“I am not the bank!” - Children’s special and extraordinary expenses

Jack sometimes feels like he is considered a banker as the kids always need something new and Jill keeps on asking for money.   Now, it is braces and bikes.  Jack considers that the monthly child support he gives Jill should be enough for her to cover all those expenses.  Now that they are separated, he also has his own housing expenses to pay and there’s no way he is going to go into debt because Jill is unable to properly manage her money.   Jack strongly feels that it is time for Jill to learn how to live within her means.  After all, he is not a bank. 

Often, custodial parents are blamed by the ex for spending too much money on the children.  Under Canadian Federal and Provincial laws, children are entitled to financial support from both parents even if they are separated or divorced.  After all, it does take money to raise children and the expenses just get bigger as the kids get older. 

In Canada, child support is made of two components:  the basic table amount (meant to cover all basic needs) and the contribution to “special expenses” (meant to cover specifically defined types of expenses).  The basic amount is determined using the payor’s gross annual income in accordance with the Federal Child Support Guidelines.  Click on this link to access the federal child support calculator:  http://www.familylawinabox.com/en/resources_child_support.php 

Most disagreements in the area of child support arise with regards to special expenses, to which both parents must contribute in proportion to their respective income.  For example, if mom earns $25,000 per year and dad earns $75,000 per year, mom would have to contribute 25% towards the cost of special expenses and dad would have to contribute 75%.

As set out in section 7 of the Guidelines there are six specific categories of special expenses:

1. Child care (i.e. daycare)

2. The portion of medical and dental insurance premiums paid by either parents to cover the children (that portion that is paid by the employee)

3. Health-related expenses exceeding $100 a year (i.e. orthodontics, counselling, prescription drugs)

4. Extracurricular activities (i.e. horseback riding, hockey, music)

5. Primary or secondary education programs (for example, tutoring or the cost of a special software for a child with disability)

6. Post-secondary education costs

As usual, family law is not as simple as 1-2-3 and special rules apply to special expenses.   Even if an expense fits in one of the categories described above it does not mean that the parents must necessarily contribute to it. The expense has to be necessary for the child, and reasonable in light of the parent’s financial means.  Extracurricular activities or primary and secondary educational costs also need to be “extraordinary”.  Confused yet?  To help you understand your rights and obligations we have created a program entitled: « What is a special or extraordinary expense?”  which you may access by clicking here for more information.

While this is not specified in the Guidelines, the best practice for parents is to consult one another BEFORE an expense is incurred for the children, unless the expense is absolutely necessary (like child care or medical expenses).  Judges frown at parents who spend money on special expenses without requesting the other parent’s permission and then try to collect.  If you do that, a judge may deny you the reimbursement. 

How to choose a family lawyer?

It has now been three months, and conflict between Jack and Jill is reaching an alarming level.  Until recently, Jill believed that she would be able to resolve family issues with Jack amicably without the need for lawyers to get involved. This no longer looks like a possible outcome.  As a result, Jill is looking for a family lawyer.

How does one choose a family lawyer?  Hiring the right professional is certainly one of the most important decisions you will have to make in the context of your separation.  The choice of lawyer you make may have a significant impact on your financial future, the length that it will take to resolve things, and the amount of legal fees you will have to pay.  Most importantly, your children’s well-being and your ability to co-parent cooperatively with your ex in the future may forever be affected by choosing the wrong lawyer.

To choose the family lawyer who will be the perfect fit for you and your particular situation, take into consideration the following:

- Do you want a fight or do you want to remain civil and amicable?  If you want to do this as peacefully as possible, look for a lawyer who has a mediation or collaborative law training.  If you want a hired gun who will defend you fearlessly against an abusive and/or vindictive ex-partner, seek someone with a lot of court experience.

- Do you need an expert in family law or someone who has great negotiation skills?  While the expert may be better if your case presents some complex legal issues (often when the couple has accumulated significant wealth), if the main issue of contention is the care of your children you may be better served by someone with great negotiation skills rather than lots of academic knowledge;

- What is your budget? If you have limited means, you may want to look for a sole practitioner as opposed to hiring a lawyer who is part of a big law firm.  Sole practitioners or lawyers in smaller practice can usually offer more flexibility than large firms in terms of payment plans and hourly rates.

