Kim Kieller, Partner

In the mid-1990s there were serious concerns in regard to child support.  Firstly, child support was still taxable in the recipient’s hands and deductible by the payor.  This lead to a  great deal of controversy and a hearing at the Supreme Court of Canada in regard to the constitutionality of the Income Tax Act.  Secondly, child support was determined in both  negotiated agreements  and by the Courts  on a very ad hoc basis, using the “Paras” calculation.  The name/adjective, “Paras”, resulted from an early child support court decision.  The calculation for support was determined  by a party (usually the recipient) drafting a budget for the children and then the parties respective  incomes were ascertained.  The mother and father’s full incomes were added together and a percentage calculated  which was the amount the payor was  to pay of the budgeted amount.  In those days there really was not a lot of argument in regard to how a party’s income was calculated – it really was the budget that was usually the contentious issue.  Lawyers, academics and government officials were aware that the Paras calculation lead to disproportionate amounts being paid to children in different cases – even with the same family income.  After much consideration and debate, the Federal Child Support Guidelines (CSG) were legislated into law in 1997.  Child support was no longer taxable and the income of the paying party was the amount to consider in arriving with the charted guideline income.  The only issue on basic (“base” “section 3” or “table”) support was the payor’s income.

As a result of the Guidelines income became a focus in the determination of support.  It is a common misunderstanding that only one’s Line 150 (from a tax return, known as a T-1) is how support is to be paid.  In some cases this is true (i.e. for a person who only receives a T-4 and interest  (T-5), but not in all cases.  Some examples follow.

If there is a situation where there is an individual who earns commission, they will claim expenses from their commission income such as promotion, vehicle costs, gifts, association fees etc.  The Guidelines do speak to this and between the application of the CSG and the case law, reasonable – meaning usually not all – expenses are deductible.  Therefore, when one reviews the first page of the tax return, there will be a place where deductions are taken away from gross commission income.  One has to review the actual expense and add back  to the income expenses that are not reasonable.  The usual subjects are “home office”, “cell phone”, “vehicle”, “miscellaneous”, meals and entertainment, etc.  anything that is deemed  personal is added back to the income for support purposes.

In the event of a self-employed individual, there will be an income and expense statement filed with the return or as a part of the return.  Again, one starts with the net income in Line 150 of the tax return and then reviews the expenses deducted from the revenue of the business or professional practice.  The same items as above are added back and one also has to check if children are paid, spouses are paid, is there a rational explanation for soft expenses such as depreciation?  Of course, even before the expenses are checked the revenue is also reviewed and considered – is there bartering, cash sales that are not reported, etc.?

Corporations are also complicated.  The same calculations are done as in the previous two paragraphs, but in addition, one checks the retained earnings (profits kept in the corporation and not withdrawn by the shareholder).  The query then becomes what are the reasonable expenses and then if there is a profit, how much of the profit should be added back to the payor’s line 150 income. There is no clear direction.  Corporate savings are essentially deferred income as the profit is taxed on a lower basis then personal income.  There is an argument that some retained earnings stay in the corporation for retirement purposes especially if the payor does not have an employment pension or significant RRSPs.  Each case is decided on its own facts and, as in any of the above situations it is important to have legal (and usually accounting) advice.

The last point is that the addition to the Line 150 income is the tax consequences.  If an individual has deducted an expense from his or her income and the amount deducted is added back to his or her income, one must equate the increased income to a taxable income. The courts call this process a “gross up”.  For example if one is a teacher, the cost of running a car is paid in after tax income.  If one has the ability through a business or corporation to deduct the vehicle expense from the business income then the resulting business income has taken into account a deduction that the above fictional teacher does not have.  Therefore in order to ensure that everyone pays support in the same amount on the same income, the court will add a notional tax to the self- employed person for the deduction when it is added back to his or her income for child support.  For example, for tax purposes a business owner may be able to deduct all of his vehicle expenses which are $10,000.  However for child support purposes if the court finds that there is a personal use of the vehicle for fifty percent of the time.  $5000 will be added to the payor’s income.  In addition as the payor never paid tax on the $5,000 (as he or she deducted the full amount from the revenue to determine his or her taxable income), the court will gross up the $5,000 by the notional tax rate – for example if that tax rate is 30% – $5,000 X 30% = $1,500 so $6,500 will be added to the line 150 income for that person.

