Uncontested Divorce: How To Get Yours

Obtaining a uncontested divorce is the final step in the dissolution of your marriage.

Usually we resolve all of the issues of your divorce including issues related to the children (custody and access), child support, spousal support and property issues before we proceed with the divorce. We settle these issues in a separation agreement or, if necessary, obtain a resolution through the court process. 

A divorce can only be granted by a judge so it requires the completion of the appropriate court documentation, serving them on your spouse and filing them at court.. You won't have to appear in court to obtain an uncontested divorce. Many people consider doing their own divorce and find it is too complicated.  As a result, we do many uncontested divorces. 

There are some conditions you must meet before you can proceed with your divorce. 

1) You or your spouse must be living in Ontario and have lived in Ontario for at least one year if you want to obtain a divorce in Ontario.

2) You also have to file the documents in the court located in the area where one of you live. 

3) Another requirement is that there must be an agreement or order to pay the proper level of child support according to the Child Support Guidelines. If the proper amount of child support is not being paid, you will have to explain what other financial benefits are being paid in lieu of child support payments. For example, if the person who ought to be paying child support gives their spouse their equity in the matrimonial home in lieu of paying child support, a judge may allow the divorce to proceed. 

Some people resolve all their divorce-related issues without completing the divorce. I remember one fellow who was about to get married and then realized he was still married. We had to rush through his divorce so he could tie the knot again.

The benefit of completing the divorce now is the sense of closure you will feel when you have it in hand. Our clients often return to complete the divorce when they start dating again. New romantic partners may be repelled by the fact that you are still married. Obtaining a divorce takes six to nine months to complete so you don't want to wait until it becomes an issue in your new relationship. 

If you would like us to assist you with your divorce, please contact us. We can help.

Build Trust in Divorce and Avoid Family Court

Trust is essential for every relationship and is often damaged when people are getting divorced. It can be damaged many different ways. An affair, a lie or a betrayal can damage trust. Trust may also be broken when people change and no longer understand each other. They just grow apart. 

In my life, I know how disorienting it is when I have lost my ability to trust someone who I once trusted implicitly. Equally uncomfortable is when someone no longer trusts me. If the relationship is important, I feel frustrated and want desperately to repair the relationship and the loss of trust. Without trust, we can't have a relationship. 

Have you had a loss of trust in your marriage? Maybe there was an affair. Maybe you feel that your spouse has given up on the dream you once shared. Maybe you feel like you or your spouse have done or said too many mean things to each other that you have become like strangers to each other – strangers who can’t trust each other.

Some of our clients want to go to Family Court because they don’t trust their spouse and can’t imagine negotiating an agreement with them. Family Court can’t ensure your spouse will become trustworthy again and you are giving up the power to make decisions about your life to the judge. Court is slow, costly and the results are often difficult to predict. Often, the court process itself increases the animosity of the parties. Court is the place of last resort. Family Court won’t solve the trust issue.

If Family Court is not the answer, is there a better way? How can we build sufficient trust that our clients can negotiate an agreement, keeping the power to decide important issues, rather than go to Family Court?

I came across some interesting research that is helpful. You can use Confidence Building Measures to build trust. You offer unconditional and unilateral gestures of goodwill to your spouse so that your spouse can see you are genuine about wanting to negotiate a deal.

Our lawyers know how to help you to develop and offer effective Confidence Building Measures so that you and your spouse can engage in negotiations. It won't save your marriage but you can build sufficient trust that you can begin to negotiate an agreement and avoid the pain of Family Court. We can help.

The "Roll" of RRSP's in Your Separation and Divorce

Registered Retirement Savings Plans are the main savings vehicle for many Canadians, especially those who don't have a pension through their employment. As a result, upon separation and divorce, RRSP's are part of the property settlement. 

Our guest blog this week is  by Sandra Ramos, a well known financial advisor in Barrie, Ontario.  She has great advice about how to deal with RRSP's during your separation and divorce. 

