Spousal support consists of a payment or payments made from one spouse to the other following the breakdown of a marriage or other cohabiting relationship. Spousal support is governed by the Divorce Act in instances where the couple was previously married and by the Family Law Act if the couples were cohabiting but not married. The purpose of this support is to ensure that the recipient spouse continues to enjoy the wealth accrued by the other spouse during the duration of the marriage or cohabitation.

Support payments are typically made in the form of monthly payments, but may also be made in any of the following manners:

• A single lump sum payment
• Periodic payments, such as monthly or yearly payments
• Series of lump sum payments

If there are children of the marriage or relationship, child support takes precedence over spousal support, to ensure that the parents continue to provide for their children. Provided that a parent is able to pay both child support and spousal support, the factors to be considered in determining whether spousal support should be paid include:

• Length of cohabitation
• Toronto domestic contracts or other agreements previously entered into by the spouses
• Roles of the spouses during marriage

Marital misconduct is not considered a factor in determining whether a spouse is entitled to support. Unlike child support, spousal support may be deducted on the payor’s income tax return and it is considered taxable income to the recipient spouse.

The Divorce Act currently only provides support to married spouses and does not cover common law marriages where the spouses were cohabiting, but not formally married. The purposes of providing spousal support under the Divorce Act include:

• Recognizing economic disadvantages caused by a marriage or subsequent divorce
• Fairly divide the financial responsibilities associated with raising any marital children
• Relieving any economic hardship that arises as a result of the divorce
• Encourage increased economic self-sufficiency over a period of time

The Department of Justice released federal spousal support guidelines that may be used in determining the amount of spousal support in divorces regulated by the Divorce Act . Unlike the Child Support Guidelines, these guidelines are not mandatory. However, they are often used by courts in determining the amount and duration of spousal support payments. These factors include:

• Length of the marriage
• Each spouse’s income level
• Work history of the spouses
• The number of children

Unlike the Divorce Act, the Family Law Act defines a spouse as one who has been married or who has cohabited continuously for three years or more in a permanent relationship where there is a child involved. The child may either be the natural child of the parents or an adopted child. This definition applies to both heterosexual relationships and same-sex partners. The purpose of spousal support under the Family Law Act is for one partner to provide support to the other partner in accordance with need, if he or she is capable of doing so.

Factors that courts consider in determining the amount and duration of child support under the Family Law Act include:

• Current assets and income of both parties
• Expected future assets and income of both parties
• Age and health of the parties
• Length of cohabitation
• Each spouse’s ability to contribute to his or her own support
• The ability of the supporting partner to provide support to the other spouse
• The standard of living maintained throughout the cohabiting relationship
• Ability of the dependant partner to become self-supporting in the future
• Necessity of the dependant spouse to stay at home to care for the children during the cohabitation
• Effect of the cohabitation on the dependant spouse’s earning capacity due to domestic responsibilities
• Contributions made by one spouse to the other’s education and/or career potential

Spousal support is often modified or terminated following the breakdown of a relationship for various reasons. Support can be modified if there is a change in circumstances following the initial support order. The burden of demonstrating a change in circumstances is on the spouse applying for the modification.

Support can be terminated in any of the following circumstances:

• Spousal support is set to end at a specified date
• The supporting spouse dies
• Reconciliation of the spouses
• Remarriage or cohabitation by the dependant spouse

Spousal support is often set to end at a particular date in order to encourage the dependent spouse to become self-supportive. Courts are prevented from extending spousal support payments past this specified date, unless there has been a change in circumstances that resulted in economic hardship to the dependent spouse.

Not all spousal support arrangements include an end date, however. In instances where the dependent spouse has provided a great deal of child care, domestic services, and other assistance to the other spouse in his or her career, an indefinite spousal support order is often granted.

If the support spouse dies, support payments typically terminate. However, if the support order specifically states that the support is binding on the supporting spouse’s estate, the dependent spouse can receive additional support from the supporting spouse’s estate following death.

In the province of Ontario, if the spouses reconcile, the spousal support order is considered void. If, after the reconciliation, the spouses decide to separate again, they must enter into another spousal separation agreement.

For more information on spousal support and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

Domestic contracts are agreements between two spouses, or cohabiting partners, that define the boundaries of a marriage, living arrangement or separation. There are three main forms of domestic contracts:

• Marriage contracts,
• Cohabitation agreements, and
• Separation agreements.

Marriage contracts, also referred to as pre-nuptial agreements, include the terms of a divorce or separation, should the marriage breakdown. Such agreements are typically signed prior to entering into a marital relationship, although they are sometimes signed during the marriage relationship. These contracts define the terms of:

• Ownership and division of property
• Spousal support
• Right to choose the education and moral training of any marital children

Marriage contracts cannot define the terms of child custody, child visitation, or child support. However, because educational, religious, or moral training are decisions that can be made prior to a child’s birth, such decisions may be agreed to by the contract.

