I want my share in your business!

 

Jill’s sister has been living in a common-law relationship with her boyfriend for 11 years.  They have two children together, they own a home jointly and they have invested in a rental property through a company belonging to her boyfriend.  In all aspects (except for the very expensive wedding), they are like a married couple.  As of late, things have been rocky in their relationship and her sister has sought Jill’s guidance with regard to their rental property. She thought that since Jill is going through a separation herself, she would know the answer to her questions. However, Jill herself was married and she wonders if the same rules would apply to common law spouses.

 

The answer is NO. When it comes to property rights, things are very different for common law spouses than for married spouses. If you are married, Ontario laws very specifically set out how your family property is to be shared.  The rules are clear and will be strictly followed by lawyers and judges (unless you and your spouse agree to share your property differently).  However, this property division scheme does not apply to common law couples in Ontario.

 

It does not mean that non-married spouses have no legal remedies when it comes to property. To rectify what courts often saw as a terrible injustice, Canadian courts have created some legal principles which, if some conditions are established, allow common-law spouses to share in the value of a property owned by the other spouse following a separation. The main legal principle applied by Canadian courts to split assets between unmarried spouses is called “unjust enrichment”.

 

In simple terms, “unjust enrichment” may be established when one spouse made a contribution (financial or otherwise) towards the acquisition, maintenance or improvement of an asset (for instance a piece of property) which is owned by one spouse only, resulting in a financial benefit for the other party, to the first party’s detriment.  In the case of Jill’s sister, it would be profoundly unjust if she did not get to share in the value of the property held in her boyfriend’s company name given that they contributed an equal amount of money and efforts towards its purchase and maintenance.

 

This said, proving unjust enrichment can be quite a challenge sometimes, and the cost of making this claim before a court of law can be out of reach for many people.  For that reason, prevention is always better than cure, and many of the challenges associated with unjust enrichment claims can usually be avoided from the outset with careful family planning through cohabitation agreements and other legal contracts. For more information about this subject listen to our program:

 

«Protecting Your Finances: Marriage Contracts and Cohabitation Agreement (“prenupts”)»  http://www.familylawinabox.com/info/study_box.php

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).

She’s seeking sole custody? Is she trying to alienate me from my kids!

Jack is furious that Jill is seeking sole custody of their two children. He regards himself as a father who has always been involved with his children, and believes that he has much to offer his kids, both in terms of decision-making and in terms of the time they spend together.  Jack views Jill’s actions post- separation as an overt attempt to cut him out of the children’s lives, and “alienate” them from him. But is this the proper use of the term, “parental alienation?”

A parent who engages in alienating behaviour deliberately and actively campaigns to estrange his or her child from the other parent. Specifically, an alienating parent will talk negatively about the other parent or treat that parent disparagingly in the child’s presence; he or she may tell false stories and lie about the other parent directly to the child. Such parents will not allow their children to speak openly about the other parent in positive terms, or relate positive experiences they have had with the other parent. Moreover, alienating parents may subject their children to interrogation immediately following their return home from access visits, or create divided loyalties by refusing to allow the child to wear clothing purchased by the other parent or bring gifts home from the other parent.

 

Such behaviour on the part of the alienating parent typically occurs over extended periods of time. In response, a child who is alienated will consistently express negative feelings about a parent, or outright reject a parent, for reasons which are unjustified given the child’s past relationship with that parent and given the rejected parent’s conduct itself.

Courts must assess allegations of parental alienation on an individual basis, in order to determine whether a child’s fear or rejection of a parent is reasonable and justified given the circumstances of that particular case.  Was this child previously abused by her parent? Does the parent routinely miss or cancel access visits? What type of relationship did the child have with her parent prior to separation? If a child has valid reasons for exhibiting fear of his parent, or if there is a history which explains why the child refuses to attend access visits or engage with his parent, then it is inaccurate to claim that the child is alienated. If, on the other hand, a child who used to enjoy a loving and meaningful relationship with her parent is now truly fearful of that parent, or outright hostile toward that parent, then parental alienation may be at issue.