For most couples, separating your assets can be the most challenging event of your separation, not only from the standpoint of “equalization” but also from a “taxation point of view”. RRSP’s, Registered Retirement Savings Plans add complexity to the equalization process due to their inherent tax implications. If you remove funds from your RRSP you will pay tax on the withdrawal and the amount will be added to your income in the year of the withdrawal. You can roll your RRSP’s to your spouse during the equalization process without immediate taxation, however, should your spouse use those assets to pay for legal fees or to get back on their feet financially, there will be taxes when withdrawn. This is an element that is often times overlooked during negotiations simply because the current dollar value is the only information being considered and not the net after tax effect. It is important if you are going to receive some part of your settlement in the form of an RRSP roll over from your spouse, that you tax the potential future tax implications into consideration.

Example if your spouse has $ 10,000 in an RRSP that he or she would like to roll to you as equalization payment for other property; you must adjust for taxes. If your personal marginal tax rate annually is 20% this RRSP asset should only be viewed as $ 8,000 after tax. Receiving assets inside an RRSP can be very beneficial to the recipient when handled and valuated properly, but it should not be viewed in the same way as cash or other property.

The involvement of a Financial Advisor or Accountant at this point in the equalization process is very important to ensure there is a thorough understanding of the taxation issues for your unique scenario. The collaborative process involves all of these elements for you, to ensure you understand the implications of the decisions you are making both from an asset valuation and forward taxation point of view.

I would love to hear some of your stories and thoughts regarding this topic and if you are interested in learning more about how I can assist you, please do not hesitate to give me a call at 1-866-949-1027 ext 235 and visit my website at www.sandraramos.ca.

Sandra Ramos, CFP

Senior Executive Consultant

Investors Group Financial Services Inc.

138 Commerce Park Drive

Barrie, Ontario  L4N 8W8


Determining Income for Support Purposes

Determining income is the first step toward determining the proper level of child support and spousal support. This is easy to do for employees. We just look at line 150 of their personal income tax return. The challenge is determining the proper level of income for those people who are self-employed or are employed by a corporation they solely own. 

Self-employed people often write off various expenses for tax purposes that have a personal component to them. For example, the monthly costs of the cell phone might be written off as a business expense but that cell phone may also be used for personal calls. Some self-employed people will write off meal expenses, some of which are with family members or friends. Those meals are really of a personal benefit and not considered a legitimate expense for determining your income for support purposes. As a result, the portion of the expense that are of a personal nature are added back to the self-employed person's income for determining support. Since taxes are not paid on this income, it must be grossed up to take into account the taxes that are normally paid on it.

For those people who are the sole owners of the shares of a corporation, the issue is whether there is a legitimate reason for the earnings to be retained by the corporation. For example, a corporation that has to make major capital purchases periodically may have good reason to retain their earnings. They will need them to buy new equipment or other capital and will need the money. On the other hand, if a corporation is retaining earnings as a tax savings shelter for its only shareholder and there is no legitimate business reason to retain the earnings, some or all of the retained earnings can be added to the shareholders' income for the purpose of determining his or her support obligation. 

These are often complicated cases. There has to be a careful analysis of the business and the purpose for the earnings being retained. We sometimes use an outside expert such as an accountant or business valuator who has experience looking at these issues. 

If we are working through these issues using the Collaborative process, both parties might jointly retain an expert to help determine whether some or all of the retained earnings should be considered income for determining support obligations. This is better than the court process where both parties retain experts who fight it out. 

Once we have determined both party's incomes, we put the numbers into our computer and determine the likely range of support appropriate. It's easy once we have the incomes. 

 

Double Dipping. Paying Spousal Support from Pension Income

cakeWhen 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. 

Why Is the Date of Separation Important?

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. 

$150,000 Per Month Paternity Suit

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? .....

Victim of Assault Pays Spousal Support

"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.

Abused woman in shadow of fistIn 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.

Spousal Support and Fault: Is There a Connection?

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).