An offer to settle? Is my lawyer losing trust in my case?

The trial in Jill and Jack’s family matter is approaching.  They have not yet been able to settle their disputes over financial matters and the judge overseeing their court case has advised them that he was “setting this matter down to trial”. Family judges often do that to force the parties to be reasonable and be pro-active about settling their affairs. As a result, Jack’s lawyer has recommended that an offer to settle be made to Jill, emphasizing the fact that the offer is a significant compromise on Jack’s part. In other words, Jack’s lawyer is proposing to settle financial matters for an amount significantly less than what Jacks believes he is entitled to.  Jack wonders why he would do that and is beginning to think that his lawyer may not be advising him properly.

 

In fact, this is really good advice that Jack is getting. The role of offers to settle in a family court proceeding must not be understated, as they can have a significant impact on the dollars you might be able to recoup at the end of the day.  If accepted by your ex-spouse, an offer to settle will end your court case definitely.  This means, among other things:

• No more legal fees to pay (thousands and thousands of dollars of savings);
• You will not have to go to trial (no need to spend an entire week – or more – under stress, telling a perfect stranger about your most private affairs with your ex-spouse);
• No more stress over the legal proceedings (sleep at last); and
• The right for you and your children to live in peace, and finish grieving the end of your relationship. 

If your offer is not accepted by your ex-spouse, then making a « low ball » offer to settle will have the effect of protecting yourself against the high costs of divorce litigation. At the end of a full-blown trial, the judge will have the obligation to consider costs spent by each party in the court proceeding, and to award costs in favour of one party against the other.  This means that the judge will have the right to order one party (usually the party who “lost”) to pay to the other party (the “successful” party) an amount to compensate him or her for the legal fees paid throughout the proceeding.  The judge will look at the offer to settle that was presented before trial. If some of the terms of the offer were more beneficial to the other party then what was ultimately offered by the judge, the court is directed by law to make a cost order against the party who failed to accept this most beneficial offer for the time wasted going to trial. As a result, a “low ball” offer to settle can become very beneficial in the end. 

 

Everything in family court is about being reasonable.  While you may think that you have a 100% chance of success in the position that you are advancing in court, history has shown that, in every single case, at least one of the parties end up disappointed.  Making every possible effort to settle your family issues out of court could mean accepting a bit less than what you think you are entitled to. Most importantly, it could mean finding peace of mind. Often, settlement is a question of perception:  is your glass half-empty or half-full?

 

I need closure!

Jill wants to have the home transferred to her name.  She knows that it is over with Jack and she’s chomping at the bit to build a new life.  She feels that Jack is purposely dragging out the separation process in an attempt to wear her down and get a sweeter financial settlement.  Her biggest fear is to settle too quickly and end up living from pay check to pay check.  

Here are 3 common mistakes people make when negotiating a settlement:

1. Insist on keeping the home you worked hard for or that you like so much
Often, the matrimonial home can be more of a liability than an asset especially when you are living on a single income.  It is important to make a list of all the monthly expenses before making this big decision.  It is also recommended to add 25% to your current monthly budget because with time, you will need extra money to get the roof repaired, a new fridge and stove, a lawn mower, new furnace etc.   In the end, it may make more financial sense to sell the home and move into a smaller, more affordable property such as a condo, an apartment, or a smaller bungalow where the maintenance is taken care of or less costly.  Emotionally, it may also make sense to start fresh in a home more suited to your family’s current needs.

 

2. Get bogged down in the “I want” war
Too many separated spouses fight over possessions they want such as furniture, antiques, and knickknacks while losing the big picture in the process.  As a result, lots of time and money are wasted in petty battles.  Fighting over minor possessions just makes negotiations on the important issues, like the home, parenting issues and support (child and spousal), more difficult and lengthy.  It is important for you to become a savvy negotiator.  Make a list of the things that you absolutely want.  Also include in the list some of the items you are willing to let go.  Then “compromise” on the non-essentials and make it look like a win-win situation!

