Tag Archives: family. divorce

Some Basic Information on Dividing Matrimonial Property

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When married couples decide to part ways, one of the things that needs to be determined is what to do with all of the stuff that they’ve amassed during the relationship.

In Canada, the law of divorce falls within the federal sphere of power but the division of a married couple’s property is governed by provincial law. In Alberta, that law is the Matrimonial Property Act (MPA). The MPA empowers a court to distribute the property owned by either or both of the spouses.

(The MPA does not apply to unmarried couples. We will discuss how property for unmarried or “common law” couples gets divided in a future blog post. Stay tuned!)

The general concept is that spouses are financial partners in a marriage and, broadly speaking, each spouse has a claim to half of the value of the property that the couple acquired during the marriage. This means that it usually doesn’t matter whether a car is registered in only one spouse’s name or whether the home the couple lives in has only one name on the title – each spouse has a claim to half the value of that property if it was acquired during the marriage.

However, not all property owned by a spouse is necessarily subject to an equal split. The MPA identifies three broad categories of property and how they are dealt with:

1) Exempt Property. Certain property is exempt from being distributed as matrimonial property, based on the idea that not all property falls within the financial partnership of a marriage. This category includes gifts from third parties, inheritances, property that was owned before the marriage, awards for damages (such as an award in a slip-and-fall lawsuit) and proceeds of certain insurance policies. The value of the property at the date of the marriage or at the date the thing was acquired (whichever is later) is exempt from distribution.

2) Increases in the Value of Exempt Assets. The court must order a “just and equitable” distribution of property for the increase in value of an exempt asset or the income generated by an exempt asset for the period of the marriage. For example, the value of a collectible car owned by one spouse before the marriage is exempt, but the increase in its value over the course of the marriage – the accrued equity – is subject to a “just and equitable” division (which is not necessarily 50/50). Determining what is “just and equitable” requires the court to consider a variety of specific factors. For example, one such factor that the court will consider is any contribution (financial or otherwise) made by a spouse (or on behalf of spouse) in relation to the acquisition, conservation or improvement of the property.

3) Everything Else. If the property does not fall into the first two categories, then its value is subject to division between the parties. This is typically an even-steven split but it doesn’t have to be, if the court thinks that an even split would actually be unfair.

Most of the time, couples are able to come to an agreement on how they will split their property. The MPA specifically allows couples to make agreements that opt out of the MPA default rules for dividing property, so long as the agreement is in writing and both spouses have independent legal advice before signing. For the times when a couple doesn’t agree, Alberta courts rely on the MPA to determine the division of property.

If you have questions about divorce and your legal entitlements to property, Patriot Law Group can help.

Agreements and Child Support

At Patriot Law Group, we are big believers in reaching a negotiated settlement to resolve the issues that can arise out of your separation. A recent case heard by the Alberta Court of Appeal (the province’s highest court) highlighted the need for parents to follow through on their obligations  under their agreement, particularly when it affects child support. It dealt with the issue of retroactive child support (the mother’s attempt to collect child support payments that had accumulated in the past)[1] .

A couple had a brief relationship that resulted in a child being born. The couple had very little contact after the relationship ended and the father paid no child support for the first four or five years of the child’s life. Eventually, the couple came to a written agreement dealing with child support that set out the amount the father would pay to the mother, based on his income at the time. They went on to live their separate lives in different towns. The child lived with the mother and the father rarely saw the child but paid the amount directed in the agreement.

All seemed well. However, after nearly 13 years receiving the exact same amount of support, the mother asked the father for his most recent financial information. Their agreement required them to exchange information annually, but they never did. When the mother received the father’s financial information, it was clear that the father’s income had increased dramatically since the agreement was made. Child support is directly related to the payor parent’s income, so the father had been underpaying child support for years.

The mother then brought an application in court for “retroactive” child support. The Supreme Court of Canada had previously dealt with the matter of retroactive child support[2] and came up with a series of four factors that a Canadian court should consider when making an order for retroactive child support: unreasonable delay by the recipient parent; “blameworthy” conduct of the payor parent; circumstances (or “needs”) of the child; and hardship caused to the payor parent by a retroactive award.

The Alberta Court of Appeal looked at each of the factors through the “lens” of the child support agreement. The Court of Appeal found that the father had undertaken a positive ongoing obligation to disclose his income and that his failure to meet the obligation trumped any delay by the mother in seeking increased support. Next, the Court  found that despite his lack of intention to do so by underpaying support, he had disadvantaged the child in reality, so the ‘conduct’ factor weighed against him. The court determined that since a child has the right to be supported commensurate to the parents’ income, “need” for support at the payor parent’s level of income is presumed. That is, it did not matter that the child had not suffered actual hardship; the child should have had a higher standard of living because the father should have been paying support based on his increased income. Lastly, the Court found that a payor parent can’t claim financial hardship without significant proof of actual hardship and the enforcement of the obligation to pay child support from a prior period is not hardship in itself.