The court’s role in custody and access cases is to determine what is in the child’s best interests; it is not the court’s objective to reward or punish parents for their behaviour. Therefore, how courts respond to cases where parental alienation exists is not uniform. In certain cases, reunification or reintegration counselling may be recommended; a complete change to the existing custody and access regime may be ordered. In other instances, courts may find that to order any change to the status quo would cause further harm to the child.

So if you believe that your ex-spouse may be engaging in an alienating behaviour, don’t jump to conclusions.  Seek the assistance of a mental health professional who will be able to guide you through this process and make proper recommendations as to an intervention plan which may, or may not, involve hiring a lawyer.

What? You moved away with the children!

Jill and Jack have been arguing for quite a while now.  For Easter, Jack took the children on holidays to his family in Toronto.  On Easter Monday, Jack sent Jill a text message saying the children would not be returning home that night as he had decided to permanently move to Toronto with the children in order to be closer to his immediate family.  Jill is in a state of shock and her first instinct is to call the police and charge him with kidnapping! All Jill wants is to get the children safely home as quickly as possible. Does Jack have the right to move out of town without telling her?

 

While Jack may certainly move, he cannot do so with the children and most importantly without speaking with Jill who has legal options available to her.  The very first thing that Jill should do is to IMMEDIATELY speak with a family lawyer as in custody matters of this kind, acting with all speed is absolutely crucial.  Every hour and every day that Jill delays in taking court action works against her chances of getting back the children quickly.

 

Under no circumstances should Jill consent to Jack’s removal of the children or sign any agreement that deals with custody and access matters until she and her lawyer have reviewed it.  Similarly, nor should Jill say or write anything to Jack that could be interpreted as agreeing with his removal of the children from the family home.  Jill will also be required to start an urgent court proceeding against Jack for the children's return. Custody proceedings are very fact-specific and to save time and legal fees, Jill will need to provide her lawyer with the following information:

 

1. the family’s background (names of the parties and their children, dates of birth, length of relationship, employment, income, etc.);

 

2. Short timeline of the main events leading up to Jack's removal of the children;

 

3. List of family members, daycare providers and friends who can help her care for the children if the court orders their return to the family home;

 

4. why it would be in the children’s best interest to be in your care until the matter is sorted out, and;

 

5. what access, if any, do you propose the other parent to have.

 

The reason for the parent's moving is irrelevant to the court unless it helps to determine the parent's ability to provide for the children's needs. When making parenting decisions, the courts sole concern is the child’s best interest – what are the child's needs and the ability of each parent to satisfy those needs. Of course, the relationship that the child has with each parent will also be examined. Courts do not like to introduce instability into the children’s lives, nor do they want children to remain in environments that leave them vulnerable to emotional and physical harm. Thus, the trend in the Ontario courts has been to disallow the removal of the children from their family home if there is no compelling reason to show that such a move is in their best interests. In Jack’s case, for instance, the court could order for example that he return the children to Jill or have the police apprehend him and return the children to Jill.

 

Moving away with the children without proper discussion and agreement between both parents will not only disrupt the children’s lives, it will create lots of fear and unnecessary anxiety. Speaking to a family law professional and with the other parent before making such a move is a must!

Just ask the Taxman and you shall receive money!

Tax filing season is here again. Jack knows that tax deductions and exemptions reduce the amount of income on which he has to pay tax, in contrast to a tax credit which means a dollar-for-dollar reduction in the actual amount of the tax that he has to pay.  Although Jack pays child support for the two children, he cannot deduct the amount from his income.   However, the monthly spousal support he pays Jill is a deductible amount.   Jack knows that he will owe the Taxman money again this year and as a good Canadian citizen he will pay his dues.  However, he is also looking at ways to keep money in his pockets as he would love to buy a pontoon boat which would make his summer vacation with the children so much fun. 

