Divorce
Seeking Legal Counsel
The end of your relationship with your spouse will mean a change in some of your life goals and possibly your financial situation.
Your advisors can help you with strategies and advice for balancing your priorities and making progress towards achieving your financial goals in your new situation. The following are some questions for discussion:
- How do I make the transfer of investments to and from my former spouse?
- What about the RESPs for the children’s education?
- We may have to sell our home, what are the implications?
- Do I need a new investment portfolio?
- What will happen to my company pension?
- How will my cash flow be affected by my marriage breakdown?
- How will my government benefits such as OAS and CPP be affected?
Seeking Legal Counsel
The first thing that must be emphasized in any relationship breakdown is the importance of seeking competent legal advice.
Some splitting couples can sit down together and structure their separate ongoing responsibilities between themselves in a friendly way. However, the laws relating to relationship breakdown can be extremely complex and there are overlapping jurisdictional considerations. It makes a difference if the relationship was a marriage under federal law or a common-law relationship, which is subject to provincial or territorial statute.
The situation can be further complicated when there are children involved. As a general rule, the courts are concerned with children first and foremost. If the courts decide that a separation agreement is unfair to the children, then that agreement will be overturned, regardless of what the parents have agreed. Certain spousal/children’s rights under law can not be given up despite what an agreement states.
Mediation
Some couples, after deciding to part ways, may engage the services of a mediator. The mediator will act as an impartial third party and meet with the couple and perhaps the children, and assist them in coming to agreement on various issues of the separation such as custody. The agreement will still have to be sanctioned by the court and lawyers should be consulted, but ideally mediation will help to make the process less antagonistic and confrontational.
Finding a Mediator
The Academy of Family Mediators has a search function at their website where you can locate a mediator in your area: Academy of Family Mediators
Types of Relationships
There are two types of legally recognized relationships in canada (marriage, both opposite-sex and same-sex, and common-law) and although both have certain similarities, there are also important differences.
From the point of view of the Canada Revenue Agency and the Income Tax Act, both types of relationships are viewed as the same. While your relationship is intact, there should be no material differences. However, as explained below there can be important differences should the relationship break down.
Here is a brief summary of some of the areas that differ depending on the type of relationship you have. Competent legal counsel should be consulted to determine how your relationship structure will affect you and your family.
The federal government has jurisdiction over marriage and divorce, while the provinces and territories have jurisdiction over the solemnization of marriage. If the relationship does break down, there are three main considerations:
| Common-Law | Marriage | |
|---|---|---|
| Child Support | Yes |
Yes |
| Spousal Support | No |
Yes |
| Property | Varies by jurisdiction |
Property acquired during the recognized relationship is to be equally split between the partners. *Varies by jurisdiction |
Child Support
Legislation and the courts are first and foremost concerned with the ongoing welfare of dependent children after a relationship breakdown. The federal Child Support Guidelines are in place to ensure that dependent children of legal marriages are properly taken care of. Although couples may choose to structure the child support privately, the courts reserve the right to cancel or amend agreements if they decide it is in the child’s best interests. Provincial/territorial law will provide for child support where there is no legal marriage in place.
Spousal Support
For married couples, the federal Divorce Act intends to provide an equitable ongoing arrangement for both parties and the courts have broad discretion in making awards. Factors such as the relative contributions and sacrifices of the parties during the marriage, ongoing economic self-sufficiency, and prevention of economic hardship will be considered. Most provinces have specific legislation dealing with spousal support in situations where there is no legal marriage.
Property
Division of family property is a provincial/territorial concern and as such there will be different approaches depending on where the couple lives. Although there are specific differences, all of the jurisdictions have adopted some variation on the approach of the ‘community of property’ for married couples whereby the intent is to divide the assets of the family equally between the partners. Generally, the property to be divided will be the property acquired during the recognized relationship, but there are definitely jurisdictional variations. The situation for common-law and same-sex couples varies by jurisdiction.
Note: A further point in regards to De Facto (common law) relationships in Quebec relates to the breakdown of that relationship. The law as it stands in Quebec accords no rights to spousal support for De Facto partners. This law has recently been challenged in the courts as being unconstitutional. After contrary rulings in the lower courts, the Supreme Court of Canada recently made a ruling that the law as it stands is not contrary to the constitution. However, the government of Quebec is left with the right in the future to draft laws to allow spousal support in this situation.