The takeaway point is that Alberta’s Court of Appeal has taken a hard line on enforcing settlement agreements. This case creates a precedent that allows the courts to claw back underpaid support, particularly when an agreement has been ignored. Parents can no longer sign an agreement and forget about the ongoing obligations in it. Payor parents must stay up to date with providing annual financial disclosure and adjusting the amount of support accordingly. It does not matter whether the recipient parent asks for the information or provides any. It does not matter whether or not the payor intended to underpay support. It does not matter if the child does not have a documented “need” for more money to live. It does not matter that paying back the child support owed will be financially inconvenient. The Alberta Court of Appeal has spoken: parents must honour their agreements and fully support their children.

Of course, every case is different and different facts can lead to different results. We would be pleased to discuss with you whether and how this case applies to your own circumstances.

 

[1] Goulding v Keck, 2014 ABCA 138

[2] DBS v SRG, 2006 SCC 37

Why you need independent legal advice for a separation agreement

We often have clients arrive at our office with settlement agreements in various stages of completion. “We’re in agreement on everything,” they say, “We agree on where the kids will stay, access, support, spousal support and we each already have what we want out of our property.” The client (quite rightly) feels that they’ve done the heavy lifting by coming to a lawyer with an agreement in hand, so they are sometimes a little confused when we tell them that both spouses will need to get independent legal advice regarding the agreement. Why can’t the lawyer just finalize this deal that each spouse has clearly agreed to? Why do the spouses need “advice” when they’re in agreement already?

First, there’s the formal requirement for it. In Alberta, the Matrimonial Property Act requires that any binding agreement between spouses regarding the matrimonial property contains a written acknowledgement by both spouses that they each understand the nature and effect of the agreement, that they understand the claims they each have and each may be giving up under the agreement and that they each signed voluntarily. This acknowledgement must be signed in front of a lawyer.

Second, there’s the substantive requirements, which are pretty clearly laid out by the requirements of an acknowledgement in the Matrimonial Property Act but apply universally:

  1. You need to understand the terms of the agreement you’re signing. You need to know what each provision means for you and your spouse. You need to understand your rights and obligations (and those of your spouse) as written in the agreement.
  2. You need to understand what is available to you (within the limits of the law) and what you’re getting and giving up. You don’t have to take everything you’re entitled to. You can agree to whatever you wish but it needs to be an informed decision.
  3. You need to be willing to sign the agreement. An agreement that is coerced or forced is no agreement at all.

Your lawyer can provide you with the information you need to ensure you understand how your agreement works and what your options are under the law. Moreover, having independent legal advice can ensure that you aren’t forced into signing an agreement you don’t understand or don’t accept.

Finally, there’s the follow-on protection of independent legal advice: it stops either party from complaining about the agreement later. When each spouse has had independent legal advice, the agreement is binding. Neither spouse can re-open the settlement agreement months or years after the fact because they have changed their mind and decided they no longer like the terms. Independent legal advice ensures that your agreement sticks.

With each party getting independent legal advice, you ensure that your agreement is understood, is fair and was entered into voluntarily.

Why We Need Financial Disclosure

slapdash_1655684c When we deal with separations here at Patriot Law Group, we find that clients sometimes react with frustration or confusion when we bring up financial disclosure requirements. The client will tell us that “I already know about our finances,” or “We have already agreed on everything,” or “I don’t understand why I need to do this.” We usually respond by explaining that each party is legally entitled to full financial disclosure from the other party and that the court can compel a party to produce the necessary information if that party refuses to do it voluntarily. But deep down inside, our inner Tom Cruise is channeling Jerry Maguire and pleading, “Help me help you.”   Part of our professional duty to our clients is to provide advice regarding child support, spousal support and the division of your matrimonial property. For example, the amounts payable for basic child support is directly related to each parent’s income.  The amount payable for spousal support is based, in part, on a formula that compares the spouses’ respective incomes. The division of matrimonial property, in Alberta, is generally based on an equal distribution of assets and debts acquired during the marriage between the two spouses. In order to make an informed decision, the parties need to know what they are legally entitled to and what is available. One can easily see how crucial the accuracy of financial information is to the quality of the advice we can provide. In high-conflict separations, one spouse may be secretive or controlling with financial information. The higher income spouse may threaten that he or she will not or cannot afford to pay support. One spouse may be running up credit card debt for their sole benefit. In rare situations, a spouse may be actively hiding or selling off matrimonial assets. Full financial disclosure allows us to delve into these areas and determine what the financial situation actually is. Disclosure provides clarity, from which we can offer advice. In those happy situations where the parties have largely come to an agreement, full financial disclosure allows us to confirm or disprove the client’s belief that a fair bargain has been struck. Rather than trying to get in the way of a good deal, we want to make sure that the deal is fair and will be lasting. Full financial disclosure is key to ensuring our clients are getting a fair deal. And at this point, our inner Tom Cruise is wearing a flightsuit and cool sunglasses when Iceman shakes his hand and tells him, “You can be my wingman anytime.” Posted by Brian Jalonen