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. 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

Do you remember the day you separated? How did it happen? Was a note left or an email sent to say it's over? Maybe a text? Maybe it was a screaming match? Maybe it was just a sad mutual realization that your marriage was over?

Regardless of how it happens, the date of separation is a painful memory, whether you are the one leaving or the one being left. 

I remember my "date of separation". It was over seven years ago but the memory of that day remains vivid in my heart and mind today. Each year, when the anniversary of it comes around, I cannot help but think of how dramatically my life changed since the date of my separation. 

From a lawyer's perspective, we need to know the date of separation for three main reasons. This first reason is we use it to determine the equalization of property. Here is an article about the equalization process.  Secondly, you can obtain a divorce one year after your separation. The clock starts ticking from the date of separation. Lastly, if support is owed, it likely will begin from the date of separation. 

You can still be living under the same roof but considered separated so determining the date of separation can sometimes be difficult. 

Property Issues

Some times the date of separation can have a huge impact on the equalization of property. I remember one client who had some shares in a business. If he used one date, he would owe his wife about $10,000 related to the value of his shares. If he used a date three months later, he would have to give her $30,000, because the value of the shares had rapidly increased over that three month period. 

The reverse is sometimes true. You might prefer an earlier date because the value of your spouse's asset was much higher than it is at a future date. This certainly has been the case recently with some businesses and real estate investments that have been dropping in value. 

The value of jointly owned assets is less relevant because any increase in value or decrease in value from the date of separation is shared. 

Divorce

Although it is possible to get a divorce on the basis of adultery or physical/emotional abuse, the vast majority of people seek a divorce simply on the basis of a one year separation. It is easy and does not involve any blame. 

Support

The date of separation is relevant to support issues too. Support is owed from the date of separation unless there are other payments being made in lieu of direct support payments. 

Here is an article about child support and another one about spousal support. 

Determining the Date of Separation

If there is some ambiguity about the true "date of separation", the law says you should look at the circumstances of the parties. For example, when did one of the parties communicate their intention to end the marriage to the other; when did the parties start to hold themselves out to family and friends as being separated; when were finances separated; when did sexual relations stop; when were chores were no longer shared; when did the parties physically separate (two beds or two homes); when did the parties stop doing social activities together such as eating meals together or attending events together. This is not an exhaustive list but gives you an idea of the factors taken into consideration.  You don't have to have all of these factors to say there has been a separation. It just depends. 

If you are not sure which date to use, consider whether it will impact the bottom line. Maybe compromising on the date is better than fighting over it if the impact is fairly small. 

Regardless of what date is called the Date of Separation for the property and support issues, no doubt there will be a day you will always remember as the day you knew your marriage was truly over. Perhaps that is the "emotional date of separation". That date is important because it marks the beginning of the healing process. It is the first day of the rest of your new life. 

• Email This
• Print
• Comments
• Trackbacks
• Share Link

Can you imagine receiving a $150,000 per month, tax free? Karen Sala certainly could and sued Keanu Reeves hoping he would be ordered to pay that tidy sum to her. She was not successful.

A recent article in The Star declares that the paternity case against Keanu Reeves by Sala was dismissed by the Ontario Courts. According to The Star, Justice Graham declared that the allegations against Reeves were "so incredible" that no reasonable judge would accept them.  The judge said having a trial would be a waste of limited judicial time.

Karen Sala was seeking $3 million a month in spousal support and $150,000 a month in retroactive child support. She alleged that Reeves was the father of her four adult children.

It is remarkable that she pushed the case this far. DNA tests had been done which indicated that Reeves was not likely the father of the children. DNA tests cannot say with full certainty if somneone is the father but they are accurate 99.9999% of the time. Usually, that's good enough for the judges to dismiss the case as happened in this case.

As Ms A.J. Jakubowska notes in her blog, child support payments in Ontario are not tax deductible for the payor and the recipient does not have to claim them as income. Sala would have been able to pocket $1.8 million dollars per year, tax free, had she won her case.

How is the amount of child support determined? 

Child support payments are set in accord with the Federal Child Support Guidelines. For Ms Sala to have received $150,000 per month, she would have had to prove that Reeves' income was about $8.5 million annually. I guess that's possible...