The calculation of income is never an easy task.  Accountants and lawyers may be necessary to review income before the child support agreement is finalized

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Kim Kieller is a partner at Barriston and has practised family law for over 26 years.  She has been nominated by her peers as a “Best Lawyer in Canada” for the past four years.  Kim restricts her practice to family law matters involving complex property and income calculation cases and the division of business assets on a separation.

Catherine Hyde

Family Law Clerk

Often we receive emails from clients providing copies of emails they have received from their spouse relating to custody and access issues or money problems.  The intent is to show us how unco-operative the other party is being.  The end result is often a litany of email exchanges between the parties with rising anger in each email as each one responds to the “button” the other pushed.

Face it your spouse knows you well.  They know what to say that is going to set you off.  Responding to that is simply going to increase the animosity between the two of you.  Here are some suggestions for communicating with your spouse through email:

  1. Remember that your response will also likely be forwarded to their lawyer.
  2. Know that they are trying to push your buttons and try not to respond to the triggers.  Review the email for the actual facts and address those issues only trying to leave any emotions out of your response
  3. Be concise – stick to the facts
  4. Don’t recite or dwell on past hurts in your email – address the current situation
  5. Be positive – don’t show your anger or frustration
  6. Watch your tone – people read into email messages feelings you may not thave intended to express
  7. Wait to respond – if the email makes you angry when you receive it – walk  away – come back to respond only after you have calmed down and can  be objective
  8. Remember you catch more flies with honey than vinegar – do not criticize the other person – take the high road

 These suggestions should also be used in texting your spouse.

I came across two excellent articles on communication between spouses – High Conflict Divorce Tip #2: Avoid Reactivity by Brave, Weber&Mack  and  Reflections of a Divorce Lawyer: The Utility (and Not) of Email Exchanges Between Spouses as Evidence by Carlos Garcia

Keep all of these tips in mind the next time you receive that email or text from your spouse that sends you into a tail spin. Be the person to stop the conflict and address the issues only.

Barrie M. Hayes, Partner

There is a legal anomaly to the extent that there is, while a family unit is intact, no obligation at law for parents to support their adult children. Following separation, however, a legal obligation is triggered imposing support for adult children under provincial and federal legislation.

Most support legislation does not contain an absolute age limit where child support automatically terminates.

Under the Family Law Act an adult child is only entitled to support if he or she is in full time attendance at school. However, under the Divorce Act a child continues to be eligible for support if he or she is unable to withdraw from parental charge for a number of reasons, including health, education or the inability to provide necessaries for him or herself.

As a general rule, a child who is in full time attendance at high school or at a post secondary institution is a dependent and is entitled to receive support.

Courts generally take a liberal view of what constitutes pursuing post secondary education, however the courts expect adult children to pursue their education conscientiously and usually require an explanation if a child is not carrying a full course load or is struggling with his or her studies.

Historically, the courts were hesitate to extend support beyond a first degree or diploma, but with a recognition that a bachelor’s degree no longer assures self sufficiency the courts are increasingly approving a continuation of support for post graduate or an employment focused diploma after completion of a Bachelor of Arts.

The factors usually considered in assessing whether a second degree or diploma was eligible for a continuation of child support is:

  1. The reasonableness of the further degree or diploma in regards to the child obtaining employment after graduation;
  2. The family finances available to support the continued post secondary program;
  3. The child’s financial contribution and conscientiousness in pursuing the second post secondary program.

Wedding_rings

By Andrew Ain, Partner

There are many situations where an individual may wish to change their name, marriage being the most common of these. After marriage, many new spouses presume that their nuptials are the only requirement needed to allow them to legally adopt the other spouse’s surname. While many may proceed unhindered by only assuming their new married surname, the law actually requires individuals to take action in order to legally adopt it.

If you were married prior to April 1st, 1987, you may legally assume your spouse’s surname and stop reading here. If you were married after April 1st, 1987, or if you are in a common-law relationship and wish to legally adopt your spouse’s surname, there are steps you must take in order to legally do so.

First, you must be legally married or living common-law with your spouse . Second, you must decide whether you’d like to replace your birth name with your spouse’s surname or combine your birth name and married surname using a hyphen. Finally, you must comply with Ontario’s Change of Name Act. The nature of the Act is draconian in that it effectively strips you of all vestiges of your prior identity, but compliance with the Act is necessary in order to legally change your surname.

