Providing an Ex-Spouse with Financial Support
Spousal support, also referred to as alimony or maintenance, is the legal obligation for one person to provide an ex-spouse financial support after a marital breakdown or separation. Many factors and calculations affect the amount, or whether or not an ex-spouse is even entitled to spousal support payments after a separation or divorce.
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Neither the federal divorce act or the provincial acts address the area of spousal support. The national child support and spousal support guidelines are the law that pertains to child support but not with regards to spousal support. Many lawyers and divorce specialists do apply the spousal support guidelines when negotiating or representing their clients. The courts, however, have jurisdiction and can award spousal support based on their discretion. The outcomes for spousal support usually fall within the range as set out by the federal support guidelines.
Typically, lawyers, arbitrators, mediators, and other divorce specialists use the spousal and child support calculators to set the starting point for negotiations around spousal. As would be expected, if you are using lawyers, there is a tendency to start either at the high or low range depending on whether you are the payee or payor. There are two common software's that professionals use in Canada, Child View and Divorce Mate. While both drive the same results, some provinces use more of one then the other. The outcomes, however, should be the same regardless of which software. There are also online calculators available to the public.
With spousal support, there is no simple rule for length of time or the amount paid. The extent of payments usually relates to the number of years of marriage. While there are differences across the provinces, within the a province there is reasonable consistency with the outcome. If you are in a long-term marriage, meaning more than 20 years, then guidelines do set out that payments may be indefinite. There are significant variations on what the definition is of forever. Given the complexity and the variability of outcomes with regards to spousal support, getting independent legal advice is prudent.
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There are typically two approaches to paying spousal support. The first is a fixed amount and the second is variable. Variable payment means that the amount paid can and will vary. If the parties are unable to agree on a set number for a fixed period, the default is to make the spousal support variable. Typically, in the case of variable spousal support, the separation agreement will set out how often and under what circumstances support will be recalculated. To avoid expensive negotiations, many agreements will attempt to set the spousal support amount for a couple of years to prevent yearly renegotiation.
Spousal support payments may also be a fixed amount. The separation agreement will set out in detail, the amount that will be paid monthly as well as the duration of time. In some separation agreements, there is an option to renegotiate if there is a material change for one of the party’s. In others, there may be no option for renegotiation. Typically, the courts are hesitant to order fixed spousal support.
The other type of fixed spousal support is a lump sum. In this case, the present value of future payments is calculated taking into consideration tax. While this is attractive, as it brings closure with regards to spousal support, many are not able to afford this type of option.
Regardless of whether it is variable or fixed, there are pros and cons to each with risk and reward, and these need to be carefully considered. Having a third-party help evaluate the options, taking into consideration careers, financial security, and personal needs, can help parties come up with a solution that works for everyone.
There is no surprise that spousal support is one of the most significant areas of contention in divorce and can result in conflict, and if you are not careful, substantial legal bills.
There are some determining factors when it comes to deciding if spousal support should or will be paid. A few factors considered when determining if it should be paid include; the amount of time a couple lived together, if there were any previous arrangements, e.g., prenuptial or cohabitation agreement, as well as the responsibilities each partner had during the marriage. In the case of common law, spousal support may be awarded. The factors considered would be similar to a common-law couple; however, this is more complicated due to the lack of clear precedents across the country.
The CRA sets out that periodic spousal support payments are deductible to the payor and considered income to the receiver. If a one-time lump sum is being paid, this is received tax-free by the recipient and not deducible for the person paying.
Spousal support is often the most contentious and feared topic of all matrimonial negotiations. This area is complicated, and the results can vary depending on negotiations or a Judge's ruling. Regardless of what you have read or what you hear, the outcome is likely going to be within the ranges set out by the federal support guidelines. You can choose to use a lawyer who represents you and will work to negotiate an outcome. However, that outcome is likely going to be within the range of the spousal support guidelines and will not be where you and your lawyer started. The other option is to work with a third-party who is a neutral or mediator, who can focus on achieving an agreement for spousal support that works for both parties. You want it structured to ensure that the payor is motivated to continue working and earning an income.
At Fairway, we believe that almost all divorce-related matters can be resolved outside of the traditional litigious system. To achieve an outcome that is both fair requires that the two parties set aside their emotional differences and deal with the financial issues pragmatically. If a couple can do this, then the spousal support negotiations can happen smoothly while achieving a resolution that works for both parties. Being involved in a contentious legal battle, where there are scare tactics and threats flying back-and-forth does not accomplish anything positive for either party. It is also vital that both parties continue to be motivated to work and generate income. The only way this is likely going to happen is if both parties feel they have input into the structure of spousal support.
At Fairway Divorce Solutions, we have helped thousands of couples achieve a win-win with regards to spousal support and believe that for most parties, this is achievable. Our model is designed to navigate and facilitate resolution in a way that maintains your integrity and protects both of your outcomes and relationships, particularly when there are children involved. Ensuring you are a well educated and an empowered decision maker is Fairway’s goal.