WATCH: The Financial Side Of Separation And Divorce

Calgary Family Lawyer Charles Fair discusses the financial side of separation and divorce. Do you know what is taken into consideration when you are going through a divorce or separation? How is spousal and/or child support calculated? What is matrimonial property?

Charles Fair has been practicing law for nearly 30 years and founded Fair Legal because he is passionate about helping others, ensuring their rights are protected and that they are treated fairly. Fair Legal deals with Criminal, Family, and Civil Litigation matters.

Partnered with the Canadian Centre for Men and Families, Fair Legal provides monthly webinars on topics dealing with criminal or family matters.

Watch: The Financial Side Of Separation And Divorce

Calgary Men's Divorce Rights Lawyer Charles Fair 

Canada’s divorce and family laws are governed by federal and provincial laws. Family lawyers represent their clients in court and negotiate disputes between spouses and family members. Charles Fair has been practicing Divorce and Family Law for almost 30 years. Fair Legal handles all types of divorce, custody and family legal matters to protect your children, property and you. Contact us at 1 (403) 239-2249 to schedule a confidential meeting with a member of our legal team.

Give me a call and I can put my years of experience in divorce and family law to work for you. 

Transcript

Fair Legal Webinar - Financial Side of Separation and Divorce

Vanessa Farkas-Brahmakshatriya: Hello. My name is Vanessa Farkas-Brahmakshatriya, and I volunteer with the Canadian Center for Men and Families, Alberta. I'm very pleased to introduce Charles fair of Fair Legal. Charles has been practicing law for nearly 30 years, and founded Fair Legal because he is passionate about helping others, ensuring that their rights are protected, and that they're treated fairly. Fair Legal deals with criminal, family and civil litigation matters.

Charles is generously volunteering his time with CCMF Alberta to deliver monthly webinars on topics of common concern to the population that we aim to serve. In other words, men struggling due to intimate relationship breakdown and turmoil. At CCMF Alberta, we are committed to meeting men where they're at, so that they can feel heard and validated and have conversations that matter to them.

We help equip men to manage stressful situations, rebuild their lives after relationships fail, and stay connected with children. We recognize that providing mental health support for men leads to optimal parenting outcomes, a reduction in family violence, and lower rates of suicide. 

This month's topic is the financial side of divorce and separation. Like all of the topics that Charles covers for us, this topic is potentially painful and contentious. All of you are here for a reason, and I hope that you'll take advantage of CCMF Alberta's other programs, including peer support, mental health support, domestic violence recovery, and more. So if you could visit us at ccmfalberta.ca you can learn more about what we offer to people like you.

This is an educational offering, it's not legal advice, and please be respectful. Also, look out for a short customer satisfaction survey in your email inbox at 8:15. We're always working to deliver the best content we can that meets you where you're at, so your feedback is very important. 

If you have questions during the presentation, please send them via direct chat to Melanie. Melanie Seneviratne. Not to Charles. She'll read them out loud for Charles to answer during the Q&A period. 

And, with that, I'll hand it over to Charles.

Charles Fair: Great. Thank you very much, Vanessa. As usual, it's a great pleasure for me to be involved here with the Canadian Center for Men and Families. I think you guys do great work, and it's a real honor to be able to help out in this way. Tonight's presentation is a huge, huge topic, and I just wanna say on the outset that the advice - I may have some tips that are kind of generally aimed towards men, but really it's going to apply whether you are male or female, or same-sex, it doesn't really matter. These issues are the same really, regardless of which direction you're coming into this situation with, or from. 

So the other thing is, this is a huge topic and I'm not gonna be able to cover what might be a half a year's material in a law school course in 30 minutes. So you're just gonna have to bear in mind that it's going to be incomplete. And, for that reason especially, you gotta be very careful about taking what I say is legal advice and cobbling it together into some kind of plan of action in your own case. Every case has got some unique situations and there may be things about your situation that I don't touch on because it just simply isn't enough time.

So just bear that in mind. This is, as Vanessa said, it's an educational opportunity, and I will try to keep it as straightforward, and not have a lot of legalese. You guys don't need to hear me go on and on to make myself look like some kind of expert. I'm trying to make this easy to understand for you guys.

Okay, so, this is me, but you can see me, and that's my name. 

So here are the main topics that we're gonna cover here. As you can guess here, matrimonial property is basically the stuff you get while you guys are together, whether you're married or not - now in Alberta, this stuff applies to non-married common law spouses as well - and that's the stuff you during the relationship, you know, the stuff you accumulate, and the debts, and you gotta divvy it all up at the end, and there's rules about how that gets done and what kind of things are exempted, et cetera. 

Second big topic is child support. If you've got children, the law, the courts, expect you to make sure that the children are financially supported, and that is a right of the child, not a right of either parent. And then the last big topic is spousal support. And that is - and I've just labeled it spousal support. We can call it partner support or - the idea here is, when you've been together for a while, then you start to become kind of, your finances start to get more intertwined, and after there's a breakup there's some need or maybe entitlement to getting some financial support from the other person, or maybe you have to give the other persons financial support. 