Compliance with the Act requires that you:

  • Complete and file an Election to Change Surname form. If you are common-law, you will also need to complete and file a Joint Declaration of Conjugal Relationship form. (To obtain these forms, call the Office of the Registrar General at 1-800-461-2156);
  • If you file your Election to Change Surname form within 90 days of marriage, or within 90 days of filing a Joint Declaration of Conjugal Relationship form, there is no fee. After the 90 day period there is a $25 fee;
  • If legally married, provide a copy of your Marriage Certificate, issued by the proper authority of the jurisdiction where the marriage was solemnized;
  • Provide all birth certificates and/or change of name certificates in your possession.

Following compliance with the Act, the Government of Ontario will register your change of name, note it on the birth registration and issue both a change of name certificate and a new birth certificate. If you were born outside of Ontario, the government will only register the change of name and issue a change of name certificate.

In practice, not many newlyweds or common-law couples will take these legal steps and non-compliance won’t cause them much more than minor angst. In some circumstances, however, you may need to have your lawyer complete a Change of Name Application to clear up a title problem or draft an Affidavit confirming you are the same person as named in your birth certificate.

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

In the vineyards in which I toil, Family Law, fathers often, undeservedly, get a bad rap. They are said to be more inclined to abandon their children, to not pay their child and spousal support,  to refuse to pay their share of the family debts, etc, etc..  However, a recent movie being premiered at the Toronto International Film Festival sheds a new light on one man’s commitment to his “daughter”. 

Canadian film director (and actress) Sarah Polley has released a deeply personal story of her life.  It is part of the story of her own life and to that extent it is autobiographical.  In this film Ms. Polley reveals that the man she had always thought was her “dad” wasn’t.  It turns out that Ms. Polley’s mother (now deceased) and had an affair during her marriage to Michael Polley and  Ms. Polley was the result of that extra-marital liaison.

The film reveals that Michael Polley was aware of the affair and was also aware that Sarah was not his biological child but this knowledge did not, in any way, affect his commitment, to “his daughter”.  From Sarah’s perspective she was always treated by her father the same way her siblings were treated.  In an interview, Michael Polley is also quick to point out that he did not want any of his children’s perception of their mother to change in any way as a result of learning of their mother’s infidelity.  Mr. Polley takes some responsibility for what transpired during his marriage.  He offers that at times he was less responsive to his wife than what she needed and this may have led her to seek out the affection of another person.

There is this popular misconception that men’s commitment to fatherhood is fragile and easily shattered. But this is not an absolute rule.  Some statistics I have read is that between 10-15% of children are not fathered by the men they believe to be their dads.  Fathers such as Michael Polley are to be commended for recognizing that their children did not choose how to come into this world and that the adults in their lives have a duty to raise them to the best of their abilities regardless of any biological investment in the child or children.  Further, this commitment needs to transcend the continuation of the marriage or relationship with the children’s mother.  Greater involvement by both parents of children who are raised in separated families is generally more desirable so long as it is appropriate involvement in which conflict is minimized and handled appropriately.  We are all better off if the next generation is raised by positive role models who demonstrate parenting skills and motivation that will ensure that the adults of the future have the necessary skill sets to be contributing members of society and great parents in their own right.

Many people are surprised by the high cost of legal services when they go through separation and divorce.  It is not unusual to spend tens of thousands of dollars to have issues resolved even in an “amicable divorce”.  Here are some of the reasons.

First, in most cases, people have many issues to resolve:

1)    The children:

a)    What is the parenting plan going to look like? Is he or she entitled to see the children as often as they wish? Why?

b)    What about the fact that the children don’t want to see their mother/father?

c)    What about that new partner? How can the children be seeing him or her?

d)    What if things change over time?

e)    What happens if we don’t agree on the parenting plan and what it should look like?

2)    Child support:

a)    What is the income of the paying parent? 

b)    What is the income of the recipient parent?

c)    What are Section 7 expenses?

d)    What if we share the children 50% of the time? What how do I calculate 50% of the time?

3)    Property division:

a)    What do you mean I don’t get half?

b)    Equalization, how does that work?

c)    Why do I have to get assets like my pension or my small business valued?

d)    Do I need other experts to value by property?

4)    Spousal support:

a)    The Spousal Support Advisory Guidelines – how do they work?

b)    Income determination – same problem as in child support – what’s the income?

So even in relatively “simple cases”, figuring out what you are entitled to or are obligated to pay is not a simple task. Financial issues can take a lot of time to resolve.

