Ontario Family Law Blog : Barrie Lawyer & Attorney Brian Galbraith : Simcoe County, Canada Divorce, Separation, and Collaborative Law

When you divorce, what would you rather have - a valuable pension or a home worth the same? Or does it matter? 

If a pension is worth the same as the equity in the home, the property settlement is easy. One person keeps their pension and the other keeps the house. Technically, this seems like a fair settlement but there may be complications. 

Retirement

Often the pension holder is the bread winner for the family so will be paying spousal support to the other spouse. The challenge is that when they retire, the pension holder will have an income from the pension but the one with the home may not have any income. The pension holder will say "Hey, I shouldn't have to pay you spousal support from my pension... you got the house because it was of equal value to my pension.... if I have to pay spousal support from my pension, that would be double dipping!" 

In the case Boston v. Boston, the Supreme Court of Canada agreed. It said that in most cases it would not be fair that the pension holder would have to pay spousal support to their spouse from that portion of their pension income that has been equalized. They did say that any pension that was acquired post-separation or any other income could be considered for the purposes of determining whether spousal support should be paid. So, if the pension income is $5,000 per month and $4,000 of it was based on the pension acquired at the date of separation (which was equalized), then only $1,000 per month would be considered as the payor's income from which spousal support could be ordered. With an income of merely $1,000 per month, spousal support won't likely be ordered.

There is an assumption in the Boston case that the home owner should be able to generate a stream of income from the home asset when a retirement income is needed. For example, the home could be sold and the money invested into an annuity. As a result, both parties are in a similar situation. 

Exceptions

There are exceptions to this general principle against double dipping. In Meiklejohn v. Meiklejohn, the Ontario Court of Appeal states it may be appropriate to order spousal support be paid from an equalized pension when the recipient is in dire need, has little ability to earn an income and most of his or her assets are tied in their home. 

If you are the pension holder, you will want to include a provision in your separation agreement that specifically prevents double dipping. If you are the home owner, you will want to argue against such a provision and leave open the potential of spousal support from the equalized pension. 

Pension Division 

There is pending legislation in Ontario that will allow a pension to be divided at source. That means that a portion of the pension can be transferred directly to the other spouse. You can do this with some federal pensions already. This new legislation will be welcomed. It will be mean that each can have a portion of the pension and each can have a portion of the equity in the home. It will certainly make for better settlements. I anticipate there will be fewer arguments about double dipping after this legislation is finally passed. 

My mom used to say "You can't have your cake and eat it too!" but she is wrong when it comes to double dipping. There can be exceptions. 

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Everyone hates having to do a sworn financial statement. This is a court form used in Ontario to list your assets, debts, income and expenses.  It is long, cumbersome and, frankly, a pain to complete. If your case is in Court in Ontario, you must complete the form. The Rules require you to complete it and the court clerks won't even open your court file without you filing a sworn financial statement.

If you aren't in court, I don't blame you if you don't want to complete it.

As your lawyer, we ask you to do a financial statement to ensure that you are protected. Yes, to protect you! We want you to fully disclose your assets and debts on the date of separation and date of marriage to ensure that your spouse cannot wiggle their wait out of the agreement, claiming that you were hiding assets. The Family Law Act allows the Court to "set aside" (which means not enforce) a separation agreement if there has not been full disclosure. 

The financial statement is an easy way to ensure that there has been full disclosure. It is like a checklist for lawyers. 

We ask your spouse to provide a sworn financial statement for the same reasons. It is an easy way to ensure we have a complete financial picture from him or her too.  

Once we have a complete financial picture, we can advise you as to the range of outcome should the matter proceed to court. In other words, we can give you legal advice. Without complete disclosure, we can't give you advice: we are just guessing.

Lawyers can get into big trouble with the Law Society if we give advice based on guesses or assumptions that turns out to be bad advice. Okay... you got me... we are also covering our own butt when we are asking for sworn financial statements. 

Disclosure is Essential

It isn't the financial statement itself that is important - what is important is that there is full disclosure. It's just that the financial statement makes it easy. 

A recent case before the Ontario Court of Appeal, known as Ward vs Ward clearly states that the exchange of financial statements is not necessary but full disclosure and knowledge of the other person's financial circumstances is essential. In that case, the parties exchanged some documentation with the assistance of the family's accountant. Financial statements were not completed but there was full disclosure and knowledge of each other’s financial circumstances.

The court describes the disclosure process in that case as follows:

“...neither party filed a financial statement, nor was one required under the terms of the process to which they agreed. While this did not diminish the obligation to disclose, in this case, the parties relied on the collaborative law process and other avenues of disclosure, including net family property statements and information from Mr. Wetstein [the family friend and accountant]”

In the end, the Ontario Court of Appeal determined that the husband's disclosure and the wife's knowledge of financial circumstances of the husband were sufficient even without sworn financial statements exchanged. The Court refused to set aside the agreement reached.  