So those are the three big topics. Now, just to kind of get an idea, we're gonna try to make this a little interactive. And so here's an experiment. Now I'm just gonna ask - I can't really see anybody. But - maybe I can here, I will try here, but if you can indicate, if you are primarily interested in matrimonial property issues, if you could raise your hand. I'll give you a minute to kind of decide if that's your - it doesn't mean we won't cover the other things, but if that's the big, your biggest thing, let's have you vote and then we'll do the same thing for the other two topics, and I'll try to get an idea of where most people are interested in. Because if somebody says, "Hey, I'm not at all...", if there's nobody that says they're interested in some issue, then we can keep that really, really short. 

So matrimonial property? Primary interest there? 

Vanessa Farkas-Brahmakshatriya: So, a few people are raising their hands. Let's just give it a moment. So far, four hands are up. Is anyone else primarily interested in matrimonial property? Raise your hand now.

Melanie Seneviratne: You know, I see at least eight people, Charles. So there's a bit of a demand for that, so, 

Charles Fair: Okay. All right. Okay. Then child support?

Melanie Seneviratne: I see a few for that as well. 

Charles Fair: Okay. 

Vanessa Farkas-Brahmakshatriya: Yeah. Seven, eight. 

Charles Fair: All right. What have we got here, total? 31 participants. Okay. It looks like it's probably gonna be about evenly split. Okay. Now, how about the last one, spousal support?

Melanie Seneviratne: Not - a couple, I see so far. Not as much as the other two, but there's a couple of spousal support hand raisers. 

Charles Fair: Eight, nine. I don't know. Okay. It looks like we're kind of evenly split. We got about eight, nine in each one, so we might have some undecideds in there. 

Okay. All right. 

I will get rid of that screen there. 

Okay, so, now let me get into this again. And the last thing I'm gonna finish off with some important tips for success. How you make sense of a lot of stuff here. And I just wanna say at the outset, what often happens when a client goes to see a lawyer about a family law problem, one of the first things a lawyer starts to ask about is a whole bunch of financial disclosure. And I've often thought that that means there's a bit of a disconnect. You thought you had a relationship problem or a legal problem, and now the lawyer is sounding like an accountant or something, and you're going, wait a second, how does this apply?

So I'm going to try to make this a little easier to understand why this stuff is important. Okay. So - and we're gonna end up with some important tips for success, as I mentioned - so, essentially, family property, matrimonial property and debts, will be divided in a manner that the court considers just and equitable.

So, as I said before, matrimonial property is the stuff you get while you're together. And what the Act says is property, people often forget that that means the debts as well. The way you divide up debts is a little more difficult than the way you divide up property. The other thing is, of course, when is it that you've acquired the property and when does that obligation or that property division stuff end?

So this is an interesting point because I just wanna compare the way Ontario does it, or at least did it when I was there, and the way Alberta does it. And that is, in Ontario, property gets divided as of the date of separation. But here in Alberta, it's as of the date of trial, or that's when it gets valued.

And that has some interesting problems because I think people don't actually think about it that way. They think, "why should I be sharing property that I acquire after we broke up?" And if you're not paying attention and you're not dealing with this and you start acquiring a lot of property, you may find yourself having to share some of that.

Now, what's interesting though is that the family property access, it has to be divided in a manner that the court considers just and equitable. So I think that the post-separation stuff is going to be divided a little differently than the stuff that's acquired during the marriage or relationship. 

The second thing is, when is the period of time that counts for acquiring stuff? Well, that's not from the date of marriage up to the date of separation - as I said, it doesn't apply to the separation - but it starts when you start cohabitating, or living together. And oftentimes we find that people are kind of fuzzy about when they started living together. 

Sometimes they're even fuzzy when they got married, but that's usually a little easier for people to remember. I had one case where my client couldn't remember who he'd gotten married to, but that was another issue. So, anyway, so usually people are quite vague on when they started to cohabitate, and it can become important, not just for matrimonial property purposes, but also for spousal support as we'll see. 

Then we'll say, well, what is matrimonial property? Well, it's property that's not exempt. So let me just see if we can throw up a list here. So, I'll just go back to this slide here. 

Here's some idea of the kinds of things that are property. Real estate, obviously. You've got your matrimony home. You might have a cottage, that kind of thing. Maybe you've got a timeshare, that's also matrimonial property. Pension plans. That one is something that people don't think about. And I'll just, very quickly, say that there are different kinds of pensions, and there's different ways of asking for a pension valuation statement. And you may inadvertently think that you know what a pension plan is worth, and you could be very, very, very wrong by hundreds of thousands of dollars. Or more. And that's because a defined benefit pension plan is different than a defined contribution plan. That's the technical jargon, but you gotta get advice. There's all sorts of things that go into what the value of a pension plan is. And then there's a whole ton of different ways of divvying, dividing, pensions. And all of that stuff is kind of complicated. We usually bring in experts to help us with that stuff. 

Anyways, other stuff. Bank accounts. Yeah. Savings accounts. Retirement savings plans. TFSAs, that kind of thing. Vehicles are also assets. What's interesting though, if you have a leased vehicle, it's not technically an asset, but you can't - you wouldn't claim it as an asset, say on a business balance sheet necessarily, but in a matrimonial context, it may have some residual value or equity in the vehicle. So it might have value even when it's leased. And that depends on the kind of buyout option you have. 

