FAQ: Spousal Support

Find out the answers to frequently asked questions ("FAQs") with regard to family law and other legal issues.

Increase in Spousal Support

There may be instances where a spouse that is ordered or agrees to pay spousal support to a former spouse receives a raise or some form of an increase in income after the order is made or the agreement is signed.

The question in these cases is whether the recipient of spousal support can ask for an increase in his/her support based on the recent increase in the payor’s income.

Cases such as Fargey v. Fargey and Abernethy v. Peacock have dealt with this issue, and highlight various important factors as well as objectives that a court must consider prior to making a ruling on the matter.

The cited legislation that deals with varying/increasing spousal support is section 17 of the Divorce Act and section 37 of the Family Law Act.

Section 17 of the Divorce Act states that:

17(1) A court of competent jurisdiction may make an order varying, rescinding or suspending, prospectively or retroactively,

  • (a) a support order or any provision thereof on application by either or both former spouses; or
  • (b) a custody order or any provision thereof on application by either or both former spouses or by any other person.

17(4.1) Before the court makes a variation order in respect of a spousal support order, the court shall satisfy itself that a change in the condition, means, needs or other circumstances of either former spouse has occurred since the making of the spousal support order or the last variation order made in respect of that order, and, in making the variation order, the court shall take that change into consideration.

17(7) A variation order varying a spousal support order should

  • (a) recognize any economic advantages or disadvantages to the former spouses arising from the marriage or its breakdown;
  • (b) apportion between the former 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 former spouses arising from the breakdown of the marriage; and
  • (d) in so far as practicable, promote the economic self-sufficiency of each former spouse within a reasonable period of time.

The cases of Abernethy and Fargey conveyed that the most vital factor that a Judge must consider when ruling on an Application to vary spousal support is whether there has been a material change in circumstances.

In the case of Abernethy, because there was a material change in circumstances, the Applicant was entitled to a variation of support based on “contract, on need, and on compensation.”

The Court in Fargey cited the case of Willick to properly define the meaning of a “material change in circumstances.” A material change in circumstances was defined as a change that, “if known at the time, would likely have resulted in different terms.”

To learn more about an increase in spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Interim Spousal Support

Courts take a different approach in making a ruling on temporary spousal support during a Motion than the approach taken on a determination of a final award of spousal support at a trial.

Specifically, in determining whether a party is responsible to provide his/her spouse with temporary or interim spousal support, the Court will look to cases such as Thomas v. Thomas and Hughes v. Hughes. The jurisprudence (i.e. case law) conveys that an award of temporary spousal support should seek to allow the recipient to obtain support from the date of the commencement of the litigation until the final trial. An adjudicator should primarily take into account the needs and means of the recipient of support, and attempt to place the parties on equal ground with respect to the financial support available to them individually.

Interestingly, if a party feels as though he/she is disadvantaged due to the unlimited resources available to their counterpart, they may apply to the Court for “advance” costs to fund the litigation and place the parties on relatively equal ground. However, a motion for “advance costs” should not be relied on and should only be used in extreme cases, as Justice Gates pointed out in the case of Lakhoo v. Lakhoo.

To learn more about temporary spousal support as well as other issues relating to spousal support, call 905.707.3370 today.

Duration of Spousal Support

Unlike Child Support, concrete legislation does not exist with respect to Spousal Support. Instead, the legal realm has come to rely on the Spousal Support Advisory Guidelines. (SSAG)

The fact that judges do not have the law to resort to when face with the issue of spousal support, has proven difficult for the courts in determining the duration of spousal support.

In the case of Bracklow v. Bracklow, the Court conveyed the notion that circumstances where one of the parties are disabled or struggle with ill health, does not always require his/her spouse to pay lifetime spousal support. Although, it is interesting to note that the case of Bracklow did not involve a long-term marriage.

The SSAG dictate that a marriage that has lasted for 20 years or more will result in an obligation of “indefinite” spousal support. Justice Beryl MacDonald analyzes the term “indefinite” in his ruling in Bridgen v. Gaudet as follows:

I realize there are many who suggest there is a compensatory element to be considered because of the existence of a long term relationship. I have some difficulty with that analysis although there is support for it in Bracklow. (see “Spousal Support Post-Bracklow: The Pendulum Swings Again?”, Carol Rogerson, (2001) 19 Can. Fam. L.Q. 185) I prefer to consider compensatory support in the context of a known lost career advance or lost employment and benefits a person may have pursued, or received, but for the marriage. Many spousal recipients had no employment before marriage or their employment may have been in minimum wage endeavors that may still be pursued if the spouse’s health permits. There is no specific loss that can be identified. Long marriages do lull these persons into a permanent state of financial dependency but I would still categorize these as non-compensatory cases.