Figuring out what to do with children is probably the toughest issue facing most people. In some cases, parents are able to come to a quick agreement. But if the emotions are running high due to the way in which the separation occurred, judgment is often clouded and it is very difficult for spouses to focus on the needs of their children, because their own needs are coming first.  Conflicts over the children are the most time intensive and therefore costly part of a lawyer’s job. Facts are always in conflict – each parent tries to paint the other as a “poor parent” who does not have the ability to address the needs of the children.  When facts are in conflict, it is always necessary to conduct lengthy interviews of third parties who are potentially neutral third party witnesses to historic events that need to be proven in court. It is also often necessary to retain an expert in child development to assist either by mediating or by assessing the family. Courts insist on neutral evidence like this in order to make a proper decision about the best interests of the children if a trial is necessary to resolve the parenting issues. Child custody cases typically cost well over $50,000 just in legal fees if they go to trial.  While this is perhaps more than the cost of your automobile (depending on the make), it is certainly a lot of money to spend which often the family coming out of  a separation simply does not have.

Determining income in this day and age is difficult. Many people are self employed “contractors” who earn their money through their own businesses. Income determines how much child and spousal support you need to pay or receive. Many people work over time or are entitled to bonuses. Figuring all of this out is never an easy cut and dried task, primarily because people are frightened  about their financial future and need to be careful about how much income they declare or how much money they can get from their spouse.  Often the trauma of the separation and the emotion make people behave in ways they would normally not – hiding their assets or understating their income. The lawyer’s job is to figure out what the real numbers are and make recommendations on facts. Discovering the facts about income often takes a great deal of time. It also usually involves hiring another expert, like a chartered accountant who is skilled in family law issues. This necessarily adds to the cost of the case. But it is necessary in order to present the case properly and to arrive at a proper result.

Determining your property rights can also create a myriad of issues. Each side needs to establish their “net family property” (please see previous blogs for what that entails).  In general terms, married couples who separate are entitled to share all of the wealth that the couple generated themselves during the marriage.  Figuring out what that is takes time, and often involves valuation experts at additional cost.

Added to the complexity of the legal issues is the process itself. If you have ever been in Family Court, you know that there are The Family Law Rules which must be followed.  Just completing the paperwork is a time consuming and therefore expensive process. The financial statement which must be filed must be accurate and it must be supported by documents or valuation opinions. Properly completing this form so that it is satisfactory to the court and in compliance with the rules can all by itself cost several thousands of dollars, depending on the complexity of the property issues.

The rules require that procedure must be followed. For sound philosophical reasons, each case that is in court is supposed to be managed by one Judge. Nothing can happen in a case until you have had a case conference. You must also have a settlement conference and then a Trial Management Conference. The purpose of all these conferences is to encourage a settlement of the case without a trial. However, they all add to the cost of your case because the lawyer has to prepare paperwork for each and your financial statement has to be updated as well if it is more than 30 days old.  Nothing ‘substantive’ happens at these conferences unless the spouses come to an agreement. Often agreements are reached with the assistance of the presiding judge but these agreements are usually not a complete resolution of the entire case.  If the case has to go to a trial, it usually goes on a list with many other cases and you have to wait your turn as the case moves up the list.  You really can never be guaranteed a trial date in our court system.  But your lawyer has to be ready for trial just in case it does get reached when it’s on a list. Marshaling the evidence properly so it can be readily and easily presented to the trial Judge is a very time consuming and therefore expensive task. Most family law trials take at a minimum three days to try often taking much longer if there are many issues.  By the time all of the steps are taken to get through the family court system and by the time the trial is over, the cost is usually close to or exceeding $100,000 for the normal middle class family with children and the usual income and assets.  In other words, the ‘system’ adds to the cost but it is a ‘necessary system’.

If both parties can keep their emotions under control, retain a lawyer who is experienced in family law matters and then listen to their lawyer’s advice, use mediation or arbitration to resolve those difficult issues that can’t be agreed upon, or, in other words, if they can stay out of court, a much less expensive resolution can be obtained.  Both sides have to

a)    be honest with each other about their parenting roles and what’s best for their children,

b)    keep the focus on a resolution of the parenting issues, not a “win in court” at the expense of the children,

c)    fully disclose their financial information without having to be repeatedly asked,

d)    want to get their matter resolved in accordance with the law or accept financial responsibility for the breakdown of the relationship,

e)    be prepared to compromise, and

f)     be willing to do a lot of the work themselves.

