Why should I stress with work and let you relax at the spa!

Jack’s work environment has changed considerably lately and he feels lots of pressure to work excessive hours with short timelines.  He is currently experiencing health issues and his doctor has asked him to explore the possibility of taking an early retirement.  His employer has made it clear that hiring temporary help is out of the question.  Jack is seriously considering his doctor’s suggestion but wonders if, by taking an early retirement, his monthly support payments to Jill would be reduced or terminated.  After all, why should he stress with work while Jill spends his money relaxing at the spa!

 

If Jack is retiring for the sole purpose of reducing his support obligations, a court may impute him a higher salary than his retirement income, and calculate his support obligations based on what he used to earn before he retired.  This same principle applies to a payor who intentionally reduces his/her income to avoid paying support.   However, if Jack’s decision to retire is deemed reasonable (because it was prompted by medical reasons or some other « reasonable » cause), then his support payments may be reduced or even terminated.  In that case, the courts would look at many factors, including the following two important principles:

1. The nature of spousal support - Spousal support is an important and necessary means to share the financial impacts of separation which sometimes go well beyond the payor’s retirement.  In deciding whether or not the support obligation should be modified once the payor retires, the court will consider the nature of the support received by the recipient: (i) was the support ordered to compensate a spouse who stayed home throughout the marriage and who, as a result, did not have the opportunity to advance his/her career and earn a reasonable income? or (ii) was the support meant to alleviate a financial need, where a spouse  is unable to meet his/her personal monthly needs?  When support is based on compensation, the courts have often concluded that a spouse is considered to have been fully compensated by the time the payor retires.  However, when the support is based on needs, the courts have at times extended the obligation to pay beyond retirement. 

2. The “double dipping” principle -  The court will consider whether or not the payor’s pension was divided at separation through an “equalization payment” (the payment made between married spouses after a separation ensuring that each spouse ends up with assets of equal value for the period of the marriage).  If the pension was already divided as part of the property settlement agreed to by the spouses at separation, the court will try to avoid « double dipping ».   In other words, the court will avoid dipping again in the same source of funds (i.e. the pension) when granting support, unless the recipient has a significant need that cannot be addressed otherwise. 

 

Spousal support is a very complex area in family law and the payor’s retirement can add to the  complexity.  If retirement is a factor to be considered in your situation,  you  must consult a lawyer to ascertain your options and the impact your retirement may have on your financial situation.   Prior to meeting with your family law professional, take the time to understand the basic concepts of spousal support to use your time with your lawyer more efficiently (Knowledge is power and time is money!).  Visit our website at www.familylawinabox.com and listen to our program on Spousal Support (click here).

Remarriage and Spousal Support

Jill has met a new man.  He has never been married and asked her the other day if she would ever consider marriage again.  Jill always thought that once was enough but this man, Gary, is very kind, attentive to her needs and he is very respectful of the children.  He dreams of building a family life with Jill and believes that marriage would be the ultimate commitment. Jill is really not sure about this ‘marriage commitment thing’. She is also afraid that it may affect the monthly spousal support she is getting from Jack and that she has fought so hard to obtain… And then what happens if it does not work out with Gary?

If Jill remarries, she will be faced with three possible scenarios.  Her spousal support may be (1) terminated (2) reduced or (3) continue as is.  The main issue that will be considered by a court will be whether Jill’s remarriage is considered a “material change in circumstances”.  In order to change the spousal support terms of an agreement that you signed, you must show that something important changed in the parties’ circumstances and that if such changed circumstances had been present when the agreement was negotiated, it would have led to a different amount being paid.  So, if Jill’s remarriage was a clear possibility when she signed her agreement with Jack, and the agreement does not state that her remarriage would be “a material change in circumstances”, it is likely that Jill’s remarriage would have no impact on Jack’s future support obligations.

If Jill’s remarriage was not likely to occur in a foreseeable future when the parties signed their separation agreement, it is possible that her remarriage will be considered a “material change in circumstances” allowing Jack to ask that his support obligations be reviewed in light of Jill’s new family circumstances (and increase family income). This would not of course guarantee an automatic change, as Jill’s entitlement to support (particularly if it was being paid to her to compensate her for the economic disadvantages suffered during her marriage to Jack) might not change even if she is remarried.

Sometimes, a separation agreement specifically provides that spousal support will end if the recipient remarries.  In that case, the outcome would be quite clear and the spousal support would end the day Jill says “I do” for a second time. 

Spousal support is complex.  When dealing with this issue, courts (and lawyers and mediators) will have the following four objectives in mind: 

 

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

 

2) apportion between the spouses any financial consequences arising from the care of any child of the marriage over and above any obligation for the support of any child of the marriage;

3) relieve any economic hardship of the spouses arising from the breakdown of the marriage; and

4) in so far as practicable, promote the economic self-sufficiency of each spouse within a reasonable period of time.

 

If you are contemplating remarriage, spousal support is only one of the issues that you should  consider carefully with your legal advisor. Understanding how to protect your property in a second marriage (by entering into a marriage contract) is also key to happy endings. Visit our website at www.familylawinabox.com and listen to our program on Division of Family Property for Married Spouses (click here).