Okay. Other big one is business assets, and business assets involve a lot of different kinds of assets. And I just wanted to mention there's intellectual property here and some trademarks that could be owned either by the business or by individuals. That is certainly not an exhaustive list of how you value a business. And then businesses gets really complicated because what happens if you've got other shareholders other than one of the spouses? What happens if you've got both spouses or partners are also owners or partners in the business? How do you deal with that? Those are really complicated questions, but you gotta get legal advice.

Part of the matrimonial asset. Basically, if this stuff was acquired, as I said during the course of the relationship. 

Now, family debt, and these are debts that either spouse took on during the relationship And you can see, mortgages and that kind of thing. So there's some rules there about whether the debts are taken on after separation. If the money was used to take care of the family property, or to take care of the family. Debts from before the marriage that were paid off during the marriage might get divided. Some of these things may or may not get 100% agreement from everybody. 

But the really important thing to remember about family debt is, regardless of what the parties might agree, or even what the court might order as to who's responsible for what, the reality is that none of that is going to be binding on the various creditors. So you might - and that's one thing that's just a little tip, we might be able to come back to it at this time, one has to remember that if you can't bind or enforce the third party creditor, that's, like, the mortgage company, if you can't make them go after only one of the parties to the relationship, then you got a problem if that party that was supposed to pay the mortgage doesn't pay the mortgage and then the bank comes after you when you thought it was supposed to be the other person. That's just a little tip there. 

Okay. Some exemptions. So, assets before you started living together. And the value of those assets at that time - again, there's some technical rules about when that specific time is for the valuation - that is exempt. Gifts from a third party are exempt. Inheritances that only one spouse has received. Exempt. Money received from an insurance policy as an exemption. 

There's some other ones as well. These are just examples. And, you know, I gotta say that there's other things that can happen. Sorry, I just wanna, I'll come back to it. I don't think we have time. I'm just gonna skip that one. 

So, notice here, I've put a few notes here. Prenuptial agreements and cohabitation agreements, if you go into them at the beginning of a relationship where there's lots and lots of property that one or both parties have, they can be useful for setting some of the - deciding what property is going to be exempt or how it's gonna be treated in the event the relationship breaks down. So those agreements can be important. Oftentimes, if there's not assets, I don't recommend them. That's a whole other discussion. Maybe needs to be a whole other topic on its own. 

Secondly, tracing rules. Here's where this is really important. I had a case a while back where the husband received an inheritance from his family and he used that money to go on a trip, pay off some household expenses, and basically the money got spent. The wife received an inheritance from her family and she put it into a separate bank account, or a separate investment, and just kept it separate. When they separated, my client, the husband, was very shocked to learn that he could not claim an exemption on the inheritance that he received, but his wife could. And that's because of tracing rules. He couldn't trace that inheritance that he received into any other asset. So, that's a really technical thing. 

And I've had cases where we've had to argue about whether the property really is a tracing rule. Because oftentimes life just intervenes. And, you know, one party buys a house, then they sell it, then they buy another house, but then both parties go on title, then they sell that one. And then one party goes on title. That kind of thing can get complicated when people start mixing their property stuff together. 

Okay. I'm gonna just say I'm not gonna cover unequal division, theoretically it's possible, but I think it's rare. There's some grounds for it, but I don't see it working very often. However, people are free to agree to an unequal division, something other than what the court would order. 

Okay. I gonna move on to child support. As we mentioned, everybody's got a responsibility. If you've got children, you've got to provide for your children. It is an obligation of all of the parents who are involved, which includes the biological parents. But it also includes the parent that has become, what the legal term is, in local parentis. Which means, you know, they're the stepdad or the stepmom and they've been around long enough and have had such an important role in the child's life that on separation from that new relationship, guess what, they've got another child.

And, now, sometimes the courts will kind of adjust for that and say, "well, you know, it's not your, you know, wasn't your child". But, you know, you really have to think about this. Because the whole point of this system is to make sure that children are looked after. And that means not just financially, but also in terms of their, you know, their need for the the involvement of their stepparent in their life in a positive way.

And, yeah, you might end up being obligated to pay support, but which is more important from a big, you know, from a life perspective is, you've got a relationship with that child, do your best to be a parent to that stepchild, even if it means you might have to pay some support down the road if there's a breakup. Again, it's not quite as clear. 

So then there's basically two kinds of support. There's what we call Section 3 and Section 7 support. Section 3 is the basic support that you gotta pay based on your income, because you're expected to contribute to the financial wellbeing of your children based on your income.

And this is set out in the federal child support guidelines, which are basically just copied in Alberta. And there might be some differences. I can't think of anything right now. But we always talk in the legal profession of Section 3 expenses and Section 7 expenses, and those refer to the federal child support guidelines.

So Section 7 is the extraordinary expenses that arise. So that's things like extracurricular expenses, extraordinary health expenses. And sometimes there's a lot of argument about what's really, truly extraordinary. Is a cell phone an extraordinary expense? Who pays for the cell phone. Or should that come out of the Section 3 expense? Or is it an extraordinary expense? 

Are school fees an extraordinary expense? There's some argument that they should be just a Section 3 expense. Oftentimes, though, these little extras just get thrown in as Section 7. Section 7 expenses are based on the total family income, not on the payor's income alone.

And you figure, well, who has to pay? Well, the person who has less than 60% of the parenting time has to pay. You say, well, less than 60%. Well, that's where it gets complicated. If both parents have less than 60%, so in other words it's 50/50 or 60/40, then both parents have to pay Section 3 expense. But if they've got, if you've got less than 40% of the parenting time, then you're going to be paying, you're the only person going to be paying, Section 3 expense. But the Section 7 expenses, those are extraordinary expenses, those are going to be shared based on your total family income. 

Which kind of makes sense. You know, really, you know, enrolling your kid in, you know, some very expensive, extracurricular activity makes sense if the family has a really big income but doesn't make sense if only one of the parties has a decent income and the other party has a low income. That can be particularly aggravating when, say somebody's got 20% of the total family income and they're the one who has the kids all the time, and they're signing them up for all sorts of expensive stuff because, after all, the most they're gonna have to pay is 20% of the expense, because their income is 20% of the total family income. You can appreciate that can be really frustrating for the party that's got the higher income. 

And, by the way, that's often the man in the relationship has a higher income, but it's not always, so, and regularly, whether it's the man or the woman who's got the extra, the higher income, if it's a lot higher, this issue of sharing extraordinary expenses can be a real sore point.

So there's ways that we deal with that, in terms of making sure everybody agrees to the expense, making sure that the expense makes sense based on the total family income. Another way we do it is requiring that the parties consent to the expense in advance. 

And if people can't agree, then oftentimes they go to court, and that's rolling the dice. I had one case where my client didn't wanna pay for football expenses because he thought that his wife was just over-enrolling the children so much and, luck of the draw had it, we in ended up in front of a judge who was a volunteer in some youth football program. And, of course, he loved football, which meant like, oh my God, this is not gonna, this is not gonna fly.

Anyways, so it's, as I said, it's based on parenting time. The child support is paid until the child reaches the age of 18 in Alberta. If your children move out of province, it can go to 'til age of majority in that province. So if your partner takes the kids to BC, you might end up paying an extra year of support. Well, you will end up paying an extra year of support when they turn 19, because that's the age of majority in BC, I think. 

So, it was the last time I checked. So, then, after that age, and they're attending school, then the support might continue, but that's subject to a whole lot of calculations. Then the child support can be reviewed annually.

There's a note here, as initiated by a parent, if there's a change in the custody or the parenting time, or in the party's income - I gotta be really careful here. You know, it says here - again, this is an educational webinar. This is not legal advice. So if somebody doesn't initiate a request for more support and you're the payor and your income goes high, and you don't tell your former partner, your ex, about your income going up, and it goes up the next year and the year after that, and then he or she gets wind of it, you are going to find yourself in an awkward situation because you may have to owe back support based on that higher income. And the courts in that case try to determine your blameworthiness. That's actually the law. It's how blameworthy you were in not disclosing your income. So, you know, if you've got any questions about child support, you gotta get advice from a lawyer. 

This last point here, payments are exempt from taxes. That means that you don't get a deduction for child support that you pay, and you don't have to include child support in your taxable income if you're receiving it. And that's because child support is a right of the child, not of the parent. And that's different than spousal support. 

And I don't know whether I've got a full list of topics here. I do here. I've just split it into different screens here. 

Okay. So, spousal support is taxable in the hands of the recipient, and it is a tax deduction provided certain rules are met in the hands of the payor. So - under the Divorce Act. 

And the principles in spousal support are gonna be very similar, whether it's under the the Federal Divorce Act or under the Provincial Family Law Act. So here's what the court considers: The length of cohabitation. The functions perform by each spouse during cohabitation. You know, and that's, you know, if one party's out there making income, bringing home the bacon, and the other party's cooking the bacon, well, that's what's meant by functions. You know, the one party is raising the kids, and the other one is, is advancing their career. You know, the parties are moving around to follow the one party's, the one partner's, career as they move from city to city. That's all gonna be considered. Court also considers agreements and arrangements between the parties.

But I gotta say, this is where we, going back to the topic of prenuptial or cohabitation agreements, these things can be the - agreements that somehow spousal support, in my mind, always become a little more difficult to hang on to the longer the relationship is. It's just because life intervenes. And, and the courts will enforce those orders, but they'll, if the circumstances are right, they're gonna be looking for ways to get around agreements that cut off or limit spousal support, in my opinion. I may be wrong on that, but that's, you know, in terms of how many times it happens, I don't know. 

So, under the Divorce Act, here are the objectives. And it's just a long list here. But, you know, a better way to say this is, look, you know, the longer a relationship is, you know, the parties are together and the relationship, the more their financial lives are, kind of, intertwined. And when there's a breakup, somebody's gonna take a hit, and that's gonna be - the whole point of the spousal support is to try to balance that out in a way that's fair. And we can - and you'll see here, so there's: Recognize any economic advantages or disadvantages arising from the marriage or its breakdown.

Well, what does that mean? Well, you know, if somebody has got a promising career as a neurosurgeon and they get married and stay home to raise the kids, there's maybe an economic disadvantage arising from the marriage, but then what's the difference between that andand item B here; apportion between the spouses any financial consequences arising from the care of any child in the marriage.

So some of these things are a little overlapped and, you know, like if you're staying home to look after children while your career is interrupted, so you're gonna end up making less money when you go back into the workforce after you're looking after children. 

Relieve any economic hardship of the spouses arising from the breakdown of the marriage.