There are no easy answers to the question of why legal fees are so high. There are many factors outlined above – the complexity of the law itself, the system in place to resolve the issues, the time it takes to organize and understand those issues and to prepare for a trial.

On the other hand, a lot has to do with the manner in which the parties themselves want to get their issues resolved. A lawyer has no choice but to follow their client’s proper instructions, and if the client wants to take a matter to trial that should be settled in some other manner, then the lawyer really has no choice but to take the matter to trial.  A good lawyer will make the client well aware of the potential outcome, the risks involved and the cost of taking that kind of approach to their case.  But even good lawyers have to take a case to trial when it is against their better judgment to do so.  The client has a lot to do with keeping his or her legal costs down.  A good lawyer will encourage this strategy and not encourage the client to take an adversarial approach.  A good lawyer only goes to trial when the other side presents no alternative.  Two good lawyers acting in the best interests of their clients only go to trial when there is some very honest difference of opinion on the potential outcome of the case. Most good family law lawyers settle their cases without a trial. 

Catherine Hyde, Family Law Clerk

I have recently been involved with a number of cases dealing with “Excluded Property” in order to determine whether certain items of property can be excluded from the “net family property” calculation.  To determine this one first needs to look at the Family Law Act

Section 4(2) of the Family Law Act provides that:

Excluded property

(2)  The value of the following property that a spouse owns on the valuation date does not form part of the spouse’s net family property:

  1. Property, other than a matrimonial home, that was acquired by gift or inheritance from a third person after the date of the marriage.
  2. Income from property referred to in paragraph 1, if the donor or testator has expressly stated that it is to be excluded from the spouse’s net family property.
  3. Damages or a right to damages for personal injuries, nervous shock, mental distress or loss of guidance, care and companionship, or the part of a settlement that represents those damages.
  4. Proceeds or a right to proceeds of a policy of life insurance, as defined under the Insurance Act, that are payable on the death of the life insured.
  5. Property, other than a matrimonial home, into which property referred to in paragraphs 1 to 4 can be traced.
  6. Property that the spouses have agreed by a domestic contract is not to be included in the spouse’s net family property.
  7. Unadjusted pensionable earnings under the Canada Pension Plan. R.S.O. 1990, c.F.3, s.4 (2); 2004, c.31, Sched.38, s.2 (1); 2009, c.11, s.22 (5).”

The Act further states that onus to prove such a deduction or exclusion is on the person claiming it.

In order to exclude such property, you must first prove   that it was a gift from a third party (not your spouse), that it was received during the marriage and that it can be traced to an asset that you had on the date of separation.

If you received the asset by way of an inheritance, it will be necessary to review the Last Will and Testament  of the individual to determine whether the intention was to gift the asset to you and whether it is subject to the provisions of the Family Law Act or not.

Clearly there are many issues to be dealt with when considering whether or not you will be entitled to claim exclusion for certain property and how much you are entitled to claim. Your lawyer will best be able to explain to you the various issues and concerns relating to your specific assets that you are seeking to exclude.  Keeping complete records of any monies received and spent including bank statements, purchase receipts and investment statements, copy of correspondence from Estate lawyers, distribution statements, etc. will assist in tracing the assets to a valuation date asset.

Although you never anticipate that you are going to be divorcing and need such documentation it is simply a good financial step to take.

A recent Court of Appeal decision has caused considerable concern in relation to the certainty of the statutory provisions being applied to determine net family property equalization between legal married spouses.

Sections 4 and 5 of the Family Law Act have, to date, been viewed as all encompassing statutory direction in the division of net family property. The said provisions detail that all assets acquired by spouses from the date of marriage to the date of separation (save and except for certain assets which are excluded – i.e.: gifts from third parties, inheritances, life insurance proceeds and certain civil damages) are to be valued, reduced by outstanding liabilities, compared intra-spousally and any difference in value is to comprise the net family property equalization payment. Spouses receive a credit for the value of assets brought into the marriage and property acquired by spouses post separation are not to be considered in the equalization process.

As I have detailed in prior blogs, common law spouses who are not recognized for net family property equalization purposes in the Family Law Act have had to resort to the equitable principle of unjust enrichment in order to pursue property claims arising from common law family separation situations.

Family Law lawyers have not, in equalizing property between legally married spouses, considered or applied the unjust enrichment principle, but instead have relied on Sections 4 and 5 of the Family Law Act.