Lawyers often use the financial statement because it is easy. It lists all of the categories of assets and debts so you don't miss disclosing something important. In our law firm, we insist on backup documentation to verify every value in the financial statement. It is the backup documentation that is important and fulfills the obligation to disclose. 

Collaborative Cases

In Collaborative cases, the Financial Specialist works with the clients to obtain a complete and accurate representation of the financial circumstances of the parties, usually without the use of a sworn financial statement. The Financial Specialist does a report and attaches the backup documentation for every value. Both lawyers ensure that their client has fully disclosed everything. Equally important, every lawyer must review what the other client has provided to ensure s/he has provided full disclosure. 

In Collaborative cases, as lawyers we always carefully review the Financial Specialist's report with our client to ensure it is accurate. Ultimately, the lawyers will ask for a sworn statement from each client stating that they have fully disclosed their assets, debts and income and that the Financial Specialist's report is accurate and complete. Alternatively, the lawyers will add wording to the separation agreement that states both parties are warranting that they have fully disclosed everything and that the Financial Specialist's report is accurate. Either way works. 

Full disclosure is essential. If you are trying to hide assets or income, we won't be your lawyer. We don't play those games. 

If you don't like having to provide full disclosure, we get it. You are not alone. Complain all you want. We have big shoulders. We want your agreement done right and made to last so just get it done. It’s for your own sake. 

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Summer is fast approaching. Now is the time to begin to work on your summer access schedule. 

Some separated families have the summer schedule set for every summer. Mom will have certain weeks every year and Dad will have other weeks. There is very little negotiation or planing involved. This is a nice arrangement, if you can manage it. The disadvantage is that life is not static. Sometimes the opportunity to negotiate the children's schedule gives you a chance to accommodate the varying schedules and attend special events that arise each summer. 

For most families, there is a lot of negotiation and compromise involved in scheduling the summer schedule.

Here is how to do it. 

Find a clean calendar you can work with to develop a plan. 

First, write down any dates on the calendar  that are carved in stone. For example, if your holidays are determined by your employer and you can't change them, write those dates on the calendar. If your children have any activities that cannot be changed, write those down too. 

Next, write down the preferred dates or activities you would like to have but can live without. Use a different color so it is clear that these are not "carved in stone" dates. 

Then do the same for your ex spouse. If you know of any "carved in stone" dates for your ex, write them on the calendar. If you are aware of any preferred dates for your ex, write those down too. 

Now you just have to start carving up the time. Remember, you are trying to reach an agreement so you have to try to come up with something you think your ex spouse can live with too. You both can't get every favored date. So make some compromises. Share the favored dates. 

Get your ideas for the summer schedule over to your ex spouse as soon as you can. 

I always suggest that you send to your ex spouse a couple of options so they have something to consider. If you send just one choice, it may feel like you are trying to impose your wishes on your ex spouse. Put a short explanation for the dates you have chosen and the compromises you willing to make. You don't need a long narrative. Short, factual and clear is best. 

Google calendar is a free internet service and is an excellent way of sharing a calendar with your ex spouse. You could create one that is only accessible to you and your ex. You could put your suggested schedule for the children over the summer on it and then seek input from your ex. In fact, the Google Calendar is a great way of keeping track of busy kids all year long. You can get alerts when changes are made to it. 

When you get  a proposal for the summer schedule, respond in a timely way. Waiting to hear just causes unnecessary stress for everyone. I know trying to figure out the summer schedule is frustrating but just do it anyway. 

Once you have it nailed down, stick to it. Don't be changing it except in the event of some urgent arising. The idea of setting these dates in advance is to allow both parents to plan in advance. Last minute changes makes planning impossible. 

If you can't resolve it, don't just run off to court immediately. Court is too expensive, slow and you lose control over the outcome. Court will take the fun out of summer. I suggest you work with a mediator or a Family Coach to find a compromise that works for the whole family. 

One last thing... enjoy the summer time. This is when you have a great opportunity to spend some quality time with your kids. But don't forget the suntan lotion! 

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 Parenting is not easy. Parenting when separated is even more difficult. 

Mark A. Nacol, a Texas family law lawyer, in his blog Nacol Law Firm Blog does an excellent job describing the rules for effective co-parenting. 

Mark's list of rules may seem to be "common sense" but when you are the parent trying to work with someone who either has rejected you as a spouse, or whom you have rejected, it is very difficult.  Emotions and egos get in the way. 

A key to responding to the other parent in an effective manner is to take a few minutes, even overnight, to consider your response. Too often knee-jerk immediate responses can cause more problems than they solve. This is especially true when you have first separated. The emotions are so raw that co-parenting is very difficult.

My advice: read Mark's rules and then take a deep breath. Consider your response carefully. Sleep on it. Co-parenting gets easier in time. Be patient. Soon Mark's "rules" will become "common sense". Until then...follow the rules and breaaaattthhhhhh...

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