As Ms Jakubowska, a Newmarket family lawyer, notes in her blog, spousal support is tax deductible to the payor and must be claimed as income to the recipient. So, if Sala had been successful, Reeves would have been able to deduct the spousal support from his income but not the child support.

Certainly there is an incentive to sue for child support when the stakes can be this high but DNA tests constitute a mountain too high to overcome. You can't just allege someone is the father of your children these days expect to get away with it. If you are lying, science will prove you wrong. How DNA tests work is a sample of hair from the father, mother and child are analyzed in a lab. The DNA of the child is compared to the DNA of the "alleged" parents to determine if paternity is possible. Courts like the certainty of DNA tests.  They normally end the case one way or another.

Ms Sala was tenacious. She persisted in court. She lost. Case closed. Next? .....

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link

"Doctor Must Support Abusive Husband" is the headline in the Globe and Mail newspaper, on September 23, 2009. I am sure many people were outraged at the judge who made this decision.

In reality, I would be outraged if I was the female doctor whose husband was convicted of assaulting me and now I  had to pay him $6,000.00 per month in spousal support. But, it is the right decision.

Let's look more closely at the facts and the law.

According to The Globe, the wife has an income of over $400,000 per year while the husband's income is around $45,000. Certainly, it appears he will suffer economically as a result of the separation and that's one factor the court must consider.

Also, the wife had signed an agreement in which she agreed to pay her husband $6,000.00 per month as spousal support. That's something else to be considered too.

The doctor did not yet prove that the agreement was signed under duress or she did not understand what she was signing or that it was unconscionable. She may prove this at trial but at this point in the proceedings, the agreement appears to be enforceable.

At the trial, the judge may decide that it the assault was a repudiation of the relationship rending spousal support inappropriate, but, frankly, I doubt that will happen. The husband received a suspended sentence for the assault suggesting it was not a horrendous assault. I am sure it was horrendous for the doctor but not so in comparison to other assaults.

The courts don't get into an examination of who was the "good guy" and who was the "bad guy" in a relationship. The law is very clear: section 15.2(5) of the Divorce Act says judges are not to consider any "misconduct" during the marriage when considering whether there should be spousal support.

You may disagree with the law and believe that the court should look into the behaviour of the husband and wife before determining spousal support or, for that matter, any other issue. Maybe you feel that "misconduct" should be considered when equalizing the property. What about when determining custody and access?

Well okay... but I would not want our judiciary having to make moral judgments in family law cases. It can get pretty complicated. People would use the court to seek revenge, further escalating the pain and conflict inherent to divorce.

Judges apply the law, they don't make it. If you want to change the law, talk to your Member of Parliament but don't blame the judges. They are just doing their job.

• Email This
• Print
• Comments
• Trackbacks
• Share Link

In the Ottawa Divorce Blog, the author is critical of the Supreme Court of Canada's decision in Leskun v. Leskun suggesting the Court is allowing "fault" to creep back into whether someone should get spousal support. In that case, the wife claimed she was still unable to work 8 years after the marriage because she was still suffering from the emotional damage inflicted when she learned her husband of 20 years wanted a divorce so he could marry another woman.

I don't think Jeff has it right in his blog. The Court is not suggesting that someone can receive spousal support simply because of the wrong-doing of their spouse. The Court is looking at the impact of the wrong-doing and concluded that, in fact, the wife was unable to become economically self-sufficient as a result of her present state of health. I don't think it would matter if the cause of her inability was hearing her husband had an affair, or she was run over by a truck.

It's the impact of the event that rendered her unable to become self-sufficient.

I certainly agree with Jeff's suggestion that everyone should do their best to recover from their divorce, but I don't feel he is being fair when he characterizes Ms Leskun's state as being "self-inflicted". Let's give her a break. If learning her husband had an affair hit her like a truck plowing down the road full speed, rendering Ms. Leskun unable to become self-sufficient, she is entitled to spousal support in my books (and according to the Supreme Court of Canada too). 

• Email This
• Print
• Comments (1)
• Trackbacks
• Share Link