No matter what type of lawyer you need, in all cases you want to make sure that the lawyer who will help you with your case will have the following essential attributes:

- He/she practices exclusively in (or at least the larger part of his/her practice is dedicated to) the field of family law.  While your best friend, who happens to be a real estate lawyer, may be willing to help you (even for free), he/she does not have the necessary skills;

- He/she is available and responsive.  A two-day delay for a return call from your family lawyer is just not acceptable in the highly emotional field of family law which often presents emergencies;

- He/she is compatible with you.  You and your lawyer need to be on the same page when it comes to making decisions in your case.  As you will need to work closely together, you don’t want to work with someone who makes you feel unworthy or with whom you do not feel comfortable.

- He/she must treat you as an equal and essential part of the team.  You want a lawyer who listens to you, who seeks and considers your views, who keeps you informed of every event and development in your case, and who works collaboratively with you towards a final resolution.  You are not hiring a lawyer to make decisions for you.

- He/she must be a teacher, a coach and be candid and honest in the opinions he/she gives you. Way too many lawyers see their role as either your decision maker or your cheerleader.  You want neither.  You want someone who explains to you in clear language how the law works, who tells you when you are unreasonable or when your position is weak, and who leaves it to you to make your own decisions based on the information you have been provided.

In case of doubt, seek references from your friends, colleagues and family members who have been through a separation before. They most likely had to work with family lawyers and are a great resource when it comes to making that very important decision.

It only takes a minute to make a phone call!

It is 6:03 p.m. and Jill is home waiting impatiently for the children to return from their visit with Jack.  It is now seven o’clock and the children are still not home.  Jill is really worried that they had a car accident and tries to call Jack on his cell phone but, as usual, she gets the voicemail.  It is 7:52 and Jill is close to tears when finally the car pulls into the laneway.  The children are happy to see their mother, Jack acts like nothing happened and wonders why Jill looks so weird and upset. 

If this scenario sounds familiar, just know that you are not alone. Agreements around children’s exchanges are sometimes not followed and can be a perfect opportunity for an irritated parent to upset the other as a result of thoughtlessness, immaturity, or simple lack of respect.  Unfortunately, there is often no legal sanction for this type of behavior.  Disputes arising from the implementation of the parenting provisions of a court order (such as exchange times) are civil matters, not criminal ones.  The police usually does not get involved unless there is a risk of harm to one parent or the children.

How can you manage your children’s exchanges effectively?  Obtaining a solid parenting agreement containing detailed expectations and built-in sanctions for misbehavior may be the answer to your problems. Your agreement should allow for a reasonable exchange time window as it happens to everyone to be “reasonably” late because of traffic, work or some other unavoidable delay.   However, if the parent does not call to notify the other parent or simply does not show for the visit, then the agreement should provide that the parenting time is lost so as to allow the other parent to carry on with his/her day. The same sanction could apply to future parenting time if the children are not returned on time after a visit. You may also want to consider asking for the exchange to take place in a public location such as a restaurant or coffee shop.

Is it possible to change your current, ineffective child custody order or parenting agreement? Yes, but you will need to go to court and ask a judge to vary the terms of your agreement or order. Depending on your current situation, this costly process might be worth your while in the long run and may be in the best interest of the children who are often caught in the middle of these high conflict situations.  Be sure to journal all the exchanges – the good and the bad – as you may need to provide the court with detailed accounts of the exchanges.

Parents and children both deserve a life post-divorce that is devoid of chaos and stress. This is easily achieved when both parents maintain a mutually respectful co-parenting relationship. Remember that good accounts make good friends and it only takes a minute to call and inform the other parent that you will be late. 

Tax Headaches for Separated Couples…

Here comes tax season again, and it’s time for Jack and Jill to pay the price for being respectful and abiding Canadian citizens.  It is hard enough to disentangle income tax issues when the family unit is still whole, imagine the complications that can arise when you have just separated and you do not have a finalized separation agreement. Canada Child Tax Credits, Harmonized Sales Tax Credits, Universal Child Care Benefits, Dependants Claims and National Child Benefits are only a few of those complex issues that need to be dealt with and Jack feels overwhelmed.  To make things worst, his lack of “meaningful” communication with Jill at this stage of their separation process is actually making income tax filing a true headache.   

