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+ How to Answer the Question; What is My Divorce/Separat ion - - PowerPoint PPT Presentation
+ How to Answer the Question; What is My Divorce/Separat ion - - PowerPoint PPT Presentation
+ How to Answer the Question; What is My Divorce/Separat ion Going to Cost? James Jeffcott + Four Aspects: Legal Tax Costs Process Costs Hypothetical Jim 40 lawyer (employed) - $100,000 Laura 38
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+ Hypothetical
Jim 40 lawyer (employed) - $100,000 Laura 38 lobbyist (employed) - $60,000 married 15 years; together 20 years marriage contract excluding family
business
2 kids 10 & 7
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+Legal
Calculating incomes Key to determining
support
Income is different
depending on what we are looking at
For example, taxable
income is not the same as income for the purposes of child support
Entitlement basically the
child or the person with whom the child lives primarily is entitled to support from a parent of the child
The obligation continues
as long as the child is a child of the marriage or relationship
Child support always comes
first before any other
- bligation
Support Child Support
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+Legal
Child Support Table Support
Based on the Child Support Guidelines Tables consider the number of children and the income of
the payor - table gives us the amount
If the child lives primarily with one parent, the table
amount is the amount the payor pays
If shared time (at least 40% of the time), the table amount
- r up to the table amount is paid
If split time (one or more child with each), then set-off the
table amount for each party
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+Legal
- S. 7 Expenses
In addition to the table support Doesnt matter how much time each person spends with the
child
4 categories: child care, health and medical, school, extra-curricular All have to be special or extraordinary and these are
- utlined
*Guidelines are statutory they are mandatory*
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+Legal
Entitlement - depends on
whether married or unmarried
If married the obligation
is automatic
If unmarried one has to
live with the other person for at least 3 years before an obligation is incurred
Three types: Contractual Compensatory Means and needs of the
parties (non- compensatory)
Factors there are
innumerable factors to consider in determining the support amount and duration
Spousal Support
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+Legal
Spousal Support Advisory
Guidelines
Contrast with Child
Support Guidelines they are not mandatory just provide a recommended range of support
Two formulas: With children Without children SSAGs establish a range of
support based on comparison of after tax after support income (net disposable income)
Duration is indefinite
depends on the circumstances length of the marriage/cohabitation is key
Enforcement wont deal
with here a whole other topic
Spousal Support
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+Legal
Entitlement - depends on whether married or unmarried Married we assume that the parties will share equally in the
assets they have accumulated during the marriage
Unmarried depends much more on the intentions of the parties
and the extent to which they contribute to the wealth of the other and the extent to which they combine their wealth during the cohabitation
Equalization Married they equalize their Net Family Property Unmarried they divide based on their respective contributions
Property
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+Legal
We divide values, not things (with some
exceptions)
We have special rules for: Matrimonial Home Pensions Jointly-owned property Gifts and damages (including inheritances)
Property
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Taxes
Spousal support is deductible if
periodic
Spousal support is not deductible if
lump sum
Child support is not taxable Retroactive support can be deducted
up to one tax year before the order or agreement which provides for retroactive support
Support Payments
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Taxes
General rule One can deduct costs of obtaining
- r enforcing support payments if it
is the recipient
The payor cannot deduct expenses
Collecting Support
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Taxes
Spousal Credit (not available if separated) Eligible Dependent Credit (if no spouse can
claim for a related dependent)
Adoption Credit Children Fitness Tax Credit Child Care Expense Deduction Child Tax Benefit Universal Child Care Benefit Tuition and Education Credits Pension Income Splitting
Deductions and Credits
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Taxes
Capital Gains and Losses Principal Residence Exemption can be
claimed on disposition if joint, has to be claimed by both
Family Businesses complicated need
advice
Pensions and RRSPs can be transferred to
a spouse on a tax-free basis
Property Transfers After Separation
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+Costs
Charged by each lawyer Usually an hourly rate No contingency fees are
permitted
Some block fees ie
uncontested divorce
Key drivers of cost =
conflict and complication
Decided by the court General rule: loser pays Offers could affect that try
to encourage early settlement
Also used to punish bad
behaviour or failure to comply with rules
Legal Fees Other Party
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+Costs
Time consuming Stressful Damage to relationships
Personal Costs
Filing fees Fees to obtain a divorce Incidentals (the service of
documents)
Court Fees
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Process Options
Negotiation Mediation Collaborative
Practice
Arbitration Litigation
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Role of the Financial Professional
Act as financial neutral in a
negotiation process
Provide consultative professional
services to the parties about financial issues
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