Contracts & Agreements

The best interests of the children is the governing principle for determining all questions relating to their parenting. Many parents are able to put aside their differences on the adult level and by concentrating on the children’s needs, work out the most suitable parenting plan in the circumstances. Sometimes they will need help from a family professional with a background in social work to better understand what their children are going through and to help them manage any emotional conflict that interferes with the discussion staying on track. Your lawyer can make a referral for this purpose. A prime consideration in the planning will be to determine how you and the other parent can continue to be involved with the children and remain a significant part of their lives. In circumstances where the relationship between the parents is too damaged to co-operate on the planning, some variation of sole custody to one parent subject to access by the other parent is usually negotiated or ordered.

Where the child resides with one parent most of the time and spends the rest of the time with the other parent (a typical custody/access arrangement) the basic amount for child support to be paid by the other parent is determined by consulting a table published as part of the Child Support Guidelines. The number of children is matched with the income of the non-custodial parent (the income of the custodial parent is not counted). An amount may be added to this basic amount for the non-custodial parent’s contribution to “special and extraordinary expenses” such as child care expenses, and expenses for extracurricular activities and post-secondary education. Adjustments are made for shared parenting where the child is with each parent more than 40% of the time, and for cases of hardship where the standard of living in the payer parent's home would be less than the standard in the payee's home. A feature of child support payments that differentiate them from spousal support payments is that they are tax-free in the hands of the recipient. (In spousal support where the payments are made on a periodic basis—e.g., once a week or once a month—pursuant to a written separation agreement or a court order—the payments are included in the income of the recipient for tax purposes and deducted form the income of the payor.)

Married spouses (and, in certain circumstances, common-law spouses) have a duty to support each other. In determining the amount and duration of support the court applies a broad discretion within an area loosely defined by a number of criteria. This gives the law of spousal support a sometimes vexing degree of unpredictability. To address this problem Spousal Support Advisory Guideline have been designed as a “check,” or “litmus test,” or “tool,” to assist the court and the parties to arrive at proper spousal support terms.

The “advisory” nature of these guidelines must be emphasized. They are not “presumptive” like the Child Support Guidelines, and, therefore, do not have the same authority or certainty of application. The law for determining spousal is shaped around certain factors and objectives set out in family legislation. The “factors” consist of the means, needs and other circumstances of each spouse, including (a) the length of time the spouses cohabited and (b) the functions performed by each spouse during cohabitation. The “objectives” of spousal support to be considered are those which;

“(a) recognize any economic advantages or disadvantages to the spouses arising from the marriage or its breakdown;

“(b) apportion between the spouses and 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.” The effect of these factors and objectives is to create two elements as a basis for spousal support: (1) compensation and (2) need. The opposite side of the coin to these elements, and equally important, is the ability of the other spouse to pay support. Where property has been acquired during the marriage the compensatory element may be satisfied by the fruits of the property division. (See question on property division, below.)

Assuming satisfaction of the compensatory element, whether or not one spouse is obligated to support the other depends largely on the applicant spouse showing a need for support on his or her part, and a corresponding ability on the part of the other spouse to pay support. In weighing needs, the applicant spouse must first look to his or her own resources. These include his or her own ability to earn an income from employment, and the investment potential of any payment received in the property division. Generally speaking, it is when these resources fail to make the applicant self-sufficient, that spousal support is payable. In this sense, spousal support is an income supplement to make up for a shortfall between the amount needed to maintain a reasonable standard of living, and the amount generated by the applicant's own resources. The income tax treatment of spousal support is an important consideration. The deduction/inclusion rule applies which allows amounts paid for spousal support to be deducted by the payer spouse from income for the purpose of calculating tax, and whether or not this deduction is made, the amount for spousal support must be included by the recipient spouse in income for tax purposes.

Married spouses (but not unmarried spouses or common law spouses), upon their separation, are entitled to a division of the property acquired by them during cohabitation under the marriage. However, it is not the property, itself, which is divided; it is the value of the property. The process involves an accounting of the value in a procedure that creates a debt owed by one spouse to the other, not a right to a physical partition and transfer of actual property. Subject to certain exclusionary rules, property of every kind acquired during the marriage comes into the accounting -- the value of land and buildings, bank accounts, pensions, accounts receivable, and everything else the value of which can be expressed in dollars. The property acquired during the marriage can be the increases (gains) in value of property that was owned at the time of the wedding, as well as the value of the several items of property purchased after the wedding. The values used in the division process are net of debts and liabilities; that is, the debts and liabilities are deducted from the positive value of the property. To calculate the payment owing by one spouse to the other, an accounting is made of the "net family property for each spouse". Generally speaking, net family property is a spouse's net worth (assets less liabilities) at time of separation less the spouse's net worth at the time of the wedding (except for a matrimonial home that is owned at the time of the wedding). In the ordinary case, the debt created or the payment that is owing is one-half the difference between the greater net family property and the lesser net family property. The spouse with the greater net family property owes this amount to the other spouse. Because this payment balances the values of the property holdings of the spouses, the payment is called an "equalization payment." Where an equalization payment would be "unconscionable" the division of the difference between the net family properties is adjusted to be more or less than one-half. An example of a calculation of an equalization payment is:

Husband Wife

Value of property, date of separation $200,000 $350,000

Value of property, date of marriage 15,000 50,000

Net family property $185,000 $300,000

Difference between nfp's $115,000

($300,000 - $185,000 = $115,000

One-half the difference is $57,500

($115,000 / 2 = $57,500

Wife pays this amount to Husband 57,500 (57,500)

Value of holdings after equalization payment $242,500 $242,500