If you were represented by a family lawyer when you signed your final separation agreement, you should not have to worry about future tax implications as your counsel should have carefully assessed them and included specific provisions in the agreement to help you determine which tax credits and benefits each of you is entitled to claim. However if, like Jack, you do not have such an agreement, here are a few tax principles that you absolutely need to be aware of:

 

 

1-     Child support payments. These payments are not tax-deductible for the support payor and are not included in the recipient’s income for tax purposes.  Support Payors Beware: You cannot claim an income tax deduction for the child support payments you made this past year.

  

2-    Spousal support payments. These payments, however, are included in the income of the support recipient and are deductible from the support payor’s income (unless the support was paid in one lump sum in which case different rules apply).  However, to be deductible the obligation to pay spousal support must be confirmed in a written separation agreement or a court order.  While Revenue Canada will recognize support payments made in the year preceding the execution of a separation agreement in most circumstances, you do not want to take a chance and you should confirm any spousal support obligations in a binding agreement (even partial, even signed at the kitchen table) without delay. Spousal Support Recipients Beware: You may need to pay income tax on the money you have received from your ex this past year, so make sure you put some money aside.  For more information on this topic you can visit the following Canada Revenue Agency link:

     

      http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/ncm-tx/spprtpymnts/menu-eng.html.

3-    Shared custody arrangement. A shared custody arrangement (for tax purposes) means that each parent spends an equal amount of time (or a near-equal amount of time) with the children in any given year.  In that case, the rules can get real complicated.  You can obtain more information by visiting the following link on Canada Revenue Agency’s website: http://www.cra-arc.gc.ca/bnfts/menu-eng.html.  Share Custody Parents Beware:   Do not leave your money to the Taxman! Figuring out what tax credits and benefits you are entitled to and for what period of time can be a complex task.  You should consult with an accountant who will help you breeze through that determination.

Family Law is not a “one size fits all”

Jack is leaving with peace of mind for a one week vacation with the children during the school March Break.  He is feeling much better now that he has spent an hour with a family lawyer he just retained to represent him in the context of his separation from Jill.  Speaking with friends, family members and other well-intentioned – but misinformed – people had left him completely anxious, discouraged and convinced that he would lose it all to Jill unless he hired a “big gun” lawyer, took a “go-for-the-throat” stance in his separation process and spent half of his retirement savings in legal proceedings.   The lawyer he retained was reassuring, clearly explained to him his rights – yes, men and women have equal rights – and obligations and, most importantly, explained to him that it was not necessary to create a legal war to arrive at a fair and equitable settlement, even if he and Jill did not see eye-to-eye on many things.

On top of all of that, Jack learned that when you are going through a separation, you need to be very careful about who you listen to.  During this one-hour informational meeting, Jack learned that he, just like many of his supporters, had many misconceptions about family law, separation and divorce.  Among other things, Jack learned that he was WRONG to believe that: 

1. Couples living in common-law relationships had the same rights and obligations than married couples;

2. The laws about separation and divorce are the same throughout Canada;

3.  A spouse’s extra-marital affairs and/or bad behaviour could result in a less favourable financial settlement for that spouse;

4.  If Jill remarried, his spousal support obligations would automatically stop;

5.  Having joint custody of the children would mean that neither he or Jill would have to pay child support to the other;

6.  “Joint custody” meant that the children spent one week with one parent and one week with the other;

7. Even if he and Jill had signed a marriage contract (something he had thought about asking Jill to sign when they got married), the result would be the same (i.e. that a marriage contract not worth the paper it is written on, as they are not recognized by courts when there is a separation);

8.  If Jill refuses to let him see the children as he wants, he has the right to stop paying child support;

9.  When his children are twelve years old, they can choose where they want to live;

10.  If push comes to shove, he could just take a lower-paying job and would not have to pay spousal support.

There is lot to be said about family law issues, and many people have an incredible amount of misconceptions about them. That’s why it is very important to be careful about who you listen to when you go through a separation as what applied to them may not apply to you.  Just remember that family law is not a “one size fits all” and getting clear and reliable information about YOUR family matter can avoid costly  battles as well as future headaches and heartaches. 

March Break Fun Without Me!

Sitting at her window, Jill is looking at the snowflakes falling slowly in her backyard.  With sadness, she is reminiscing on all the fun in the sun her family used to have during the March school break. Unfortunately, the end of her marriage also brought with it the end of the “family’s” fun in the sun vacation.  This year, Jack is leaving alone with the children on a boat cruise in the Caribbean while Jill stays home shovelling her laneway!