And this one is really if a spouse can demonstrate that they are in some hardship as a result of the breakdown and the choice is either getting spousal support or going on to welfare, the Court's gonna say, well, as long as the other party can afford to pay, and that's part of the complication on spousal support, then the party with the need is gonna get support as opposed to going on the dole with the government. 

And then the last objective here gets quite a bit of emphasis in Alberta, and that is to promote the economic self-sufficiency of each spouse within a reasonable period of time. 

And so what's a reasonable period of time? Well, that's again, it's up for debate. What does economic self-sufficiency mean? Does that mean subsistence when you are in a very wealthy relationship? No, it doesn't mean that. So these objectives, you can tell, the words kind of sound like they're pretty clear as to their meaning, but the reason why I keep saying, you gotta get legal advice because the actual application of these things to your situation may be very different. 

Okay, so, I didn't mention this with the child support and I should have. The child support guidelines basically assign the amount of child support based on the person's income because it's based on a table that kind of takes into account by each province how much money you should be paying for the support of your children, depending on how many children you have.

Well, that doesn't apply in spousal support. Spousal support - there's no rules at all. So the federal government, a number of years ago, got a couple of law professors, one of whom was one of my professors in law school actually, and they, they asked these two professors to analyze all the cases in Canada, or a good number of cases, and try to figure out a way of coming up with a way to calculate spousal support based on what the courts had been doing. And so that gave birth to what's known as the spousal support advisory guidelines, or SSAG, and those guidelines have some rules in there, and they have some different ways of calculating things. And I'm just gonna describe - I'll state the "Without Children" calculation because that's the easy one.

Okay, so, spousal support has basically three questions. The guidelines deal with the second and third of the three questions. The first question is, is the spouse entitled to support? So the guidelines don't deal with that question. But if the spouse is entitled to support, then you've got two other questions left. How much and for how long? 

So, I explain it like this. The longer the relationship is, the more you're gonna expect that the parties, after the breakup, they should kind of have more or less the same income - you know, between the two of them, their income should be closer together the longer the parties were living together.

If it was a short marriage, nah, that doesn't matter. You know, somebody's got high income, marries somebody who's low income, it lasts six months. The Courts, if there even was entitlement to support, the Court's not gonna order a whole lot of spousal support because the relationship just wasn't long enough.

So, if we think about that, 25 years, I think we'd all agree, would be a long-term relationship, and if you say, after 25 years, the difference between the two parties incomes should be equal, then you come up with a formula that says, well, for every year of marriage you get 2% of the difference between the incomes.

So what that means is you got married for 25 years, multiply that by two, that gives you 50%, you get 50% of the difference between the incomes. That one's an easy calculation to make. Now, the guidelines also say there's a bit of a range to that. So you have, it's between 1% and 2% per year times a number of years.

Now. Then you deal with how long. And the how - yeah, sorry. I'll just go back to the "With Children" calculation becomes really complicated because now you've got child support, which doesn't have tax consequences like spousal support does, and so it's the same basic idea, but because of the tax calculations, you don't come up with the same number. So you gotta use a program. And any family law lawyer is going to have access to that program. I wouldn't rely on some free thing that you get on the internet, if there is even one out there. 

Then the second question is, well, how long should this support last? Yeah. If you've got a short term relationship, it shouldn't last, but eventually we get to the point, well, the parties were together long enough, or the party is old enough, that we really shouldn't be cutting off support too readily.

And so that's the Rule of 20 and the Rule of 65. So both of these rules end up giving, presumptively, indefinite support. So the Rule of 20 is a relationship that's 20 years or longer. 

The Rule is 65 is a little more complicated. You take the age of the recipient at the data separation and you add that to the length of the marriage. So somebody who's 50 years old when she gets married, and is married for 10 years, so at the date of separation she is 60, and you add - the number of years of the marriage is 10 years, that gives you 70. So even though it's a 10 year marriage, it ends up being an indefinite support.

But think about it this way. You get somebody who's married at, say, 45 and is separated at 55, then they just barely meet the rule of 65. They're married for 5 years at the age of 65 and separated at the age of 60, you add those two together. So even a short-term marriage can result in a longer term or indefinite period of support. 

And you think about it, it kind of makes sense that longer the relationship or the older somebody is, then - you know, one of the other issues is, again, there's a calculation that goes into that. It basically goes a half to one year per year of the relationship. So you figure, you know, if it's a 20-year marriage, you know, you're gonna get support for 10 to 20 years, subject to this rule of 20 and subject to the rule of 65. Anyways, a lot of complicated stuff there. You wanna make sure that you've got some legal advice on that. There are calculators available. 

And you gotta make sure that whoever's using the calculator is filling them out properly and completely. 

Okay, so. These are issues that are - the first issue here, determining income. That is gonna be an issue both for child support and spousal support. Life is complicated. You know, somebody's just getting a salaried income, maybe not so complicated, but people have self-employment income, they've got investment income. They decide that, rather than paying support, they're just gonna be unemployed, but there's no reason why they can't be employed. All of those kinds of issues go into determining what the income should be for the purpose of calculating support. 

And sometimes there's even other rules, like if you're self-employed and the company is paying for your car, well, you know, unless you've also got another car that you use strictly for personal stuff and you've got a company car and you don't have a personal car, well, that is a benefit. Even if you get to deduct it for taxes, it's gonna be regarded as something that should be added back to your income in order to fairly calculate what your income is. 