Given that the Supreme Court of Canada has directed illness does not mean an entitlement to lifetime spousal support some objective criteria must be developed to rationalize an appropriate time when support should end. Ability to pay is not a factor in determining as appropriate termination date unless we are to revert to the concept that, although on the one hand the court says marriage does not mean support for life, even if you’re disabled, if the payor spouse can afford it, then a spouse will receive lifetime support. I do not consider that to be an objective criteria upon which to analyze these very difficult situations.

To learn more about duration of spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Lump Sum Retroactive Spousal Support – Tax Consequences

When a court orders that one of the parties are entitled to a specific amount of spousal support in accordance with the SSAG, the Court will also award a lump sum retroactive spousal support award from the date of the application until the present day.

The first issue is how the Court determines said amount.

At first glance, it seems reasonable and obvious that the Court would multiply the amount awarded in spousal support per month by the amount of months in arrears. However, in reality, that is not a fair and reasonable figure as it does not take into account the fact that monthly spousal support payments are deductible to the payor and taxable to the recipient. Therefore, decisions such as Hume v. Tomlinson, Elgner v. Elgner, and Vanasse v. Seguin, stress the that the Court has an obligation to consider the tax consequences when ordering a lump sum retroactive spousal support award.

In Thompson v. Thompson, The Court explained its position on the matter as follows:

The quantification of retroactive spousal support, the range that is generated by the SSAG must be adjusted because these ranges are based upon periodic ongoing payments which are presumed to be taxable in the hands of the recipient and tax deductible by the payor. A retroactive award must be netted down to account for its non-taxable status in the recipient’s hands, and its non-tax deductible status in the payor’s hands.

To learn more about lump sum retroactive spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Life Insurance Policies

In cases where a party is awarded spousal support, the recipient will want to obtain some sort of guarantee in the event the payor suddenly dies. It is for this reason that courts have the ability to compel a spousal support payor to alter his/her life insurance policies and name the recipient as a beneficiary to the life insurance policy.

As was witnessed in Schellar v. Scheelar, this can pose a significant problem if the payor dies without complying with the clause in the separation agreement that compels him/her to name the recipient as beneficiary to the policy. In such cases, if the parties included in the agreement a standard clause such as the following, “in the event that the husband should die without such life insurance being in effect, notwithstanding that he remain subject to the obligation to pay child and/or spousal support, the wife shall be entitled to a first claim upon the estate of the husband for the sum of $500,000”, then the payor must have assets for the recipient to collect on his/her spousal support entitlement.

In cases where the payor did not have sufficient assets, courts such as the one in Scheelar, refused to order that the life insurance policies be paid to the recipient nonetheless.

It, therefore, would be wise to make the payor and recipient joint owners of the policy. That way, if the payor decided to amend the designation of the beneficiary of the policy, the joint owner would be notified.

To learn more about life insurance policies as well as the services provided by Krol & Krol, call 905.707.3370 today.

Interim Spousal Support

In many matrimonial cases, one of the parties will find themselves in a precarious financial situation. More often than not, a mother who sacrificed her career to take care of the children of the marriage, will find herself in need of interim spousal support upon the dissolution of the marriage.

Justice Douglas, in Horowitz v. Nightingale, outlined the various principals of interim spousal support as stated in the case of Driscol v. Driscol. They are:

  1. On applications for interim support the Applicant’s needs and the Respondent’s ability to pay assume greater significance;
  1. An interim support order should be sufficient to allow the Applicant to continue living at the same standard of living enjoyed prior to separation if the payor’s ability to pay warrants it;
  1. On interim support applications the court does not embark on an in depth analysis of the parties’ circumstances which is better left to trial. The court achieves rough justice at best;
  1. The courts should not unduly emphasize any one of the statutory considerations above others;
  1. On interim applications the need to achieve economic self-sufficiency is often of less significance;
  1. Interim support should be ordered within the range suggested by the spousal support advisory guidelines unless exceptional circumstances indicate otherwise;
  1. Interim support should only be ordered where it can be said a prima facie case for entitlement has been made out; and
  1. Where there is a need to resolve contested issues of fact, especially those connected with a threshold issue, such as entitlement, it becomes less advisable to order interim support.

To learn more about interim spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Spousal Support – The Rule of 65

The case of Djekic v. Zai is a proper example and model of how the courts will and should determine the issue of spousal support.

When a Judge is tasked with the burden of issuing a ruling regarding spousal support, the Judge is required to look at the case as a whole. This means that the Court will look at all the circumstances that surround the parties to the matter. The issue of Quantum is related to the issue of duration.