Most parents are exhausted as they try to keep up with their work, the children’s activities, their homework and the daily family routines.  One would think that a single parent would rejoice at having some time alone without the children.  Strangely enough, most parents, especially in the first few years after their separation, feel such a void when the children are visiting with the other parent that they spend their time alone mopping around the house and being – mostly – miserable.  What is important to remember is that you are not alone and you should see this as the perfect opportunity to do something you enjoy and that will lift your mood and feed your spirit.  It is your time to be good to yourself.  You have gone through a lot and you deserve some R and R.  Planning ahead the fun things that you will do during your time alone is as important as making sure that the children have all they need when they are away from home. 

Here are a few tips to help you make the most of this free time and regain your energy. 

1. Cut loose, let your hair down and put your feet up with a tea (or a beer)… every day!  Simply enjoy the peace and quiet in your home.  It may feel strange at first but after a couple of days you may actually enjoy hearing the humming of your  fridge.

2. Call your friends or your family and have a good laugh.  Talk about your most embarrassing moments.  Talking about your ex will only add clouds to your sunny time of relaxation.

3. Buy yourself something you’ve been wanting, such as a book, a new tool, or flowers.  Just choose something that is important to you, even if your budget won’t allow for something extravagant.

4. Treat yourself to a nap, if that’s something you’ve missed and makes you feel better. 

5. Complete a scrapbooking or a renovation project that you never had time to finish and that you can share with your children upon their return.

6. Don’t plan too much and stick to the plan!  Remember, this week is just for you.

Taking care of yourself doesn’t have to be complicated and you don’t have to break the bank to become a happier and more fulfilled single parent.  In fact, most people feel much better about their lives when they take the time to sit down and create their own fun in the sun.

I will NEVER get married again!

Jill cannot stand looking at another heart, cupid or flower which are plastered all over the stores for the upcoming Valentine’s Day.  She vows to never get married again because marriage is too much work, too many headaches and heartaches.  Although she fears being alone for the rest of her life and knows that another partner could provide emotional stability and possibly financial security, she is convinced that one marriage was enough and that love is not for her.

Following a separation, each spouse will be emotionally bruised and will deal with their feelings in a way that is unique to his or her emotional life experience.  Although some may choose to stay alone, others will remarry and many will live common law relationships.  In most Canadian provinces, common law couples do not have the same rights as married couples.  Protecting the assets you currently own becomes even more important and complex when entering a second or third relationship. Having a rock solid cohabitation agreement (for common law couples) or marriage contract (for married couples) is the best way for both parties to protect their assets and to define clearly their rights and obligations.  

Although a domestic contract will allow you to choose how you will divide money and property if there is a separation, issues may arise with respect to how you will manage your financial affairs while living together.  At the outset of a new relationship, most spouses vow to remain financially independent and share 50% of all expenses.  However, many factors may influence that decision such as the number of children living in the home, the disparity in your income, as well as child and spousal support obligations payable to a former family.  What is important is to find simple ways to keep track of monthly expenses and then determine how they should be divided amongst you at any given time as circumstances may change along the way. Here are a few simple tips that can help you better manage your joint finances:

 

1.     Getting a joint credit card dedicated solely for all household purchases such as groceries, kids’ expenses, gas, restaurants, family trips etc.  If no children are involved, it is easy for each spouse to pay 50% of the monthly account balance.  If children are involved, expenses can be shared proportionately (for example 40-60% or 30-70%) depending on the number of children.

2.     Opening a joint bank account where both spouses deposit monthly amounts of money dedicated to pay for household utilities, home renovations, car payments, mortgage etc.  Again, you can decide at the outset which amount is fair for you to pay based on your circumstances and which expenses will be shared or not be shared.

3.     Keeping a “cash’” envelope in the home where each spouse deposits a specific amount of money monthly to pay for take-out, restaurant tips and social activities.  Paying for pizza every Friday night might seem like an insignificant expense at first. However, this weekly treat can become expensive when only one person pays for the whole family.

You may currently be living in bliss but just in case you have already forgotten, the road through separation is long and stressful - even the second time around! You can live happily ever after, if you work from the beginning at not letting financial issues come between you and your spouse.  You now have the knowledge and the opportunity of protecting what you may think is rightfully yours. Talking about money is never easy, but ignoring the issue of joint finances is just like burying a volcano ready to erupt at any time!