Here is a list of some child tax benefits and credits that might be available to you from the federal and Ontario governments:

1. Child Tax Credits - This federal credit can save you up to $329 for each child under the age of 18.

 

2. Canada Child Tax Benefits - The federal CCTB is calculated for July to June yearly and could bring in to a low-income family with two children up to $555 in additional savings.   If Jill and Jack shared custody of the children (50-50 or 70-30), the CCTB would be divided equally but since both kids reside with Jill (70-30), she is the only parent eligible to claim the CCTB.  In Ontario, depending on your income, you may also be eligible to claim the Child Care Benefit and the Child Care Supplement. 

 

3. GST Credit:  This federal tax-free quarterly payment helps individuals and families with modest income offset all or part of the GST that they pay.  To receive the GST credit you have to apply for it every year.

 

4. Child Fitness and Art Tax Credit – At the federal level, for each child under 16, parents may claim a tax credit of up to $500 registered in a sport like ballet, hockey and soccer and another $500 for artistic and cultural activities, like art or music lessons.  In addition, the Ontario government offers the Children’s Activity Tax Credit where you can claim up to $526 in eligible expenses and get up to $52.60 back for each child under 16.  You can receive up to $105.20 back for a child with a disability who is under 18.

 

5. Universal Child Care Benefit – The federal UCCB provides families with $100 per month for each child under the age of 6 or $1,200 per child, per year.

 

6. Eligible Dependant – If you were a single parent during 2012, you may be able to claim an eligible federal dependent tax credit for one of your children which is equivalent to claiming a dependent spouse.  However, whether or not you receive spousal support you are entitled to this credit.  In the case of Jack, since both kids reside with Jill, he may not claim them.

 

7. Child Care Education – Child care expense can be claimed to the federal government when you hire a babysitter or put your child in a daycare or summer camp to enable you to go to work (or attend school).  If you enrolled your child in a fitness program or summer camp, which operates during the hours you are working, then you must first claim the cost as a childcare expense.

 

8. Medical Expenses – Save your receipts whenever you buy glasses for your children or take them to the dentist as you may claim them at the federal level.  If you have a group health insurance plan at work, then only the portion that is not reimbursed is available for you to claim.

 

9. Child Disability Benefit - The federal and provincial governments provide child disability benefits.  If you believe your child is eligible for this benefit, ask your doctor or occupational therapist to complete a Disability Tax Credit form.

 

10. Tuition Tax Credit  - The federal government offers textbook amount and scholarship and bursary exemptions.  Also, if your child attends a university or a private school, you may claim the applicable tax credits from the Ontario government. 

 

Find out more information about Tax Benefits and Credits by visiting the section in our ToolBox (click here). 

Ask your lawyer for tax receipt and save money!

It is now tax season and Jill has made an appointment with her accountant to finalize her yearly income tax return.  Since Jill needed every penny she received in spousal support to make ends meet, she did not listen to her lawyer’s recommendation to set aside in her savings account 25% of the total income paid by Jack.    She is now extremely stressed and wonders how much money she will need to return to the taxman.  After speaking with her friend Susan, who has gone through a divorce a few years ago, Jill may have found a silver lining that may help her reduce the amount of income tax she owes.  As explained by Susan, all Jill needs to do is ask her lawyer for a tax receipt indicating the total amount of the legal costs she incurred to either:

• establish the amount of support payments (child and/or spousal);

• collect late support payments;

• increase support payments (child and/or spousal);  and/or

 

• defend against a request by the payer (Jack) to reduce established support payments. 

If you are a recipient of child and/or spousal support, you can deduct, in your income tax return, the legal fees incurred to obtain, collect or increase support as well as defend a claim for the reduction of such support.  The legal costs incurred by a recipient to resolve any other issues such as property and parenting cannot be deducted.  Unfortunately, if you are the payer of child and/or spousal support, you cannot claim legal costs incurred to establish, negotiate, or contest the amount of support payments.

 

Your lawyer, if asked, will be responsible to prepare the tax receipt and determine the amount of legal costs you spent in the year to deal with the support issues mentioned above. So if you believe that some of the legal fees you incurred this year qualify as a tax deduction, don’t forget to ask your lawyer for a receipt!