In the Macnamee case, the husband received shares of a company from his father by virtue of an estate freeze. The wife had, following the receipt of the husband’s shares, been actively involved in the operation and consequent growth in value of the corporation. The Court of Appeal held that the transfer of shares were, in fact, a gift from the husband’s father and, as such, were excluded from the husband’s net family property.

The Court of Appeal held that the unjust enrichment equitable principle was still available as a remedy for legally married spouses and remitted the case back to a re-trial on the issue of whether the wife’s contribution to the growth in value of the corporation should result in monetary relief to her from what would have statutorily been an excluded asset.

The Court of Appeal stated that in the vast majority of cases any unjust enrichment that arises as a result of the marriage will be fully addressed in the operation of the equalization provisions under the Family Law Act.

The decision has potentially opened the door for even more litigation in relation to net family property equalization.

There are so many people who believe that when they separate from their married or common law partner, the law automatically requires them to divide the property they own equally between them. People believe that common law partners eventually acquire the same rights as married partners if they live together long enough. Most of us also think about property as being something tangible – something we can touch or feel, or something we can verify with paper such as money in the bank. In this blog, I hope to give you a brief overview of how the law is supposed to work, the practical problems in trying to apply the law and to give you an understanding of what constitutes property that must be divided on separation.

All of the information contained in this blog relates only to the law of the Province of Ontario. In Canada, each Province has its own property legislation which in some cases is similar to that of Ontario but not necessarily the same. So if you are our reading this plot from somewhere outside Ontario, you will need to check with the lawyer in your area to see if you have similar legislation.

Under the Canadian constitution, Provinces have the right to set out the rules for property division for married and common law couples when there is a relationship breakdown. Right now, there is no legislation in Ontario which deals with the property rights of common law couples. It would be nice if there was. Right now, the legislation deals only with the rules applying to married couples who separate. In other words, common law couples never acquire the same property rights as married couples no matter how long they live together. Couples who are unmarried but live together as if married are called “common law” couples primarily because it is the common law, and not Ontario legislation, which governs their property rights on relationship breakdown. I am not going to go into the property rights of common law couples in this blog. If you have lived in a common law relationship which has broken down and you have questions about your property rights, you should get legal advice.

For married couples, the philosophy of our legislation which is called The Family Law Act, is fairly simple conceptually at least. Essentially, Ontario law says that when a couple separate with no chance of a reconciliation, all of the wealth which the couple accumulated during their marriage should be divided equally between them. It also brings into this division the concept that only property which was acquired by the joint efforts of the parties should be shared. In other words, if property is acquired by one partner from someone outside the marriage by way of a gift or by way of inheritance for example, then the value of that particular property is not shared because it is not the product of the contributions made by the couple during the marriage.

So the law in Ontario is only interested in the value of property accumulated during marriage, that is the change in values of property owned by each partner from the date of the marriage to the date of the separation. If you win the lottery right after the day you separate, then you won’t be sharing that with your spouse (unless maybe because he helped you buy the ticket!) because our legislation says it’s only the value of property accumulated during the marriage that gets shared.

The legislation also lays out for us how to do this sharing of wealth. It tells us that we first must determine who owns what property. We then place that property on the side of whoever owns it. We then have to value the property which each party owns on the date of the separation so that we know how much wealth each party has as of the date of the marriage breakdown. We then have to figure out all of the debts and other liabilities of the parties at the date of separation so we can figure out each parties net worth as of that date. We then have to go back to the date of the marriage and do the same calculation so we know the net worth of each party at that date. The difference between the net worth at date of separation and the net worth at date of marriage constitutes the wealth that accumulated during marriage and it is called “net family property”.

We then have to figure out if there are any items of property owned by either spouse at the date of separation which falls into that category of property called “excluded property” which is what we call the property that was not generated by the couple themselves such as those gifts or inheritances from parents. So if one party accumulated $100,000 of wealth from the date of marriage to the date of separation and the other party accumulated $200,000 of wealth, the party with the $200,000 of wealth would have to pay $50,000 to the other party in order to “equalize” the net family property. Each party would then have $150,000 worth of property. This right is exactly that – a right to a payment, not a right to property.  There is now a debt owed from one partner to the other and, like any other debt, if the party owing the debt goes bankrupt, then the party to whom the debt is owed loses out.

While all of this may sound fairly simple, in practice, the issues arising from this legislation can be very complex and difficult to determine. One of the big issues for us lawyers is to determine exactly what is meant by the word ” property”. Rather than get into the legalities of the definition of property as contained in the legislation, I would like to first give you a few examples of what actually constitutes property that must be valued for purposes of this exercise.

