'But we're a common law couple, that's the same as being married right?'

David Harris-Lowe, partner, Family Law

Wrong.  When it comes to property division upon a separation or death, and in other areas of the law, there is a significant difference between a married and common law couple.  Married spouses have pre-determined rights to share in the increase in property value earned during the marriage and pre-determined rights to receive benefits from their deceased spouses estate. 

While common law spouses may have property rights after separation or a death of their spouse, determining those rights is not always clear.  Common law spouses do not automatically have an interest in their home or the other spouse’s investments on separation.  They have no guaranteed right to inherit from their deceased spouse’s estate.

The fact is, in many ways, the law hasn’t caught up with the realities of the way people form relationships.

If you are in a common law relationship you can protect yourself by reviewing (or getting) your will and estate plan with a lawyer.  You should consider a cohabitation agreement or a ‘prenup’.  If you have separated or your spouse has passed away, and you haven’t been treated fairly with regard to the sharing of assets, then you should also meet with a competent lawyer to find out what your rights are and whether there is a remedy for you.

Separating? There Really is a Better Way

Thomas Dart, Partner, Family Law

We have all experienced the breakdown of a relationship whether it is our own or whether it is the relationship of people we know and love. The traditional way of handling the breakdown is to have each party go to a lawyer, obtain legal advice about their rights and obligations and then have the lawyers try to negotiate an agreement. If an agreement cannot be reached, one of the parties begins a court application and then “the fight” really begins – and the expenses rise. The already bad relationship only gets worse. Children are directly affected by the conflict. Everyone loses – even the lawyers because they can’t get paid for all the time required to solve the problems in the court system and the court system itself because it can’t manage all the cases that pour through the doors.

The parties to the court proceeding are really handing over the power of solving their problems to professionals: to their respective lawyers, and to the judge who ultimately must decide their future for them. Is there a way to help people solve their own problems and reduce the animosity and harm which the adversarial nature of the court proceedings create? Fortunately, yes there is.

A competent and certified family mediator who knows the law and, more importantly, the impact of separation on children can aid separating parties in many ways. The mediator can provide all the information the parties need to make informed decisions which will impact them for the rest of their lives. The mediator can assist them in opening up discussion around the problems they are facing so that they can seek and find mutually acceptable solutions. The mediator can also help by obtaining any necessary therapists, coaches, valuation experts and any other expert who might assist them in reaching an agreement.  If the mediator successfully assists the parties in reaching an agreement, the mediator will prepare a memorandum of the agreement. The mediator cannot draft the actual legal agreement which the parties must sign to complete the process. The mediator must refer them to independent legal counsel who will prepare their actual legal agreement for them. This is to make sure that the parties obtain appropriate legal advice before signing the agreement so that they can be assured that they have made the right decisions. This provides a safeguard for anything that might have been overlooked in the mediation. If the lawyers come up with a reason why the agreement reached in mediation should not be completed, the parties can then return to the mediator with their lawyers to work out another solution.

In other words, the parties themselves can take control and through the mediation process can learn all they need to know to make well-informed and good decisions which are mutually beneficial and protect the children from any conflict. In the mediation process, the parties do all the work under the direction of the mediator. With all the work completed under proper supervision, the lawyer’s job in drafting the agreement then becomes much easier and therefore much less expensive. Parties who can mediate a settlement pay much less then parties who turn over the decision-making power to others.

Mediation may not work if one of the parties suffers from a mental health problem or if there is serious domestic violence but it can work for the vast majority of people who separate. Anyone who wants to learn more about mediation and other ways of resolving problems arising from separation should visit the following websites: www.fdrio.ca or www.fmc.ca.

Barriston also offers mediation in the form of Barriston Resolution Services. Take a look at our website for more information.

 

Can You Have Two Spouses At the Same Time?

By Douglas J. Manning, Partner, Certified Specialist in Family Law

Yes!  But why would you want to?

While not exactly bigamy, it is possible to have more than one spouse at the same time.  If you are separated from your spouse to whom you are still married, you are still legal spouses in the eyes of the law. This has several consequences:

  1. You are not free to re-marry;
  2. In the event of your death, your separated spouse will be entitled to widow/widower survivor benefits within the Canada Pension Plan;
  3. If you have not changed your Will, then your spouse may still be entitled to receive whatever you left them in your Will even though you are separated.

You could also have a “common law” spouse at the same time as having a married spouse.  If you have cohabited continuously for at least 3 years with another person (of the opposite or same sex) then this person could be your spouse as well!

So what?

Well, in the event of a separation after 3 years of cohabitation, you could have a spousal support obligation to this person, as well as having a spousal support obligation to your married spouse. Isn’t that a kicker!

Also, having 2 spouses at the same time could create complications for your extended health insurer.  The vast majority of employee health insurance plans provide prescription, dental, eyeglass coverage to the employee and to their “spouse”.  But most plans will not cover 2 spouses at the same time.  This could increase the cost to the insurer significantly so most insurers limit eligibility to one spouse at a time please.

Also, having more than one spouse at the same time could create confusion for life insurance companies.  If a separated but still legally married spouse has a life insurance policy on their life that they are required to maintain because they have a support obligation to their married spouse and/or children of the marriage and at the same time the insured has a common law spouse with whom they have had children and the insured dies, then there is the very real possibility that you will have 2 surviving spouses fighting over the insurance proceeds.  The insurance company won’t know who to pay the policy proceeds to.  Undoubtedly this type of situation will end up in litigation with the money being tied up for years.

So, if you are considering diving into the pool of committed relationships after coming out of a separation in which not all of the loose ends have been tied up, you would be well-advised to get some legal advice first.  Love may be blind, but as we all know – it ain’t cheap!

Family Law Act property rights: Not for every couple

Barrie Hayes, Partner, Family Law

The Family Law Act provides a statutory framework for the equalization of family property upon separation. The framework essentially exits out from the equalization the value of property the spouses owned on the date of marriage, and any property the spouses received from third parties; inheritances, life insurance policies, and certain civil judgments during the marriage.

The spouses deduct, from the value of their respective family assets at date of separation, any outstanding debt which then produces the spouses’ respective net family properties. In the event that one spouse has  net family property which is greater than the other spouse’s net family property, the spouse with the higher net family property owes a monetary payment to the other spouse equal to one half of the difference in the two net family properties.

This statutory framework provides a fairly focused, straightforward system for settling property issues between separating spouses.

Unfortunately the legislation only applies to legally married spouses. Common-law spouses have no recognition under the Family Law Act for property equalization.

Common-law spouses, in pursuing property issues arising from separation, have to resort to the common-law principle of unjust enrichment. Unjust enrichment will provide monetary relief to a common-law spouse if the common-law spouse can demonstrate that, through either financial or labour contributions made by the spouse, the other spouse was enriched by such contributions. The spouse pursuing unjust enrichment also has also to demonstrate that he/she suffered a deprivation by virtue of the contributions, and further that there was no legal reason justifying the contributions to the other spouse.

Cases dealing with unjust enrichment have increasingly recognized the claim and have broadened its application to common-law spouses.

The Supreme Court of Canada has recently advanced the unjust enrichment principle in creating the concept of a joint family venture in common law relationships. If a common-law relationship is determined to be a joint family venture, the law of unjust enrichment will compensate the contributing common-law spouse for the difference in the increase in assets between the two common-law spouses from the date of commencement of cohabitation until the date of separation.

Although the unjust enrichment principle greatly assists in providing fairness in dealing with property issues between separating common-law spouses, it lacks the precision and certainty provided by the Family Law Act to legal married spouses.

Other provinces in Canada have passed legislation which gives common-law spouses the same statutory property equalization rights as legal married spouses. Hopefully, over time, Ontario common-law spouses will be afforded the same statutory property entitlement.

Taxes and Financial Statements

Catherine Hyde, Paralegal

It’s tax time and hopefully you have filed your tax return.  You obtained copies of your T4s, T5s, receipts for medical or children’s expenses, business or rental income information. You provided these to your accountant or perhaps prepared your own tax return, and once done, received the Notice of Assessment confirming that you did your taxes correctly. 

 Preparing your taxes and preparing a financial statement in a separation case are similar.  In both instances you must gather together your supporting documents to prove any credits or deductions that you are entitled to within specific timelines. An effective and cost saving measure is to create a filing system.  This is not a doomsday philosophy in the event you do separate later, but rather it is simply a good practice, to assist in preparing your taxes, and to assist in any future needs you may have whether separation or estate planning.

You have essentially two options.  Firstly, you can obtain the standard filing cabinet, create paper files for each category including income, bank statements, credit card statements, investment statements, wills, property purchase and sale records, details of inheritances. Alternatively, in this digital age, you can set up an on-line filing cabinet with the same ability to set up folders for each of the categories and scanning the physical documents to each of the digital folders. These records should be maintained on a monthly basis.

 A little time now on filing can save you a world of time later.  Happy filing!

Custody battles - To Hell and Back

David Harris-Lowe, Partner, Family Law

36 days in trial after two years in the court system.  $500,000.00 in legal fees, with one party owing the other almost $200,000.00 as part of those legal costs.  This was only part of the fallout recently after two parents were unable to agree to a custody and access arrangement relating to their seven year old daughter.  This case attracted significant media attention not just because of the large sums of time and money expended, but also because of the harm that can be caused to children from marriage breakdown.

The parties’ daughter was anxious and agitated because she was worried about one of her parents getting mad because her tooth fell out while seeing the other parent.  Their daughter was told bad things will happen when she’s visiting the other parent or that the other parent didn’t love her.  The judge wrote – “What will it take to convince angry parents that nasty and aggressive litigation never turns out well?”  He also said that “no matter how hard we try, we don’t seem to be getting the message out to separating parents”:

a)   Nasty doesn’t work.

b)   Withholding the child doesn’t work.

c)    Sarcastic emails don’t work.

d)   Bad-mouthing the other parent doesn’t work.

e)   Twisting the child’s life to create a new status quo doesn’t work.

f)    Selfish decisions which may be emotionally satisfying in the short term, never look good in        a courtroom.

Cases like this should cause participants in the family law justice system to pause and reflect on how we approach these types of cases.  However, my experience is that the reality is most lawyers actually do encourage reasonableness and settlement. 

If you are, or feel you are about to go down the road to a ‘high conflict’ separation then the following are useful suggestions:

a) Get help.  Retain a lawyer.  See a counsellor.  Bounce ideas off a friend who is prepared to        tell you you’re taking the wrong approach.

b)    Don’t have parental discussions in front of the children.

c)    If you can’t have a discussion with the other parent without arguments and put downs,              then establish a process so that you can have discussions in a way that avoids this.

d)    Just because the other parent says mean or hurtful things, doesn’t mean you have to                  respond in kind. 

e)    Ask yourself, what would a judge think about my communication and actions?

f)     Take care of yourself.

Hiring good professionals in high conflict cases is important.  They will be honest with you in giving advice, even if you don’t always want to hear their advice.  A good lawyer can guide you through the system and, if needed, advocate for you in an effective and efficient way.

Mixing Personal and Professional Life

Hilary Goodman, Associate, Family Law.

Professionals, including lawyers, usually choose their profession with a goal in mind. Some want to serve others, some want to make lots of money, some just love the profession and want to join it. Once a profession calls you to it, it can become an obsession.

Law, like many professions, is not easy. It takes a lot of schooling (and corresponding student debt), to obtain the required qualifications. Then it takes a period of internship (in law called ‘articling’). Then finally you can call yourself a lawyer, some 7 years after graduating high school. Then the real work begins: hours of client work, analyzing and problem solving. Many lawyers find themselves working 50 to 60 hours per week all year round. The managing partner of the law firm has to often remind them to record their time as many forget so often to do just that.

Many lawyers though, still have time to devote to their other passions in life – like the opera or hockey – or both even !

The hockey player in me loves the sport so much that I would play it year ‘round if I could. Our firm has a ball hockey team so I am able to play that for a great part of the year. Our team sometimes struggles to win. Being competitive in nature, ball hockey has taught me that I have to learn the art of patience, forgetting the loss and moving on to the next game. The friendship and camaraderie of the team environment is very close to the office environment in which I work day in and day out. But it is entirely different as well – as our focus is on the game and the bounce of the ball – sometimes lucky, sometimes not so lucky.

Opera is also a secret passion of mine. There is nothing like the aria and the performance of those who devote their lives to this wonderful art. It also gives me the chance to get lost in a beautiful story, whether tragic or otherwise – in the timelessness of the plot, which gets re-performed by so many different players, yet remains firm in its message of humanity.

As much as I love working in the family law environment at Barriston, I also know that I need these outside activities to maintain balance and perspective. As Stephen Covey says, “we have to sharpen the saw” by taking time out, by seeing the world outside the practice of law and becoming part of the wonderful world of arts and sports helps me do that. So if you see me in my hockey uniform, please remember that I also am part of a wonderful profession, one which I believe is devoted to serving the public by protecting and advocating for those who need the help.

Keeping Legal Costs Down

Thomas Dart, Partner, Family Law

When a family unit starts to breakdown, the financial ramifications are already hard enough to handle without throwing into the mix the cost of the professional services required to finalize the parenting, property, support and a myriad of other issues. The wedding may have cost $50,000 but the divorce can cost far more than that if both parties feel like ‘fighting’ with each other. 

We have addressed the ways you can keep your legal costs down in other blog articles - for example, doing the work yourself with the help of a mediator. But what if your ex-partner won’t go to a mediator and you have to get some legal help. One answer is to seek out a law firm which will offer “limited scope retainers”. Here’s what that means.

If you need information about any aspect of your separation or taking your case to court on your own, you can try to find all the information you need on the internet.  Unfortunately, that information won’t be specific to your case and you will miss a lot of information because family law is governed by precedent court decisions, which are not easy to find and not easy to interpret. It is a lot less time consuming and a lot more cost effective to present your case to a lawyer and get his or her opinion on your case. But you may not have the money or the budget to hire the lawyer for all of the issues which you are facing. So what can you do?

Well, there is an answer. You can hire the lawyer for one specific task or as many tasks as you wish. Thanks to recent changes to the Rules which govern lawyers’ professional obligations, lawyers can now offer services for a limited purpose. If you have to take your ex to court, you can represent yourself but, as you need it, you can along the way get a lawyer’s help to:

  • Give a legal opinion about your specific case;
  • draft your court documents,
  • give advice as to what is required for financial disclosure both as to what you should give and what you should get,
  • assist you in gathering that information for court,
  • help you prepare your presentation to the court, including providing you with precedent court decisions on any specific issue,
  • help you understand rules of evidence and court room procedure,
  • provide coaching assistance for negotiations with your ex;
  • if you feel uncomfortable about going to court on your own, you can hire the lawyer for one specific court appearance and no others;
  • steer you to resources such as valuation professionals, psychologists for parenting assessments, counselors, and other experts who you may need for your case.

In short, you can hire the lawyer on an ‘as needed basis’, thereby limiting your fees to your budget.

If you choose to go that route, the lawyer will want you to sign what is called a limited scope retainer agreement so that he or she knows just what it is you are retaining him or her to do. There will also probably be a request for money up front to cover the work but the lawyer will be able to give you a pretty good estimate of what the assigned task will cost. So you probably won’t be asked for any more money, unless you want to obtain more services. You may be obliged to sign more than one agreement if you want more services as you go.

Some cases are too complex to be managed effectively by a limited scope retainer and the lawyer will let you know  if that’s the case. But a large number of cases can be managed appropriately on this type of a retainer. Yours may well be one.

Mediation Report vs. Separation Agreement

Jodi Armstrong, Partner, Family Law

There are certainly some similarities between a mediation report and a separation agreement: both documents outline agreed upon terms and both, at least appear, to have an air of finality about them.  Why then, once parties have gone through the mediation process and have received a final report setting out their agreement, are they still being strongly advised to take the next step and enter into a separation agreement? 

The answer is simple: the mediation report is not a legally binding contract.

Many, but not all, mediators are also lawyers.  When a lawyer is acting as a family mediator, however, he or she does not provide legal advice to either party.  The lawyer/mediator can provide useful legal information but, while mediating a family dispute, he or she is acting as a neutral third party and is attempting to assist  separated spouses with reaching a meeting of the minds in relation to their various family law issues.  Once the parties have come to an agreement, the mediator will prepare a mediation report outlining the particulars of that agreement and will direct the parties to take the report to their respective lawyers for independent legal advice.

Once the mediation report is in the hands of the lawyers, the parties will have the opportunity to discuss the terms and to get advice with respect to whether the mediated agreement is consistent with their rights and obligations under the current law.  Assuming that, with that legal advice, the parties are still in agreement, the lawyer will draft a separation agreement with appropriate releases.   The separation agreement must be (1) in writing; (2) signed by the parties; and (3) witnessed – at which point, it is a legally binding contract.

Spousal Support Qualifiers and Tips

Barrie M. Hayes, Partner, Family Law

The Income Tax Act recognizes spousal support payments as a tax-deductible expenditure.

The Act recognizes both married and common- law spousal support payments as tax-deductible. In order to qualify as a tax-deductible expenditure the spousal support order needs to;

1. Be embodied in a court order or written separation agreement;

2. The support payment be made on a periodic (i.e. monthly) basis;

3. The support recipient has discretion as to the use of the support payment.

Separated spouses can, in a court order or agreement, retroactively recognize historic spousal support payments as far back as January 1 of the year preceding the parties’ year of separation.

A spousal support payor can, in accessing the tax credit benefit of the spousal support payments, either claim the spousal support credit as part of the annual income tax filing and receive a larger income tax refund or claim the tax credit during the income tax year which will result in a lower income tax remittance to revenue Canada during the year.