Similarly, if you've got a company, a corporation, and you never take the money out, or you take a little bit out and then you just let the money accumulate in your company, your company's worth more but the the Court is gonna say, no, no, we gotta make sure that the amount of income that you're pulling out is appropriate. The Court will allow some retained earnings, but they won't allow you to, you know, sock away all of your income into retained earnings. Again, that is really dependent on the facts on each situation.

Then here's some other issues. Structured support. That is where you say, okay, well, you wanna go back to school, we're gonna give you some higher level of support while you're going back to school. We'll do that for two years. You get your retraining in place. Then it'll drop down for another year while you're getting yourself settled in a new job, then it's gonna drop down some more so it's not a big shock to your budget. And then it's gonna be gone. You know, that's what we call a structured support. Lump sum is, we say, okay, you're supposed to pay support for 15 years at, you know, a thousand dollars a month, that has a present value. The mathematicians will tell you what that means. It means there's an amount of money that you could, if you had that, you could invest it and you would get, you know, $1000 a month for 15 years.

So whatever that number is, you can do a lump sum payment of spousal support. But here's where it gets really twisty again. A lump sum payment of support is not tax deductible and it's not taxable income. So now you gotta adjust for the tax consequences of making these payments in a lump sum as opposed to monthly.

So again, this is just, kind of, highlighting some issues along the way. The other thing is the spousal support is subject to material changes. And, you know, if you start making a lot more money than you thought you were gonna make, then you're gonna be getting less support. If you are a payor and you start making more money, are you gonna have to pay more support? Well, that really depends on why you're making more money and how that came about. If your income goes down, is that a material change? Well, if it goes down enough, it's gotta be a material change unless you were basically just trying to screw with your support obligation and reducing your income.

I think my lights just went out here. So, anyways. Okay, so, I might be able to just turn on some extra light there. Can you guys see me? 

All right. Okay, so here's some important tips. Okay. First one is disclosure. I gotta tell you, I know, going back to the beginning, I said, yeah, there's a bit of a disconnect when you go see a lawyer and they're asking for a bunch of disclosure, it's difficult. People have all sorts of emotional baggage about it. Maybe they're just not good at it. Or maybe they're afraid of it, you know? I had one client that had spent $10,000 buying a piece of jewelry for somebody other than his wife. You know, I think some straightforward disclosure would've been would've been much better for him rather than having that come out in the course of the proceedings, and then the other side just wouldn't let it go. You know, dude, don't make excuses for it, just say what it was. And take your lumps and be on with it. 

Anyway, so disclosure is important. There are actually people that will come out and help you with that old big pile of unopened envelopes, and stuff is all over the place, and you don't know where anything is, there's people who'll help you clean up your house and organize you. They'll also do that to get your financial paperwork organized for your lawyer. And I gotta tell you, it's a lot cheaper paying one of those folks than it is paying a lawyer, or even a legal assistant, to do the job for you.

So that's something that, you know, we can recommend somebody like that. And I don't know whether other law firms do. I know some do. So that's one thing that's really, really important. 

It seems to me that a lot of legal expense around disclosure is really unnecessary, and the party who is resisting disclosure gains far less than they think because there are ways to deal with a party that isn't providing disclosure, and those ways can be quite disadvantageous and uncomfortable, shall we say. We've had experience working with clients on both sides of those difficult circumstances. So disclosure is really important. It's better to just deal with it. Okay. Second issue. Legal advice. I just gotta say that again. Today isn't it.

I've done high level, I've - we've gone over time, I see. And we've just basically scratched the surface on a lot of this stuff. You gotta get legal advice and oftentimes if you think, well, I can't really afford the legal advice, it's almost always the case that early legal advice is far cheaper than later legal advice. You know, it's much easier to get it and do things right at the beginning, and much cheaper. Okay? 

You've got to decide what's truly important. Sometimes people get onto crazy emotion-laden fights about the used furniture that you could probably buy at a second-hand shop for 50 bucks and, you know, you're so worried that you gotta hang onto it, or maybe you think this piece of furniture is really important to the kids.

Well, you know, you have to think about what's important and why. And sometimes it is important, but oftentimes it isn't. Sometimes it's important to, you know, hang on to something so you can give it up as part of a negotiation that's maybe possible. But having some thought about what's truly, truly important to you, and why, is a good tip.

And I'm gonna talk about, you know, I do a whole session on negotiation theory, and I'm gonna just say this. Two basic principles for negotiation. One is principle negotiation, where you work through what the lawyers think the Court's likely to do, or the range of things that the Court's likely to do, taking into account the individual circumstances of the family, and negotiate what is a fair resolution. I think that's a better way of negotiating rather than what often happens is the one party who wants to pay less, starts out low, and the other side who wants to receive starts out high, they want more, and you argue about it and you end up splitting the difference.

So that's one thing. Principle-based negotiation is better than the positional bargaining that's, you know, the two parties yelling at each other until you split the difference. 

But here's another point. Oftentimes, people will say, you know, I just want this done. I wanna get it over with. I just wanna say this is what a fair deal is. And they wanna just offer it to the other side as a take it or leave it option, because isn't that the most efficient way to get to the resolution. You decide in your own mind, hey, I know what's fair here. I'm going to offer that. And if the other side is, you know, smart, they're just gonna accept it. If they're evil and stupid, they won't accept it. 

