Archive for the ‘Finance’ Category

December 14th, 2011

In this video blog Julie Tyas discusses Spousal Support Entitlement.

http://www.youtube.com/watch?v=brJzgTth5hE

Is there a reason why I should stay in our home?

December 9th, 2011

Many people have heard that if they separate from their spouse they should try to stay in the matrimonial home. There are a lot of rumours as to why that is important. In reality, there are only two reasons for staying in the matrimonial home after separation. If those two reasons do not apply to your circumstances, there is no reason to stay. The two reasons for staying in the matrimonial home are 1) To remain a custodial parent of any children; and 2) For financial reasons if both parties are entitled to stay in the home.

The most important reason why a spouse should stay in the matrimonial home after separation relates to the children. Ontario Law says that if one spouse walks out leaving the children behind with the other spouse, the spouse with the children has de facto custody of the children. The “staying spouse” has the right to make all of the decisions of a custodial parent. If a spouse wants to be remain actively involved in making decisions for the children, that spouse must either stay in the matrimonial home, get the other spouse to agree in writing to joint custody, or get a court order that permits the leaving spouse to continue to make decisions for the children. The idea behind is that the parent who is caring for the children on a daily basis is probably the parent who is best suited to make the big decisions for the children. Once there is a regime that is firmly in place allowing one parent to “have custody” and make all the decisions, that situation can be very hard to change in court. Staying in the house also has the advantage of not requiring the parties to agree on parenting or access schedule. If both parents are still living to together in the same house with the children then it is easy to maintain an equal sharing of the children’s time. That equal sharing can be continued into a parenting plan when the parties do finally move into separate residences.

The second reason for staying in a matrimonial home is that both parties are legally entitled to stay in that home until there is an agreement or court order to the contrary. Neither married spouse could kick the other out of the matrimonial home – only the court can do that. A separated married spouse may find that it is too expensive to rent or buy a new home by him or herself. It can be far more cost effective for the separated spouses to continue to share the cost associated with living in the matrimonial home and both spouses continuing to live there.
Ontario Law does not give common-law spouses the right to stay in a family home after separation. The person who owns the home, or whose name is on the lease, gets to say who lives there, subject to landlord – tenant legislation if it applies.
There are no other reasons for staying in the matrimonial home with a spouse after separation. Leaving the matrimonial home does not mean that the leaving party has their name taken off title if the parties were joint tenants, or that the leaving spouse is giving up the right to ask to share the value of the equity in that home. Who leaves does not affect the amount or duration of spousal support. However, courts may not view that there is a need for support payments while the parties are living together in the same house and one or both of them are meeting their spouse and children’s needs. It is almost always cheaper to maintain one household instead of two, so that can be a practical reason for remaining in the home.

Another practical reason for remaining in the home with the kids is that the staying parent has control over where the children go and when. The staying parent can stand in the way of the leaving parent seeing the children. However, that is not behavioural that the law condones, in exceptional circumstances, nor that a judge will tolerate. The leaving parent will only be cut off from the children until the parties can get into court, or the staying parent follows the advice of a family lawyer.

Maintaining involvement with the children and needing a place to live are the reasons for staying in the home after separation. If neither of these is a consideration, then there is no reason to stay in the home.

Bank Executives with Stock Options Face Difficult Divorces

September 1st, 2011

Some bank executives receive part of their compensation through stock options. They represent a great way to be compensated because the executive can receive pay at a lower tax rate. If the stock goes up in value the benefits are even greater. However, stock options create big problems in divorce proceedings.

Stock options can be both property, and income for support in divorce proceedings. They are property, the value of which must be shared as of the date of separation. Determining the right value for the stock options is difficult, as it depends on when the executive earned the options (not when the company issued them), when the executive can exercise the options, when the executive will exercise the options, the volatility of the stock price, the risk that the executive never exercises the options and the taxes associated with them. Stock options existing on the date of separation will be equalized as property, even though the executive may not be able to exercise them until later. The executive may not be able to make an equalization payment until the he exercises the options.

Bank executives may have to share his stock options twice! To the extent that stock options are pay, they are income when calculating support. The stock options at the time of separation may not show up on the executive’s tax return for several years until they are exercised. At that time, the other spouse may want to use them as income for calculating support, even though she has already received half the value. Using the same stock options for both property and support calculations can result in the other spouse receiving payments worth more than the value of the options. That is not fair. Careful attention is needed to prevent it.

A marriage contract can set out fair terms for the stock options on separation. Without that, both separated spouses need skilled family law lawyers to assist with the complicated issues associated with stock options.