The most commonly owned property item in this category is someone’s interest in a pension plan. As far as our legislation is concerned, this is property which must be valued. Changes in Ontario legislation over the past 2 years have resulted in a method of valuing someone’s interest in their pension by way of a formula. There have been many criticisms of the formula in the sense that there is the potential for it to improperly value the pension plan. However, if you have a pension, it will be counted as part of the wealth you accumulated during the marriage. Only that part of the pension which was accumulated during the marriage is shared and the formula figures that out for you.

So one would think that a pension of any kind would be property for purposes of dividing wealth accumulated during the marriage. Not so. A disability pension is not property under Ontario law. This type of pension is viewed by the courts as a replacement of income and therefore not property.

In a very recent case, the wife’s right to the payment of future commissions was found to be property. During her employment as a commissioned insurance salesperson, she sold various policies to her clients which generated ongoing commissions for her. When her employment ended, under her employment agreement, she was entitled to her company’s “commission on release program” which meant that the capitalized value of the commissions which she was to receive was payable to her over a ten-year period by way of 120 equal installments. The capitalized value of these payments was found to be property even though,

the income tax department would probably consider these payments to be taxable income to her.

Similarly, stock options have been determined to be property. So too has the “book of business” of an investment adviser, that is his customer base from which his income is determined.

In other words, it does not matter if the money you receive will be taxed as income as that is not how property is defined in the legislation. The only question is whether or not the item fits the definition of property as contained in the legislation which reads “any interest, present or future, vested or contingent, in real or personal property and includes, a) property over which a spouse has a power of appointment exercisable in favor of himself or herself, b) property disposed of by a spouse but over which the spouse has a power to revoke the disposition or a power to consume or dispose of the property and c) [the right to a pension plan as noted above].”

In other words, in Family Law, nothing is as ever as simple as people think and unfortunately, because the law is complicated in this area, it is necessary to make sure that you understand your property rights a process which can often take some time to investigate and thoroughly establish.

It sure might have been easier (and cheaper) for all of us if the Family Law legislation simply did say that we should divide up the “property” itself on separation instead of dividing up “the wealth”. But I am sure that even  then the complications would be tremendous. 

By Lori L. Aylwin

One of the toughest issues we face in family law is the question of whether a parent can move their residence and “move forward” after separation when there are arrangements with another parent for access or when there is a shared residential arrangement. 

Here is a list of DO’s and DON’Ts for parents contemplating a move:

DO allow yourself sufficient time to give the other parent notice and for you to make appropriate plans, if a move is necessary for work purposes.  Tell your employer that you have to consider the change based on how it will impact your custody and access arrangement.

DO fully investigate the proposed move with the focus being on whether this move will be in the best interests of the children.  What are the schools like?  How far will the children have to travel to see the other parent? Are the children at a crucial point in their school career that a move may have a detrimental effect on their success?

DON’T assume that services/educational supports will be available for your children in the new locale…get all the information in advance and in writing if possible to address any questions / concerns that may arise regarding services available in the new area. 

DON’T move for your new partner with whom you have had a short-term relationship.  Your primary consideration should be the attachment of your child to their other parent. 

DO give advance written notice to the other parent that you intend to move.  Give them all the details you can muster and do it in a manner that shows respect for their relationship with the children. 

DON’T tell them  you are moving, consult with them regarding the move.

DON’T buy a new house or sell your own or accept a position in another city or province expecting to take your children until you have the other parent’s consent in writing for the move.

DON’T assume because your court order or agreement doesn’t say you have to live in a certain area that you can just move whenever and wherever you want with your children.

DON’T assume just because you are the residential parent or you have sole custody that you can just move away (even a distance more than ½ hour away may disrupt the parenting schedule/or relationship.

DO make a plan regarding how you will ensure that the other parent has meaningful contact with the children if you do move.  Consider the extra financial burden on  a support payor/access parent if they have to travel further to see the children.

DO consider your child’s needs/regarding school/ counseling/extra-curricular participation and how your child’s life will be impacted by the move. 

DON’T make a move motivated by a desire to get away from the other parent .  In situations of domestic violence or harassment this advice could be different. – consult with a lawyer.  If  he other parent just annoys you that is not a reason to move.

DO consult with a Family Law lawyer as soon as possible when considering a move.