Well, here's what I'm gonna say. That if you present kind of what your best offer is and you make it your last offer, then you've really got yourself stuck in a position that I think fundamentally misses an important point of negotiation. And that is, if you want to get to a successful resolution, you have to allow the other party to participate. Regardless of if it's a principle-based negotiation, or a positional bargaining, whichever one of those two you wanna pick, you gotta allow the other side to participate in it. Because, if you don't, they're going to think that you're trying to pull something on them and they're not going to agree. And then they don't agree to what you already determined is, or predetermined, is a fantastic offer, then you're gonna be really upset that the other side didn't take the offer. And guess what? There's a group of people that really benefit from that approach and that's called the lawyers. So be really careful about a shortcut to getting a resolution to any of these issues, whether it's property, child support, or spousal support. 

So that's how I'm gonna end it. I apologize, this has gone on a little longer, but we've had a lot of material to cover.

There you go. Any questions? 

Melanie Seneviratne: Yes. 

So, thank you Charles for that. We have a lot of questions, so unfortunately I'm not gonna be able to ask them all, so I'm just gonna pick a few of them and we'll just go for maybe another 10 minutes or so. 

Charles Fair: Okay. 

Melanie Seneviratne: So, Charles, try to keep your answers as short as possible.

Charles Fair: Okay. All right. Okay. Right. 

Melanie Seneviratne: I know how difficult that could be, so. So, do you need a judge to adjust the child support payments each year when there's changes in income? 

Charles Fair: The maintenance enforcement program in Alberta has a child support recalculation program. I think there's a fairly nominal fee. It might be $75 or something to apply for that. And if they accept the case for recalculation, basically they only accept the easy ones, then they will recalculate the support for you. 

Melanie Seneviratne: Okay, great. 

Charles Fair: Now, that's the first thing. The second thing is, parties can agree to pay to sort out all of this stuff by agreement and they never have to go to court at all. And then they can adjust it. The risk is, if they've made a bad agreement and they don't adjust it as necessary, if somebody does go to court, somebody might pay dearly for that. 

Melanie Seneviratne: Okay, great. So this one, this question, says, at the beginning, Charles mentioned that an ex can come after assets even after the divorce went through. In this particular case, they are going back 13 years. Any advice on how to protect myself? I.e. sell the house to my sister, or something like that. 

Charles Fair: Okay. Okay. All right. So, first off, if you try to move your property into some kind of safe harbor that is a very bad idea. It may embroil the person who's holding that property for you in litigation as well, on the basis that it is a fraudulent conveyance of the property to escape your liabilities. And no lawyer should be co counseling anybody, or helping anybody, do that. And, believe me, I've had lots of clients ask the same question. And unfortunately that's the answer. 

Now, going back 13 years and that sort of thing, you know, this is why I can't give legal advice. There's just too many moving parts on that. There are limitation periods that do apply that will say, after a certain amount of time, you can't apply. But what happens if you've already started the process and you never got there? What if the divorce was granted in the middle of the proceedings and everybody knew that the the property wasn't being divided until later?

Well, the divorce can happen kind of on a different schedule. What if the parties never bother getting divorced and they're separated for 20 years and they just never bothered because it just wasn't important to them. And then somebody gets a divorce. Does that wake up any kind of property claim? I just gotta say, there's no easy answer to - there's no simple answer, I gotta say. And you just gotta talk to a lawyer and you've gotta provide them with all the information because, you know, the lawyer might not ask the right question because, especially on those kinds of complicated situations, you just gotta keep talking and then the lawyer will go, ah, that's it. Yeah, tell me more about that point, and then we'll go from there.

Melanie Seneviratne: Okay. Next question. Is it possible to define a cohabitation agreement where property acquired during cohabitation stays with the person who paid for it instead of splitting it, assuming it's traceable? 

Charles Fair: Yes it is. Now here's just something to know. Negotiating and concluding that kind of agreement requires that both sides have independent legal advice, and the court of appeal in one case said, if the lawyer's not asking for a $5,000 retainer at the beginning of taking on that file, they're presumptively negligent.

So, you know, when you're drafting an agreement, whether it's a prenuptial or cooperation agreement, or even if it's a separation and property agreement, the farther you get from what a court would order, the more important proper independent legal advice is. Well, independent legal advice requires full disclosure and a really deep analysis before the party who's going to get less than what they're entitled to is gonna be satisfied - that everybody's gonna be satisfied that they knew what they were signing when they signed off on it.

So, short answer is, yeah, you can do it, but it's kind of questionable, I think. 

Melanie Seneviratne: Okay. Next question is: How can child support be calculated on the pre-tax income but paid after taxes are taken from the income?

Charles Fair: Well, it's not - the child support is based on pre-tax income because there's these tables and the tables are meant to be something that can be applied across the board. It's not really true to say that it's calculated on pre-tax income because, when you're calculating income, there's adjustments to the - we start with what used to be line 150 on your tax return. I think it's line 15,000, or something, now. The same basic principle. And we always talk about - the lawyers have been doing this for so long, we always say line 150 income. Because that's the basic taxable income. 

