SPOUSAL SUPPORT

Spousal support is money paid from one spouse to the other, for their financial support, following a separation or divorce.

From the above, it is clear that you must be a spouse for the issue of spousal support to even be considered.

So, who is a spouse: “spouse” means either of two persons who,

• A. are married to each other, or
• B. have together entered into a marriage that is voidable or void, in good faith on the part of a person relying on this clause to assert any right.
• C. either of two persons who are not married to each other and have cohabited,
  • a. continuously for a period of not less than three years, or
  • b. in a relationship of some permanence, if they are the parents of a child as set out in section 4 of the Children’s Law Reform Act.

Interestingly, the FLA goes on to include polygamous marriages as well:

In the definition of “spouse”, a reference to marriage includes a marriage that is actually or potentially polygamous, if it was celebrated in a jurisdiction whose system of law recognizes it as valid.

So, if you are a spouse, does that automatically entitle you to spousal support? NO, it does not. Entitlement to spousal support is a threshold issue that must be examined. Often, people believe that if there is a disparity in income, there is entitlement to spousal support. While often that is the case, it is important to know on what basis a person is entitled to spousal support as if affect amount, duration, etc.

There are 3 bases on which a person may be entitled to spousal support:

• 1. Compensatory
• 2. Non-Compensatory/ needs based
• 3. Contractual

Compensatory claims often relate to scenarios where a recipient has either suffered economic loss or disadvantage as a result of the role they played in the marriage, or from situations where the recipient conferred an economic benefit to the higher income earner without adequate compensation.

One can see then that this would be applicable to stay at home parents or part-time working parents, primary care parents of children following separation, moving for the higher income earner’s career, etc.

Non-compensatory claims are based on need. Need does not just mean the ability to afford the necessities of life. Need includes suffering a drop in the standard of living enjoyed during the marriage. In a long term marriage, there would have developed some reliance and expectation on the higher income earner. A pattern of dependency could have developed that leads to the recipient needing support, even if the recipient is able to afford the basics and even the luxuries of life for themselves.

Contractual claims include situations where there is a formal domestic contract or where there is an implied or informal agreement for example, where one person promises to support the other party’s education in the future.

Spousal support can take various forms:

• Lump sum
• Periodic payments with a fixed duration
• Periodic payments for an indefinite period
• Any combination of the above

Tax consideration

Spousal support is taxable at the hands of the recipient, and deductible by the payor so it is important to understand that while you might be paying $1,000 a month in spousal support for example, the net after tax cost to you might only be $700 as an example. Your gross income, income source and tax bracket would determine the true after-tax cost of course.

For the recipient, it is important to remember that you will be taxed on the spousal support amount you received. The amount of tax payable would also depend on your other income.

Lump sum spousal support payments, however, are received tax free. It is not taxable or deductible and that is why it is important to talk to us so we can advise on the proper amount to pay as a lump sum, to take into consideration, the fact that there will be no taxes paid or deducted.

Variation of spousal support

Lump sum spousal support payments help parties achieve a clean break. It is attractive for many people who have cashflow concerns or do not want to make monthly payments for any reason.

It is important to also talk to us if you are making a lump sum payment as it may be appropriate to get a spousal support release, ensuring that your obligation to pay spousal support ends with the lump sum payment.

For persons making periodic payments on a monthly, bi-weekly, quarterly basis, whatever the case may be, as well as for recipients, if there is a material change in your circumstances, such as change in parenting arrangements or a change in income, you can ask for a variation or change in the spousal support amount you are receiving, or a change to the duration of spousal support.

Reasons why people choose to vary support includes:

• a significant increase or decrease in income for either party
• change in parenting arrangement from primary residence with one parent, to a shared parenting arrangement for example
• child support terminating for one child or all children
• Remarriage or repatterning

Note that there is a difference between variation of spousal support and a review of spousal support. With a variation, the person seeking the variation must show there has been a material change in circumstances whereas with a review, the issue is looked at as an initial application.

Termination of spousal support

For parties making periodic payments, you may have a fixed end date at which point your obligation to pay spousal support ends. If that is not the case, you need to apply to have your spousal support obligation terminated.

Many erroneously assume that their spousal support obligation terminates with retirement. While that may be the case, it is not automatic, and it is not uncommon to see spousal support ordered beyond the date of retirement.

Self sufficiency

Every person has an obligation to be self-supporting , to the best of their ability. This obligation is stated in both the Divorce Act and the Family Law Act.

Objectives of spousal support order – Divorce Act, s.15.2 (6)

An order made under subsection (1) or an interim order under subsection (2) that provides for the support of a spouse should

• (a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;
• (b) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;
• (c) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and
• (d) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

Obligation of spouses for support – Family Law Act, s.30

Every spouse has an obligation to provide support for himself or herself and for the other spouse, in accordance with need, to the extent that he or she is capable of doing so.

Family Responsibility Office

The Family Responsibility Office (FRO) is a program by the Ontario government to help families in collecting, distributing, and enforcing support payments.

If your spousal support is court ordered, it will automatically be filed with FRO and FRO will continue to collect and send support payments until the parties withdraw from FRO enforcement.

You can also register your Agreements with the court, if you want your support to be enforced through FRO.

Spousal support release

A party may choose to release their right to spousal support or in some cases, both parties release each other from any past, present or future spousal support claims.

A spousal support release should not be entered into lightly and if you want to ensure that it is not set aside in the future, it is important for both parties to seek independent legal advice.

A spousal support release may be appropriate after a lump sum payment of spousal support has been made and with consideration to making sure that the objectives of the Divorce Act are met as it relates to spousal support.

Check out our free spousal support podcast: https://anchor.fm/ap-lawyers/episodes/Episode-10-Fundamental-Series—Spousal-Support-e126obj