Parties often enter into a marriage contract when they want to protect any assets they own prior to marriage, or when one party earns a significantly higher income and wishes to keep this money upon divorce. A marriage contract is often necessary in the following situations:

• One of the spouses already has an estate plan that he or she does not wish to disturb
• The marriage is a second marriage for one or both of the spouses
• One of the spouses owns significant assets or a business prior to marriage
• One of the spouses already owns the property that will become the matrimonial home during the marriage
• One of the spouses is the sole provider for an elderly parent or other dependent relative
• One of the spouses earns a significantly lower income than the other spouse due to the relationship

Marriage contracts can protect the assets of a wealthy spouse, the financial security of a spouse who earns less money, or if a spouse has foregone a career due to the relationship. Additionally, in situations where the marriage is a second marriage and one spouse must pay spousal or child support to another, or where one of the spouses provides financial support to an elderly relative, a marriage contract can serve to protect the interests of these dependent third parties.

For a marriage contract to be valid and to be upheld by a court upon divorce or separation, the following requirements must be met:

• The agreement must be written, signed, and witnessed
• Each party must fully disclose all assets, debts, and liabilities
• Each spouse must obtain independent legal counsel, even if there appears to be no disputed issues
• The parties must make their intent clear on the face of the agreement
• There must be no fraud, undue influence, duress, or unconscionability

If any of these requirements are not met, the marriage contract can be challenged and may not be upheld upon divorce. The province of Ontario recognizes marriage contracts from other jurisdictions if such contracts meet the above requirements and complies with Ontario law.

Because the laws governing married couples do not apply to unmarried cohabiting couples, it is often wise to enter into a cohabitation agreement if you plan to enter into a long-term cohabiting relationship with another without getting married. A cohabitation agreement is a written contract where the parties agree to the division of property, support, or other matters if the parties later terminate the relationship. If a cohabiting couple later severs their relationship, the rules governing property division will not automatically protect the rights of the parties. Therefore, entering into a cohabitation agreement allows a couple to determine their rights upon separation prior to cohabitation.

Cohabitation is defined by the Family Law Act as the state of living together in a conjugal relationship, whether within or outside of marriage. When looking at whether two parties continuously cohabit, courts will consider the following factors:

• Common shelter
• Sexual behavior of the parties
• How the parties behaved socially
• Services the parties performed for each other
• Economic relationship between the two parties

Under the Family Law Act, only parties that are found to be cohabiting are permitted to enter into cohabitation agreements.

The requirements for a cohabitation agreement are similar to those for a marriage contract. For a cohabitation agreement to be considered valid, the following requirements must be met:

• The agreement must be written, signed, and witnessed
• Each party must fully disclose all assets, debts, and liabilities
• Each spouse must obtain independent legal counsel
• The parties must make their intent clear on the face of the agreement
• There must be no fraud, undue influence, duress, or unconscionability

If a couple enters into a cohabitation agreement and they later decide to marry, the cohabitation agreement will automatically become a marriage contract.

Separation agreements are a third form of domestic contract that are entered into at the termination of marriage, rather than prior to entering into a marital or cohabitation relationship. Separation agreements provide for the division or property and set out the financial and support responsibilities of each spouse following divorce.

For more information on domestic and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

Upon separation or divorce, a couple must appropriately divide the property acquired during marriage or cohabitation. While the rules vary slightly depending on whether the couple was married or a common law couple, generally, property is divided fairly between the two parties.

Typically, property is divided equally, with each spouse taking 50 percent of all property. This applies regardless of whose name is on the title of the assets. However, you are permitted to keep the following:

• Gifts you received during the marriage from someone other than your spouse
• Any property inherited during the marriage that was not given to both spouses
• Money received as the result of a personal injury accident
• Money received from an insurance company due to wrongful death

While most property that you owned prior to the marriage is yours to keep upon divorce, any increase in the value of this property during your marriage must be shared equally. Additionally, any property purchased during the marriage is split evenly, regardless of which spouse paid for it.

One exception to the rule that you are permitted to keep any property separately owned prior to the marriage is the marital home. The marital home is where the husband and wife resided during the marriage. This can be multiple properties, depending on whether the husband and wife owned multiple homes, such as beach properties and other vacation homes. The marital home is split evenly, regardless of whether one spouse owned the property prior to the marriage, inherited it during the marriage, or received it as a gift.

To determine how much property each spouse should receive, the parties must first calculate the “net family property.” This is the amount of property each spouse currently has. There is a separate net family property for each spouse and, at the end of the property division, each spouse is entitled to an equal net family property. The following details how each net family property is calculated.

You must first calculate the value of all assets the date of separation. Create a list of all property that is in your individual name. Such property includes furniture, jewelry, money in bank accounts, retirement accounts, and personal items. Any property owned jointly should be valued and each spouse should include half the value of the property on his or her list.

