before death. The non-registered investment account triggers a $150,000 capital gain ($350,000 FMV minus $200,000 ACB).

Under the 2026 tiered inclusion rate: 50% inclusion on the first $250,000 of annual capital gains, 66.67% on gains above $250,000. David's $150,000 gain falls entirely within the first $250,000 tier:

• $150,000 gain × 50% inclusion = $75,000 of taxable capital gain

If David had a will directing the non-registered investments to Lisa as his common-law spouse, the spousal rollover under section 70(6) would have eliminated this gain entirely — transferring the investments to Lisa at David's ACB of $200,000 with no deemed disposition. The tax would be deferred until Lisa sells or dies.

Without a will, the spousal rollover may still apply if the assets pass to Lisa through intestacy — but the estate must prove Lisa's common-law status to the CRA, and the election must be made on the terminal return. If David's children from his prior marriage contest Lisa's common-law status under WESA, the rollover hangs in limbo while litigation proceeds.

Tax Event #3: The TFSA — Tax-Free, But Not Free of Probate

David's $100,000 TFSA has no successor holder and no named beneficiary. The account ceases to be a TFSA on the date of death. The $100,000 balance at the date of death passes to the estate tax-free — but any investment growth between David's death and the date of distribution is taxable income to the estate.

More importantly, the TFSA goes through probate. If Lisa had been named as successor holder, the TFSA would have transferred seamlessly to her own TFSA — no probate, no tax, no gap in tax-sheltered status.

The Full Damage: David's Terminal Return

At $405,000 of taxable income, David is well into BC's top combined bracket of 53.50%. The RRSP collapse alone — $300,000 at full marginal rates — accounts for roughly $140,000 of the tax. The capital gains add another ~$33,000.

BC Probate Fees: With and Without Beneficiary Designations

BC charges probate fees on the gross value of assets passing through the will (or through intestacy, when there is no will). The 2026 rates:

For a full provincial comparison, see our probate fees Canada 2026 guide. On a $750K estate, BC's fees are high but not the worst — Ontario would charge $10,500, while Alberta charges a flat $525 regardless of estate size and Manitoba charges $0.

Side-by-Side: No Planning vs Three Documents

The entire financial difference between David dying without a will and David dying with three basic documents:

The gap: roughly $180,000. The planning cost: $2,000–$3,500 for a single appointment with a BC estate lawyer.

The Three Documents Every BC Common-Law Couple Needs

These are the three documents that close the gap between common-law and married treatment at death. None of them is optional if you have registered accounts or non-registered investments.

Document 1: A will

The will must explicitly name Lisa as David's common-law spouse and primary beneficiary. It directs the non-registered assets to Lisa, which triggers the section 70(6) spousal rollover — deferring all capital gains tax until Lisa sells or dies. Without the will, intestacy applies, and the spousal rollover depends on proving common-law status after the fact.

The will also appoints an executor — without one, the court appoints an administrator through a more expensive and slower process.

Document 2: Beneficiary designations on all registered accounts

Two forms at the financial institution:

• RRSP: Name Lisa as beneficiary. The $300,000 flows directly to her RRSP as a refund of premiums under section 146(8.1) — no income inclusion on the terminal return, no probate, no CRA proof required at the account level
• TFSA: Name Lisa as successor holder (not just beneficiary). The account transfers to Lisa's TFSA seamlessly — no probate, no gap in tax-sheltered status, no taxable growth period

These designations take 10 minutes to complete at any bank or brokerage. They override the will, so even if the will is contested, the registered accounts flow directly to Lisa.

Document 3: A cohabitation agreement

The cohabitation agreement establishes the start date of the common-law relationship, confirms its conjugal nature, and creates documentary evidence that satisfies both WESA's two-year threshold and the CRA's 12-month threshold. Without it, proving common-law status after death requires assembling shared utility bills, joint bank statements, lease or mortgage documents, CRA returns filed as common-law, and potentially statutory declarations from friends or family.

A cohabitation agreement is especially important when the deceased has children from a prior relationship. David's two adult children could contest Lisa's common-law status under WESA — delaying probate, increasing legal costs, and potentially threatening the spousal rollovers. The cohabitation agreement makes that contest much harder to sustain.

The Contested Scenario: What If David's Children Challenge Lisa's Status?

This is the scenario estate lawyers see regularly in BC blended families. David's two adult children from his prior marriage may argue that Lisa does not qualify as a common-law spouse under WESA — either claiming the relationship was less than two years or not truly “marriage-like.”

If the challenge succeeds, Lisa receives nothing under intestacy. The entire $750,000 goes to David's children. And because there is no spouse in the picture:

• The RRSP $300,000 collapses as income on the terminal return — no spousal rollover possible
• The non-registered $150,000 capital gain is fully triggered — no spousal rollover
• The tax bill stands at ~$173,000 regardless
• After tax and probate, the children split roughly $555,000

Even if the challenge fails (and Lisa is confirmed as spouse), the litigation itself costs $20,000–$50,000+ in legal fees, delays distribution by 12–18 months, and may freeze the estate's investment accounts during proceedings. A cohabitation agreement signed while both partners were alive prevents this entire sequence.

For more on how common-law treatment differs from married treatment in estate planning, see our common-law partners inheritance tax guide.

Provincial Comparison: Same $750K Estate in Other Provinces

The income tax on the terminal return varies by province. The probate cost varies dramatically. Here is what David's estate would cost in the four most common snowbird and retiree provinces:

Alberta saves roughly $28,000 on this estate — lower marginal rate plus flat $525 probate. But province of residence is driven by where you live, not where you want to die. The real lever is the planning, not the postal code.

The Decision That Matters Most

Common-law couples in BC have nearly identical legal rights to married spouses under WESA. But “nearly identical legal rights” and “automatically receiving the same tax treatment from the CRA” are not the same thing. The CRA requires proof. The financial institutions require forms. The probate court requires a will.

Without three documents — a will, beneficiary designations, and a cohabitation agreement — a $750,000 estate loses up to $180,000 to tax and probate that a married couple with the same assets would never pay. The planning cost is $2,000–$3,500. The return on that investment is 50:1.

If you are in a common-law relationship in BC, the single most important financial decision you can make this year is not about your portfolio allocation or your RRSP contribution. It is filling out three forms and making one appointment with an estate lawyer.

For the full framework on how CRA treats common-law spouse rollovers in BC, see our common-law spouse rollover guide for BC. For the comprehensive guide to how Canada taxes estates at death, see our inheritance tax Canada 2026 complete guide.