 

3. Be overly anxious to get closure or be afraid to be ridiculed by your ex
Too many people rush into settlement because they are seeking closure.  Others are afraid to be ridiculed by their ex and do not stand up their ground.  Sometimes the desire for closure or the refusal to speak up means the difference between a comfortable life and a marginal one.  Get involved, understand how the law works, ask questions and make sound decisions.  Remember that a piece of paper will not give you closure. Only time and working on yourself can do that. 

I want my divorce! What is the difference between separation and divorce?

Jack has had it.  If there was ever any possibility that they would reconcile, any such hopes have come to an end when he heard that Jill had retained the services of a lawyer. Jack has told Jill that he wanted a divorce, to which Jill has replied that he would get it “when he faced up with his responsibilities as a father and a husband!”.  Jack wonders if he needs Jill's consent to get a divorce.

 

When two spouses part ways, it is very common to hear them say that they “want a divorce”.  However, in a separation process the divorce itself is really just a legal formality that will put an official end to the marriage. Getting to the point where you can get a divorce is what takes so long and can be very difficult because in most cases you will want to settle all issues by way of a separation agreement.  Getting such an agreement through mediation, collaborative justice, lawyer-to-lawyer negotiation or a court process is your first step. When an agreement is signed, you then know what your rights and obligations towards your ex and your children will be in the future.  When all issues have been settled, getting the divorce is truly just a "paper process" which, while it still requires court intervention (the divorce can only be granted by court order), will not require the spouses to attend court and will not involve months of legal debates.  If you have been separated for one year and all issues have been settled in a separation agreement, you are entitled to obtain a divorce order with or without your ex’ consent.

 

This said, there is really no difference between being separated (once a final agreement has been signed by both parties) and being divorced, except for some of the following differences:

1. If you are divorced, you can get remarried (something you cannot do if you are not divorced).

 

2. If you are divorced, you may no longer qualify as a beneficiary under your ex-spouse’s health plan or pension plan (although certain health plans allows it in certain circumstances).  Some pension plans also require that you obtain a divorce order to prevent your ex to obtain, upon your death, your pension plan benefits.

 

It is common to see couples that never get a divorce and only have a separation agreement.  There is no difference in the eyes of the Canada Revenue Agency between a separated or divorced individual.  Often times, people are emotionally exhausted and simply do not want to engage any further legal costs getting a divorce until someone decides to get remarried.  For many people, however, getting a divorce is necessary to cut the emotional ties to their ex and many people get their divorce immediately after having signed their separation agreement. So ultimately, getting a divorce is, more often than not, simply a question of personal choice.

If I have to see you in court honey, you’ll have to pay my legal fees!

Jack and Jill have been trying to settle their separation issues by themselves for a couple of months now. Jill is getting frustrated with Jack because he does not seem to take their separation seriously.   She does not see any other options than to retain a lawyer and go to court.  She is convinced that once they go to court the judge will tell Jack what he needs to hear.  But when Jill finally met with her lawyer, she was a bit surprised by (and disappointed with) her lawyer’s comments and reluctance to engage into a court action.  She wonders if she hired the right lawyer…  In fact, Jill’s lawyer has explained to her that the court process is not only very time and emotionally consuming, it will also be very costly.  However, Jill is convinced that she will win hands down on all issues and that, in the end,  Jack will be responsible to pay for all her legal fees.

 

Many separated couples believe that going to court is the only way they can get someone to pay attention to what they are saying. They believe that they are right, the other spouse is wrong and that the court room will be the venue where the winner will take it all.   But legal fees to get there are a very important aspect to consider when making the decision to resort to the judicial system.  While a court may order the “losing” spouse to pay part of the other spouse’s legal costs to prepare and attend court, it is highly unlikely that the judge will order that ALL costs incurred be paid back to the “winning” party.   In addition, considering that most cases eventually settle out of court (less than 3% of all family court cases end in a trial, where costs orders are made), opportunities to get the big fat cost order are very rare.