Degrees and licenses are not considered assets that need to be included in the net family property calculation. However, if a spouse supported the other spouse while obtaining a degree or license, this may affect the amount of spousal support and/or child support awarded.

Second, deduct the value of all liabilities at the date of separation. This includes any credit card debt, outstanding mortgages, and car loans. These liabilities should be subtracted from the amount of assets in the first part above.

Third, deduct the value of all assets exempt from the equal division rule. Any property that you (a) owned separately prior to marriage, (b) received as an individual gift or inheritance, or (c) received from an insurance company due to a death or from another individual subsequent to a personal injury claim, is exempt from being included in the marital property. This property is valued as of the date of your marriage, if received prior to the marriage, or at the date of receipt, if it was received during the marriage.

Four, add the value of any liabilities existing on the date of marriage. This means any liabilities that you owed separately prior to the marriage and includes credit card debt, mortgages, and car loans.

Once you have determined each spouse’s net family property, you must determine how much one spouse owes the other spouse. To do this, you should:

• Subtract the smaller amount from the larger amount
• Divide by two

The amount that you calculate is known as the “equalization payment,” or the amount that the spouse with the larger share must pay the spouse with the smaller share. This amount may be paid in cash, or by giving the spouse with the smaller share property in the amount of the equalization payment. The manner in which the equalization payment is made is often specified in separation agreements, or by the court presiding over the matter.

The amount of an equalization payment may be reduced if the court finds that such a payment would be unconscionable. While this is rarely done, a court may reduce the equalization payment if the couple was married for a short period of time, or if one spouse purposefully depleted family assets.

Common law couples are not covered by Family Law Act and, accordingly, the above rules only apply to formally married couples. In instances where a couple has cohabited for more than three years and decides to separate, either party may make a “constructive trust” argument for the equal division of property. Such an argument would be that each person contributed substantively to the value of the property, regardless of whether he or she paid for the property or had the property titled in his or her name. If this argument is accepted by the court, one of the parties may be entitled to an equalization payment from the other party. However, this is a more difficult standard than for married couples because the spouse claiming property ownership has the burden of demonstrating that he or she did contribute to the value of the property.

For more information on domestic and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The matrimonial home is anywhere the husband and wife resides during a marriage, regardless of whether it is a single-family home owned by the couple, a rented apartment, or a mobile home. Under the Family Law Act, the matrimonial home is always dealt with separately from other marital property within separation agreements and divorce decrees. Regardless of who owned the home at the beginning of the marriage, the matrimonial home is always divided equally, meaning that, upon the sale of the home, both spouses receive an equal share of the proceeds.

During a property division, immediately sell the home and divide the sale proceeds equally between the spouses. Depending on the needs and desires of the respective spouses, as well as the circumstances surrounding the divorce, the matrimonial home can be dealt with in any one of the following manners:

• One spouse pays the other spouse half of the home’s fair market value at the time of divorce and gains complete ownership of the home
• Both parties continue to own the home jointly until a set event occurs

When undergoing a divorce, both spouses have an equal right to possess the marital home. Often times, one spouse is permitted to continue living in the home without purchasing the other spouse’s share of the home. This is often the case in instances where one parent is granted child custody and is permitted to remain in the home, or if there has been an abusive relationship, restraining orders are involved, and the victim wishes to remain in the matrimonial home.

If it is decided that one spouse should be permitted to remain in the home, there are essentially two options: the couple can continue owning the property jointly, or the spouse retaining possession can buy out the property interest of the other spouse. If the parties decide to maintain joint ownership of the home, they can do so until a set event occurs. Such events may include the remarriage of the custodial parent or the children reaching a certain age. During the time that the custodial parent retains possession of the home, he or she is solely responsible for paying the mortgage and taxes, and is permitted to take tax deductions for any payments of principle made for the home. Any major repairs made to the home are divided between the parties and, upon the final sale of the home, the party paying for such repairs during the duration of the joint ownership is entitled to be reimbursed for half of such expense upon the sale of the home.

Upon the execution of the previously agreed-to event, the home will be sold or purchased in its entirety by one of the spouses. If the parties decide to sell the home, the proceeds from the sale will be split evenly. If, however, one of the spouses wishes to continue retaining possession, that spouse may buy out the other spouse’s share. This buy-out may be accomplished in any of the following ways:

Paying the other spouse the fair market value of the home

• Refinancing the home
• Trading the home for other property

Sometimes, the best option is to sell the home immediately and split the proceeds of the sale. This is often the best plan financially, as it allows each spouse a flow of cash with which they can purchase a smaller home. Additionally, it allows the spouses to split quickly, especially in instances where there are no children from the marriage, and it allows the spouses to start over their lives in new homes, where there are no painful memories.

For more information on domestic and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer