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Spousal Support: The Spousal Support Advisory Guidelines

Spousal Support: The Spousal Support Advisory Guidelines

Spousal support is often a very contentious issue on separation as it has a much more subjective approach than child support.  A lot more factors go into determining a spousal support amount and there is no hard and fast rule on how it is to be calculated.  The government has provided a set of guidelines called the Spousal Support Advisory Guidelines (“SSAG”), but not even this is followed strictly.  Sometimes a judge may just pick a number they feel is appropriate having looked at all the factors.

What will follow is an overview on how spousal support is generally approached via the SSAG so that you have a good background on the general principles behind its calculation.

Under the SSAG there are two ways of calculating spousal support: the with child support formula and the without child support formula.

Please keep in mind that the following examples are not accurate calculations but approximations for educational purposes.

 

With Child Support Formula

With this formula, you look at the following factors:

  1. Gross income
  2. Child support being paid
  3. 7 expenses being paid
  4. Taxes and other deductions
  5. Government Benefits and credits
  6. Length of the marriage and/or cohabitation
  7. Age of children
  8. Recipient needs
  9. Ability of payor to pay

What we need to do is look at the amount that should be paid and how long it should be paid.  When calculating spousal support you usually come up with a range and determine where in that range you should fall.

Step 1: Calculating the spousal support amount

Start by determining your gross income, which is your income before taxes and other deductions are applied.  Then you subtract child support (or add it if you are the recipient), taxes and other deductions.  Finally, you add back any government benefits and credits that may apply.  This initial calculation will provide you with your Individual Net Disposable Income (“INDI”).  See the example below for a couple with 2 children who cohabited for 2 years before being married for 10 years.

Malik’s Monthly Gross income $125,000/12

=$10,417

Child support for 2 children in Ontario (see post on child support for information on how to determine child support) $1,777
Taxes paid ~30% $10,417*30% = $3,125
Malik’s INDI Calculation

Monthly Gross income

-Child support

-Taxes

(No benefits or credits to apply)

 

$10,417

-$1,777

-$3,125

 $0

$5,515

Malik has an INDI of $5,515.  Next we move on to the recipient, a similar formula with a little bit of a difference.

Nubia’s Monthly Gross income $50,000/12

= $4,167

Child support received $1,777
Taxes paid ~20% $4,167 * 20% = $833
Benefits Recieved $651
Nubia’s INDI Calculation

Monthly Gross income

+ Child support

-Taxes

+ Benefits and Credits

 

$4,167

$1,777

-$833

$651

$5,762

With both INDI’s known we add them together: $5,515 + $5,762 = $11,277 total

Since Nubia has both children living with her, Malik pays spousal support that would put Nubia within the 54-60% range of the total (note: this number changes depending on how many children are living with the recipient, if it was only one child the recipient might receive anywhere from 45-50% of the combined INDI).  For example:

  • Nubia is the recipient
  • 54-60% of $11,277 = $6,089 to $6,766

We now subtract Nubia’s INDI from these amounts to see what spousal support could be paid:

  • $6,089 – $5,762 = $327
  • $6,766 – $5,762 = $1,004

Nubia’s spousal support could then range from $327 to $1,004 monthly in order to bring her to that 54-60% share.  We use the factors mentioned above to determine where in that range she should fall and this is done on a case by case basis with need being one of the most important factors.

How long is spousal support supposed to be paid?

The upper part of the range is the length of the marriage or the date the last or youngest child finishes high school; the lower range is half the length of the marriage or the date the youngest child starts full time school.  Generally, only the length of the relationship is used and I will continue with that in mind.  We could simplify as follows: length of marriage * 0.5-1.  For Nubia and Malik’s relationship of 12 years, that would be a range from 6-12 years.

All this does is give us another set of ranges to make a decision with.  So how do we know WHERE within the range we should ultimately be?

There are multiple factors that are considered to determine where to fall within the range.  These can include:

  1. Compensatory claims
    1. The recipient needs (limited income earning capacity or age a factor here)
    2. Age, number, needs and standards of living children. Are there any special needs?
  2. Needs and ability to pay of Payor
    1. Consider meaningful access by Payor
  3. Work incentives for Payor
    1. Consider net income and out of pocket costs
  4. Property division and debts
  5. Self-sufficiency incentives
  6. Compelling Financial Circumstances
  7. Debt payment – used where negative net worth and one spouse paying disproportionate share
  8. Prior support obligations
  9. Illness and Disability

For example, if there are no special needs of the children, Malik has no concerns regarding his ability to pay, he has no other support obligations, and Nubia has no significant need for the money, Nubia would likely receive the lower end of support being 6 years.  Again, this is all hypothetical and each situation can vary.  Also, there are different formulas depending on whether there is shared custody, split custody, step children, adult children and more.

 

Without Child Support Formula

This is similar to the with child formula as you start with the same values.  How you calculate the actual payment is different though.  The range here is 1.5-2%, times the income difference between the spouse’s gross income, times the years of cohabitation to a maximum of 50% of that income difference.

Here is what that looks like:

Malik’s Gross income $10,417
Nubia’s Gross Income $4,167
Income Difference $10,417

– $4,167

$6,250

Years of cohabitation 2 years cohabited

10 years married

12 years total cohabitation

Notice here we do not subtract any taxes or any other deductions here.  We now have the numbers we need in order to perform the next step of the calculation (note that this is just one method of doing the calculation):

  • Convert the percentages into decimals: 1.5% = 0.015 and 2% = 0.02
  • Multiply these decimals by the difference in income
    • 0.015 * $6,250 = $94
    • 0.02 * $6,250 = $125
  • Finally, multiply these final numbers by the years of cohabitation:
    • 94 * 12 = $1128
    • 125 * 12 = $1500

This gives you a range of spousal support to be paid from $1128 to $1500 monthly.  Alternatively, you could multiply 1.5-2% by the years of cohabitation then just multiply those numbers by the income difference and you would reach the same result.

Isn’t math fun?

Is the duration or payment different with this formula?

Somewhat.  The duration is 0.5 to 1 for each year of cohabitation only (no child factors to consider here).  Duration is indefinite if the marriage is 20 years or longer, OR if the marriage lasted 5 years or longer when years of marriage and age of support recipient at separation total 65 or more.

So in our example the range is from 6 years to 12 years of support payments.

Otherwise the same factors mentioned above that can affect the duration of support can apply here as well.

Is there a deadline to Apply for Spousal Support?

Under s. 16(1)(c) of the Limitation Act, there is no deadline (or limitation period) to apply for spousal support.  However, need is a prominent factor in determining how much support to award.  If a spouse waits too long and a court deems that they are financially stable enough to not need support, it may not be awarded at all.

If you have any questions or concerns regarding support in your circumstances, give the experts at Rabideau Law a call to see how we can help.

 

The Process of Getting a Separation Agreement Done

The Process of Getting a Separation Agreement Done

What follows below will be a general overview of the process for completing a separation agreement.  It begins by contacting our office and concludes with the completed separation agreement that is provided to the client.

Please note that this is not a precise account of how the process works, but merely a general guideline.  Each situation is unique. Furthermore, different types of agreements and different types of retainers with our firm necessitate varying approaches to this process.  Keep in mind that this process is not limited to just separation agreements, but can be applied to any kind of domestic contracts such as a cohabitation agreement or a marriage contract (and/or a prenup).

Step 1 – Initial Contact: A potential client contacts our firm by phone, email or in person, and we arrange an in office meeting with one of our lawyers for a consultation (click here if you would like to book a consultation, hyperlink to relevant part of website).

Step 2 – The Consultation: The potential client brings any relevant documents to the consultation so that we can determine what may be the best legal solution to their legal problem.  This consultation is an information session, and we are not hired at this stage to represent the potential client.

Step 3 – The Retainer (aka the Contract): If the potential client wishes to draft a separation agreement, we will draft a formal retainer (i.e. contract between you and the lawyer) that must be signed by the client and our firm before we begin any work. This document covers the type of legal services that the firm would provide to you.

Step 4 – Gathering Info: Once the retainer is signed by the potential client and our firm, that potential client is now our client.  We provide the client with a questionnaire that asks them to provide as much information as possible including things such as their finances, children, employment, assets and debts.

Step 5 – Drafting the Agreement: After the questionnaire is complete, the client provides it to our firm and we use that information to draft a separation agreement.   This can also include drafting financial statements.  We take this time to include the details from your questionnaire into the agreement, and include any specific terms or conditions that may have been discussed.  During this stage we may ask you for more information in order to effectively include all necessary items.

Step 6 – Reviewing the First Draft: Once the first draft is completed, we contact the client to review the agreement with them to see if any other provisions need to be included or removed.  This is to ensure that the agreement matches the client’s intentions and wishes.

Step 7 – Opposing Party Review and Negotiation: Once the first draft is approved by the client, we send a copy of the draft to the other spouse’s lawyer for them to review.  If any terms need to be adjusted, we contact the other lawyer to negotiate until all parties agree to the terms and conditions of the separation agreement.

Step 8 – Final Review and Execution: Once everyone is in agreement, we create a final draft copy of the agreement for your review.  We arrange a meeting where you attend our office and we review the final draft of the agreement in detail.  Should everything be in order, we execute the agreement by having you sign the agreement with a witness and date your signature.  This is done on multiple copies of the agreement, usually one for each party and one for each lawyer totalling 4 copies.  Once executed, the lawyer at our firm will sign an Independent Legal Advice Certificate (“ILA Certificate”).

Step 9 – Completion: We then provide all signed copies to the opposing party for them to sign, witness and date, and for their lawyer to also provide an ILA Certificate.  Once that is done, they mail two completed copies back to us and we provide the client with one completed separation agreement completing the process.

Typically this process takes about 2-3 weeks to complete.  This timeline is dependent on how much negotiation needs to take place in order to resolve all outstanding issues.  However, negotiating the details of your separation outside of court is a faster, simpler, and more cost-effective means of dealing with issues.

Should your spouse provide you with an agreement, we can discuss providing Independent Legal Advice services for you.  This would essentially reverse the roles of the parties in the process outlined above.