 

In addition, it is not because a party wins in court the he/she will necessarily get his/her legal costs paid by the loosing party. In deciding whether a party should be responsible to pay for the other’s court costs, the judge will look at different factors such as: Were the parties reasonable?  Did the spouses make reasonable efforts to settle the case?  Did one of the parties fail to accept a reasonable offer? Did one spouse act in bad faith? Did one spouse pursue unrealistic claims? and the list goes on and on…

 

So no one should ever go to court thinking that they will win it all, or thinking that the other party will have to pay their legal fees.  When making the decision to go to court, you need to start from the premise that any and all legal fees paid to your lawyer will be on you, and that you will be lucky if at the end of the day a judge orders your ex to pay some of them.  This is why it is so important to make sure that you have tried every possible way to settle out of court before you chose this very lengthy and costly avenue.

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).

Spousal support? Are you kidding me??

Jack and Jill both met in university.  During their last two years of university, Jack and Jill moved in together and married a few months after graduation.  The couple were advancing in age and as Jack was making a decent salary that could support the family.  They then decided that Jill would stay home with the children until they were in school. But Jill never truly started her career.  She is working part-time for the local television station, which gives her time to attend to all of the children’s medical and extracurricular needs. Her annual income is not sufficient to be self-supporting. Jill is completely discouraged especially in this time of recession where no one is hiring and all of her friends are being laid-off.   Jill has been told by her lawyer that after 13 years of marriage she would most likely be entitled to spousal support.  Jack disagrees stating that it was Jill’s decision to stay home while he worked his butt off all these years to support the family. 

 
Unlike child support which is calculated according to a specific amount set out in the Federal Child Support Guidelines, spousal support is not set in stone.  If the parties disagree on the amount to be paid, or for how long, the court will be required to make a decision and they have much discretion in setting those parameters.  The following factors, among others, will be considered: 

- The number of years during which the parties have lived together;
- The parties’ respective income;
- Whether the couple still have dependent children;
- The parties' age as well as their physical and mental health;
- The parties’ standard of living during the relationship;
- The parties’ current assets and financial means, including what they are likely to earn in the future;
- The capacity of the recipient to contribute to his/her own support, by working or otherwise, and the amount of time it will take him/her to achieve self-sufficiency;
- The payer’s capacity to pay support; and
- Whether or not the recipient has helped the other spouse to build a career or a business.

 

In general, the duration of spousal support can vary from 0.5 to 1 year of support for each year the couple has cohabited together (note that it is the years of cohabitation that count, not the years of marriage).  In certain circumstances, such as when a couple has cohabited for more than 20 years, the support may be payable for an “indefinite” duration.  This means that the support will continue to be paid until an important change occurs (such as remarriage, retirement, important change in income, etc.).

The right to ask for spousal support is automatic for married couples. With regard to common law spouses, it varies from province to province.  In Ontario, you can only ask for spousal support if you have lived together for 3 years continuously, or if you have a child together and live in a relationship of some permanence. The same factors (as listed above) are relevant for married and common law couples.

For more helpful information about spousal support or the rights of common law spouses, subscribe to our full library of recorded programs (Study Box) available 24/7 at www.familylawinabox.com (click here to be directed to our Study Box).

 

Who keeps the family pie?

Jill is hosting a girls’ night out at her house.  She starts talking about her divorce with Jack and explains that she’s entitled to “half of everything”. Her friend Sandy who also went through a divorce 5 years ago tells her that that’s not how it works.  “You divide the value, not the assets”, she says.  A discussion on the subject enfolds and Debra, who has lived in a common law relationship with Dave for 5 years wonders if she would be entitled to claim half of everything as well as a common law spouse. Kathy thinks so, since her cousin got half of her ex’ house after a lengthy court battle, but Carolyn is convinced that this is not the case. And everyone is confused.

 

The rules applicable to the division of family property differ significantly depending on your legal status (married or living in a common law relationship), and also on the province in which you live. In fact, each of the Canadian provinces has its own way of dividing family assets when a separation occurs, whether married of in a common law relationship.

