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Spousal Support Order Looks Beyond Marriage Contract to Family’s Financial Reality

28/01/2013


Following an order by an Ontario court judge last month, Maple Leaf Foods CEO Michael McCain must pay $175,000 per month in interim spousal support to his former wife, including a retroactive payment dating back to the couple’s separation in July 2011.

The court’s decision to look past the couple’s marriage contract points to the reality that interpretations of the Divorce Act in a court of law can overturn expectations in ways the spouses hadn’t imagined. In the contract, Christine McCain waived her right to spousal support and equalization of the family’s property in return for a lump sum payout and specified real estate property. Saying the contract was “unconscionable” having been signed in duress the judge considered the couple’s lifestyle during their marriage, their considerable net worth and Ms. McCain’s living expenses following separation.

This decision illustrates the ambiguities and uncertainty surrounding spousal support obligations and matrimonial law decisions in general. So, if a contract doesn’t necessarily set the financial terms of a matrimonial agreement following separation, what does?

Spousal Support Considered

When assessing whether spousal support should be paid, the Divorce Act sets out several critieria that must be considered, including:

  • The financial situation of both spouses, including available means and needs;

  • The length of the marriage;

  • The roles each spouse played during their marriage and the impact of these roles, and the separation, on each spouse’s current financial position;

  • The ongoing care of any children of the marriage;

  • The encouraged self-sufficiency of each spouse within a reasonable period of time; and,

  • Any contracts, orders, or agreements regarding spousal support already in place.

However, unlike the Federal Child Support Guidelines, there is no legislated set of rules for determining spousal support. While Spousal Support Advisory Guidelines (SSAGs) are often referred to by the courts, their application is varied and not guaranteed. This is especially true in cases involving individuals with an annual income in excess of the $350,000 “ceiling.” In these cases, additional judicial discretion is required which adds an element of uncertainty to the final decision.

Additional Considerations

In the McCain case, the courts took into consideration the means and needs of both spouses before they made a spousal support decision. However, this is not as easy as it seems in some cases, since there are numerous financial considerations that must be made, including:

  • Matrimonial net worth – an inventory of all assets owned and debts owed by the spouses which can potentially be complicated by ownership in companies that need to be valued, exemptions from property division claimed by either spouse, and tax planning implications that must all be considered in the final value of net worth;

  • Income determination – a clear picture of the income available to each spouse often requires adjustment of income reported for tax purposes to include non-cash compensation, benefits received through corporate ownership, and other relevant arrangements; and,

  • Financial need – to ascertain the financial needs of each spouse, monthly budgets may be prepared for the post-separation period and professional assistance related to debt repayments and restructuring may be required.

In cases like this, the importance of seeking experienced professional advice is critical to ensure that each spouse can navigate the legal process with the knowledge required to reach an informed settlement.

Click here to read the original article on CBC News.

To learn more about the family law services MNP provides, contact Bailey Rivard at [email protected] or 403.536.2185

1 Summarized from information contained on the Canadian Department of Justice website. For more information, go to http://www.justice.gc.ca/eng/pi/fcy-fea/spo-epo/index.htm.