If you are looking to get a domestic contract drafted, feel free to contact our firm to see what legal services may be best suited to your particular needs.

Separation Agreements: An Overview

Separation Agreements: An Overview

What is a separation agreement?

Separation agreements are contracts between two persons in a romantic relationship regarding their familial rights and obligations towards each other.  These types of agreements allow people to negotiate issues such as how children will be taken care of, what kind of support will be paid between the spouses, and how to distribute assets such as the home.  Once the issues are identified and agreed upon, the separation agreement can provide certainty and peace of mind for both parties as they move on from the relationship.

 

Do I need a separation agreement to get divorced or get separated?

If you are married, (if you aren’t married skip on to the next paragraph) you don’t actually NEED a separation agreement in order to get divorced or to separate from your spouse.  The Divorce Act requires that there be a “breakdown of the marriage”.  This means that:

  1. you live separate and apart for one year;
  2. the other spouse has committed adultery; or
  3. one spouse has treated the other with physical or mental cruelty.

If you aren’t married, all that is required is that you live separate and apart.  However, what that means can be complicated depending on your circumstances.

Regardless of how you and your spouse (partner, husband, wife, boyfriend, girlfriend etc) broke up, getting a separation agreement can help both parties negotiate and finalize matters between them without involving costly and lengthy court proceedings.

 

We’re working well together, why bother with an agreement?

Although you and your spouse are cooperating well at this point, there is no telling how well you two will work together in the future.  If something happens in the future where the other person suddenly refuses to work with you, and the both of you do not have an agreement in place, there could be severe consequences regarding your ability to see your children, how support payments will be made, or how assets should be redistributed.  The best thing to do is to ensure that both of you are on the same page by drafting an agreement outlining your rights and responsibilities so you won’t be faced with any unpleasant surprises in the future.

 

Why can’t I just download an existing agreement and draft it myself?

You can.  Nothing prevents you from drafting a separation agreement that both you and your spouse sign together.  However, this is an agreement that will bind the both of you into the foreseeable future.  You want to make sure that all angles are covered and that you did not omit something or improperly word something that could have serious repercussions for you in the future.  There is no guarantee that the online agreements out there are up to date or that they have the appropriate clauses to protect you especially if your ex tries to challenge or have it set aside in court.  Having a lawyer draft the agreement for you is the best way to ensure that all important issues are covered, that everything is current to today’s laws in your jurisdiction, that the law surrounding those issues regarding your rights and obligations are explained to you, and that the agreement is executed properly.

 

Can I only get an agreement at separation?

No.  There are multiple types of “Domestic Contracts” under the Family Law Act.  Other types of agreements include:

  1. a cohabitation agreement if you are cohabiting (living) with another person and are not married;
  2. a marriage contract if you are getting married (colloquially known as a pre-nup); or
  3. a marriage contract after you get married (colloquially known as a post-nup).

Be mindful that there are certain issues (eg. Access to children) that cannot be addressed in these other types of agreements.  Feel free to contact our firm to see what agreement may be best for you.

 

What are the best reasons for hiring a lawyer to draft an agreement?

One of the biggest concerns for separating spouses is how the children will be taken care of.  The agreement can help both parties create a stable and effective parenting plan for how decisions will be made for the children such as residence, school, health care, religion and education.  The agreement can also help set out a visitation and/or time sharing schedule for the parents to follow.

Another major concern for spouses at separation is the family home.  Usually, this is the largest asset that both parties have during the relationship, and a separation agreement can go a long way to outlining who is getting the home, or how the home is to be sold and distributed between the two of you.  Also, if one of you is looking to purchase a new property after separation, mortgage companies will usually ask for an agreement between the two of you before they are willing to provide a mortgage for the new property.

Other assets that can be dealt with in agreements can include: joint bank accounts, debts, pensions, RRSP’s (Registered Retirement Savings Plans), pets, cars, and life insurance.

 

How do I make sure the agreement is enforceable?

Ensure that it is signed, written, and witnessed.

Ensure that you are well educated on:  what the law is, the legal meaning and consequences of the agreement terms and the assets and debts of both parties.  Hiring a lawyer to draft the Agreement and/or provide you with independent legal advice (“ILA”) provides this assurance.

ILA is provided when one party has their own lawyer review and explain the agreement to them.  This helps to ensure that the party understands the rights and obligations they are agreeing to.  The lawyer then signs an “ILA Certificate” stating that they reviewed the agreement with their client, that their client has not been forced into the agreement, and that they believe their client understands it.

Another common addition to agreements is a sworn financial statement.  Sworn financial statements outline things such as the parties’ income, their monthly spending, and their assets and debts.  Having this financial picture helps clearly identify the financial situation of both parties so that there is no confusion regarding either party’s assets.

Having both ILA and sworn financial statements in your agreement goes a long way to ensuring that the agreement won’t be overturned by a Court in the future  (if it ever ends up that) and that you have a strong shield to protect you should anything be challenged.

Finally, you can look at separation agreements as a ”living document” meaning that it should grow and change as your financial and/or family situation changes.  It’s a good idea to review it every few years to ensure that the terms of the agreement still say what you want them to say.

The Process of Executing a Separation agreement