In the above-mentioned case, the Court ruled in favor of the Applicant and varied the decision made by the Trial Court. The Court of Appeal explained that, in its decision to vary spousal support whereby the Applicant would be entitled to support on an indefinite basis, it was incumbent on the Court to consider all of the circumstances of the Applicant; including the fact that she was over the age of 65, disabled, and received a small pension.

This case has strengthened what Family practitioners and adjudicators have come to know as the “Rule of 65”; essentially, another consequence of courts taking all relevant circumstances into account when ruling on the determination of spousal support.

To learn more about spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Spousal Support and Retirement

As is prevalent in most Family Law cases in Ontario, each matter is judged on its specific facts. The common law is considered to be judge-made law. This is because, unlike other Civil law traditions which are based on an actual code, the common law is predicated on the rulings of courts. Therefore, the common law is consistently and continuously evolving and changing.

In the case of Rozen v. Rozen, Justice Bernard was faced with a motion brought by the former husband, the payor, to vary spousal support due to his retirement and non-competition clause. The husband was earning significantly more money in the previous couple of years, and now felt as though he should not be paying the amount the parties had agreed upon in the year 2003 because circumstances had changed.

Justice Bernard rejected the husband’s position and ruled that because the support was based on compensatory grounds, coupled with the fact that had the case been brought when the SSAG existed – the actual quantum awarded would have been less than the mid-range SSAG quantum, the husband could not argue to vary the quantum of spousal support due to his recent retirement.

To learn more about spousal support and retirement as well as the services provided by Krol & Krol, call 905.707.3370 today.

Spousal Support – Objectives of the Divorce Act

When determining spousal support, a court will look to the objectives listed in section 15.2 of the Divorce Act. Section 15(2) states as follows:

(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.

In the case of Morneau v. Morneau, Justice Cole stated in response to a wife’s claim for a review of spousal support that although self sufficiency was an important objective of the Divorce Act, it should not be given priority over the other objectives enumerated in Section 15(2) of the Divorce Act. Justice Cole stated as follows:

The fact that a party has failed to take reasonable steps to become financially self-sufficient is a relevant factor to consider when deciding on the issue of spousal support. Insofar as marriage may have created dependencies, it is the duty of dependent spouses to strive to free themselves from their dependencies and to assume full self-sufficiency, thereby mitigating the need for continued compensation (Bracklow at para. 29).

However, the objective of self-sufficiency is only one of the objectives listed in s. 15.2 of the Divorce Act, and it should not be given priority over the other objectives (Moge at p. 853). In addition, a party’s failure to achieve self-sufficiency is not breach of “a duty” and is simply one factor amongst others to be taken into account (Leskun v. Leskun, 2006 SCC 25 at para. 27).

Therefore, it is important to understand that, although a change in spousal support could be awarded on a needs-based approach, a court will hold a recipient of spousal support accountable if he/she has not taken reasonable measures to become self-sufficient and independent of their former spouse.

To learn more about spousal support as well as the services provided by Krol & Krol, call 905.707.3370 today.

Tax and Spousal Support

In Ontario, the issue of whether support payments made to a dependant are taxable or deductible often arises in family law courts.

The law in Ontario is that child support is not tax-deductible to the payor, and is free of taxation in the hands of the recipient. However, spousal support, on the other hand, is tax-deductible to the benefit of the payor, and taxable in the hands of the recipient.

It is interesting to point out that although courts do not have jurisdiction to award spousal support free of taxation, this past year in 2014, Justice Wong of the British Columbia Superior Court, did just that.

 

In the case of Boekhoff v. Boekhoff, a wife sought to claim over $100,000 in arrears of spousal support that had been owed to her since 2001.

 

Throughout the 13 years period where arrears had allegedly accumulated, the wife settled down with a new common law partner, and subsequently negotiated an agreement with her former husband that would see him pay a smaller amount in spousal support per month than was previously ordered.

 

Justice Wong ruled that the agreement was valid and that the fact that the wife had allowed the agreement to survive for a number of years without enforcing the original court ordered spousal support amount, re-enforced the notion that their had been a valid subsequent agreement reached between the former spouses.

 

Justice Wong thereby ruled that the wife was estopped from claiming arrears of spousal support corresponding to the original court order. However, he ordered that the amount originally ordered by the first instance court was justified, and therefore, the husband would continue paying the wife the amount of spousal support that had been originally ordered by the first instance court.

 

However, shockingly, Justice Wong concluded his ruling by allowing these future support payments to be “tax-free” in the hands of the wife; an order he did not have the right to make.

To learn more about shared parenting as well as the services provided by Krol & Krol, call 905.707.3370 today.