 

For married spouses, there are many general principles that apply in all provinces. The most important one is that all provincial laws share a common goal: to divide equally – or at least fairly – between the two ex-spouses the wealth accumulated by the couple during the marriage.  The basic principle underlying the various provincial family property division schemes is that marriage is a financial partnership and it does not matter who paid for the assets, whether a spouse has contributed more than the other, or who is the actual legal owner of any given asset.  In Ontario, the value of all assets acquired by the spouses (jointly or individually) during the marriage will have to be shared between them. In other provinces, the assets themselves get divided. In some provinces, like British Columbia, the court has the discretion to divide a married couple’s family property the way it feels fair and equitable. In most provinces, however, the judge has no discretion and must abide by very strict rules to which there are many exceptions.

 

For common law spouses, the right to share in the other’s property – and the way property is to be shared – when a separation occurs varies from province to province. For instance, in Manitoba and Nova Scotia, common law spouses are given substantial rights to share in the other’s property after separation.  But in other provinces, like in the province of Quebec, common law spouses have absolutely no right at all to claim a fair share of the property acquired by the other spouse during the relationship.  In Quebec, what is yours is yours and what is mine is mine, so to speak.  In other provinces, such as the province of Ontario, common law spouses are presumed to have no right to share in the other’s property, but if very specific circumstances exist, courts will allow common law spouses to share in some or all of their spouse’s assets upon separation.  It is a myth to believe that you are entitled to half of your ex’s assets if you have lived in a common law relationship for more than three years!  When the parties cannot agree (as is often the case) on how to divide their assets, they will have to bring the matter to court and let a judge decide. This process is, as you know, very costly and (so far as common law spouses are concerned) very unpredictable.

 

Because the laws of each province are so drastically different when it comes to splitting this cherished family pie, it is extremely important to understand the regime that applies to your particular situation, in your particular province. Take the time to inform yourself and obtain proper legal advice BEFORE you move in with someone, get married, make a significant financial contribution or investment in joint assets or in assets belonging to your spouse.  Entering into a well written cohabitation agreement (common law spouses) or a marriage contract (marriage spouses) could avoid many heartaches and headaches.  Why wait until a separation occurs to find out that after all these years of emotional and financial investments, you are not even allowed to eat a piece of the pie…

Watch What You Write on Your Wall…

Jill is very upset with Jack and vented her frustrations on Facebook.  Her friends “liked” her comments.  Unfortunately, Jill forgot that one of her friends is also friends with Jack’s teenage niece who has her phone glued to her hip and who instantaneously saw the comment Jill made about her uncle.  Of course, she immediately shared it with her mother, Jack’s sister.  Even if Jill wanted to erase her comment, it is too late and Jack has already seen it. 

Social networking services such as Facebook, Linkedin or Twitter have not only become a “marriage killer” – you would be surprise to learn how many people discovered that their spouse was cheating through these means -  they also have the potential of becoming a “best case” killer in court or in a divorce settlement process.  When a separation gets ugly, spouses may be tempted to use social media as a channel to vent their anger, bash their ex-spouse’s actions and get support from common friends and family members in what they believe to be their “just cause”.   

 
If you are using social media to show off your new “hot” girlfriend to your buddies, or to gain support from your friends, rest assured that this evidence is going to find its way into the court room – or in your ex-spouse’s lawyer’s hands–quicker than you can think.  Yes, this type of evidence can be used against you in court and in other settlement processes.  Imagine, with your own actions and your own words you may give your ex-spouse the evidence he or she needs to discredit you and prove his or her point against you.  Your children could find your disparaging comments in future years.    It is hard for parents to argue that they have their children’s best interest at heart – and thus should be granted sole custody of them – when evidence proves that they have spent the past two months destroying the other parents’ reputation in social media.   Even worst, your children can be scared emotionally in the process, especially if your comments are available for the whole world to read. 

Finally, it is not enough to try to limit the damage by shutting down your existing account, locking down your privacy settings or “untagging” your images and pictures.  The damage may be impossible to control down the road as social media tends to leave permanent traces.  Remember that social networking services were created to help people stay in touch. Therefore, if one day you have the urge or the need to vent about your ex or the events related to your separation, just pick up the phone and talk to someone before writing it - permanently - on  your wall.