Well, what if that taxable income doesn't fairly reflect what your income is. What if you've got, you know, corporate income and the corporation's income was, you know, affected by some weird corporate write-down transaction or something like that. I just give that as just a weird example. 

There's ways of adjusting that income upwards or downwards. So it's not really - when you talk about it being based on pre-tax income, it's really just saying we're basing it on a number that we can use to fairly compare, you know, one family to another. So you come up with a way to calculate that income Yeah, it's before tax, because you'd have to do the reverse if you did it with the after-tax income, you'd have to work backwards from all the deductions and everything to come up with a way to fairly say that everybody's being basically treated the same way. 

Now, that's for determining what the amount of child support is. The same basic issue arises with spousal support, you start with the pre-tax income because you gotta figure out a way to do it. And again, you could do the same thing, and you take the after-tax income, but you'd have to adjust it for all the weird tax deductions that that one person got, but the other person didn't.

So, yeah, that's why. It's not really a reflection of - one's paid from pre-tax income and the other one's paid from after-tax income. That's not really the way it goes. 

Melanie Seneviratne: Okay. The next question is: With spousal support, what happens if you cannot pay it? An example is, being on disability and the attitude of the spouse is that the courts will force you to pay.

Charles Fair: Okay. So this is, I kind of get a bee in my bonnet about this. This is why you need legal advice., Because, when the spouse is saying what they think - threatening what they think the court is gonna do, well, how do you evaluate that? What? You're gonna believe your spouse? And I say to my own clients, I say, don't use what I tell you as a way to argue with your spouse, or your ex, because it's just gonna come across as bullying, and you might get it wrong. And if you get it wrong, if you've expressed it wrong, then you're going to undermine your ability to reach a negotiated agreement. When you can't reach a negotiated agreement, there's some people out there that will profit from that, and those are called the lawyers.

Now, this is why I say early advice is important, and timely advice is important. The other side is saying, well, this is what the court's gonna do, well, go check with a lawyer and get an independent view of what the court's gonna do. And then evaluate why the other side was threatening it rather than actually just doing it.

Melanie Seneviratne: Okay. So we'll just take one last question here. 

Charles Fair: Okay. 

Melanie Seneviratne: I apologize again that we haven't been able to get through a lot of the questions, but - you stated that, if our income increases, the Court expects us to report it, but what happens if the other parent is not reporting the two children that have moved out of the house for over six months?

Charles Fair: Yeah. Yeah. It's a material change in circumstances. Those children are no longer children of the marriage under the Divorce Act if they've withdrawn from dependency on the parent.

So, again, that's one of those things where that's the general rule, right? If the child is no longer dependent, they got married at age 18 or age 17, they got themselves married, you know, they left home, got a job, got married, dropped out of school, they're no longer a child that requires child support.

Okay, great. 

You know, and so, yeah, there's a problem with proof, right? You know, because the maintenance enforcement is looking at it and they're going, well, the kid's 17, well, you might have to get an affidavit in front of a judge to get them to adjust it. 

Melanie Seneviratne: Okay. 

Alrighty. Well, I'll let Vanessa close up, but thank you everybody for all your questions, and, once again, I apologize that we couldn't get to them all.

Is Vanessa hopping on, Is she still there? 

Vanessa Farkas-Brahmakshatriya: Yes, I am. I'm sorry about that. 

Melanie Seneviratne: It's okay. 

Vanessa Farkas-Brahmakshatriya: So, thank you so much, Charles, for tackling this really big topic that is obviously of great importance to the population that we serve. And thank you, Melanie, for fielding those questions. And I hope that all of you will join us for the next webinar that Charles will be offering on - what is the next topic? Have we determined what the next one is? 

Melanie Seneviratne: Yes, we have. So, the next webinar will be on October the 27th, I believe it is. Yes. The 27th of October. And the topic will be - oh wait, hold on a second. We just changed the title event like today. So, it's going to be "Boost Your Family Law Literacy". So it's gonna be a lot of, like, terms. Understanding what terms mean, that you hear lawyers drop, courts drop, and you have no idea what they mean. So it's gonna be a lot of that type of of information. 

Vanessa Farkas-Brahmakshatriya: Oh yeah, that sounds wonderful. That would be very useful and it helps you get more out of all the other webinars and educational offerings that you make use of. 

So, please, all of you, look out for a customer satisfaction survey in your email inbox. And we'll also send you a link to the video of this presentation, along with the question and answer period, when it is available. So especially those of you who were late comers, might wanna take advantage of that recording. 

Thank you so much Charles and Melanie for your time. 

Charles Fair: Well, it was a pleasure. And, you know, I'm thinking, for that next one, since it's just gonna be, like, dealing with jargon, you know, if people have specific questions, it almost might make sense to have the questions at the beginning and we'll do it a little more interactively. 

Vanessa Farkas-Brahmakshatriya: Oh, that sounds like fun. 

Charles Fair: Because, how do I pick what's most confusing? I don't know. It all makes sense to me! Like, perfect sense. 

Vanessa Farkas-Brahmakshatriya: So come with your confusing jargon and we'll try to shed some light on it. 

That's a great idea. 

Charles Fair: That'll really put me on the spot if I don't know what the answer is for something. 

Vanessa Farkas-Brahmakshatriya: Well then that just adds to the fun, I suppose. 

All right, thank you, everyone, for joining us and we hope to see you next time.