Our top rated grey divorce spousal support lawyers warn that because boomers now work and live longer –coupled with the fact they are acquiring substantial gains on real estate, stocks and pensions – this means the financial stakes on relationship breakdown dramatically increase. Lorne N MacLean, QC has a focus on grey divorce spousal support and grey divorce family property division and has published articles on the topic. MacLean authored a grey divorce spousal support article Business in Vancouver which explained the challenges faced by separating grey divorce spouses. We are BC’s largest family law firm and are once again rated by Top Choice Awards as Vancouver’s Best Family Law Firm. Call us toll free at 1-877-602-9900 or complete our IC form so you get the most out of an initial consultation with us at any of our 4 offices.
Grey divorce – couples splitting post-50 – has been inching upward for decades in this country. Statistics Canada figures show a gradual increase from 7.2 per cent of men aged 50 to 54 divorced in 1985 to 11 per cent by 2005. For women, it was 5.4 per cent in 1985, rising to 8.9 per cent 20 years later. Roughly, two-thirds of divorces among people over 50 are initiated by the wife.
Grey Divorce Spousal Support Issues
Top issues for grey divorce spousal support cases are:
- What happens to the family home and how will the separated spouses afford two new homes if one of the spouses is retiring and the other spouse hasn’t worked for years? Compounding the problem is that qualifying for a mortgage late in life is difficult.
- What happens to plans for early retirement and living off shared investment and pension income when parties now live apart and have double costs in many areas?
- How long will support be paid and how realistic is it to think a grey divorce spouse who has never worked outside of the home or who has been out of the work force for years will suddenly get a well paying job?
- Does the career spouse have to work until they die to pay spousal support given no mandatory retirement laws?
- Is a spouse who works overtime to try to pay support and to save for retirement required today even higher support on this “second job?”
- Should investment income be attributed to large asset settlement awards?
- Should support be life insured?
- What about re-partnering with new spouses does support end or change?
Grey Divorce Spousal Support Statistics Require You To Be Smart
Make sure you hire a top rated* grey divorce spousal support lawyer like Lorne MacLean QC or any member of the largest team of family lawyers in BC at MacLean Law. Our family wealth preservation and asset protection team are pleased to develop a cogent strategy with you as a key player.
Pension Buyouts and Grey Divorce Spousal Support – “Double Dipping”
One of the thorniest grey divorce spousal support issues is the “double dipping” issue for pension income:
What happens when a spouse who has bought out his spouses share in their pension retires and now has pension income instead of employment income? Does support end or does pension income get used to pay support?
In Parrett v Parrett the BC Court of dealt with the pension income double dipping issue involving a retired BC Supreme Court Judge and focused on requiring the wife to use her money from the pension buyout to earn income and then used only the undivided portion of the husband’s pension income for grey divorce spousal support by applying the spousal support advisory guidelines.
[36] The Supreme Court of Canada restored the order of the lower court. Major J., speaking for the majority, began his analysis by noting a recent trend in the case law to avoid ‘double dipping’. He cited in particular Shadbolt v. Shadbolt (1997) 32 R.F.L. (4th) 253 (Ont. Gen. Div.) and an annotation thereon by Professor McLeod. Major J. observed that there is no reason why spousal support cannot continue after the retirement of a pension-holding spouse, but that several factors must be considered in making such a decision in a particular case. One of those factors, he stated, is the extent, if any, of double recovery. He continued:
How is double recovery fairly avoided? (See Shadbolt, supra, per Czutrin J., at para. 46.) It is generally unfair to allow the payee spouse to reap the benefit of the pension both as an asset and then again as a source of income. This is particularly true where the payee spouse receives capital assets which she then retains to grow her estate. The comments of Walker, supra, at p. 233, bear echoing:
It is well-recognized that a borrower should not be compelled to continue monthly loan payments to the lender if the borrower has previously paid the full amount owing. “Double dipping” is analogous to such a situation and is logically and mathematically indefensible.
To avoid double recovery, the court should, where practicable, focus on that portion of the payor’s income and assets that have not been part of the equalization or division of matrimonial assets when the payee spouse’s continuing need for support is shown (see Hutchison, supra, at para. 9). In this appeal, that would include the portion of the pension that was earned following the date of separation and not included in the equalization of net family property.
Despite these general rules, double recovery cannot always be avoided. In certain circumstances, a pension which has previously been equalized can also be viewed as a maintenance asset. Double recovery may be permitted where the payor spouse has the ability to pay, where the payee spouse has made a reasonable effort to use the equalized assets in an income-producing way and, despite this, an economic hardship from the marriage or its breakdown persists. Double recovery may also be permitted in spousal support orders/agreements based mainly on need as opposed to compensation, which is not the case in this appeal. [At paras. 63-5; emphasis by underlining added.]
[37] The majority concluded that it would be “inequitable” to allow the wife to reap the benefit of the pension first on the division of assets and again as a source of income. As stated by Major J.:
The wife received capital assets on equalization which she is saving and accumulating presumably for her beneficiaries. By contrast, the husband’s only tangible asset, his pension, is diminishing.
The motions judge concluded that the wife still had a need for support and the husband still had an ability to pay, and focused on that portion of the husband’s income that had not been the subject of division with the wife in the past. I agree with her conclusion that the un-equalized portion of the husband’s pension was a principal consideration in the support to be paid. [At paras. 75-6; emphasis added.]
[38] Ms. Ellis on behalf of the wife argues that the case at bar is “on all fours” with Boston and that double recovery may be avoided here by ‘focussing’ on the undivided portion of the husband’s annuity. She suggests that this may be accomplished most easily by subtracting from the husband’s annual income that portion of his annuity that was reduced by the division in 2010, and then calculating appropriate support under SSAG on the basis of the remainder.
She notes the observations of Madame Justice Fleming in T.T. v. J.M.H. 2014 BCSC 451:
It is trite law that compensatory support is intended to provide redress to the recipient spouse for his or her efforts which conferred an economic benefit or advantage on the other spouse, and for his or her economic disadvantage arising from the marriage or its breakdown: Chutter v. Chutter, 2008 BCCA 507 at paras. 50-51, leave to appeal ref’d [2009] S.C.C.A. No. 41 [Chutter]. The courts recognize that assuming primary child care and household responsibilities, in particular, often results in lower earning potential and fewer prospects for financial success in the future: Chutter at para. 50. Where non-compensatory principles also apply, spousal support aims to narrow the gap between the needs and means of the spouses. The concept of need, however, goes beyond the basic necessities of life and varies according to the circumstances of the parties. In longer marriages the courts measure need against the marital standard of living or the payor’s post-separation standard of living: Chutter at para. 59; Hodgkinson v. Hodgkinson, 2006 BCCA 158 at paras. 68-69. [At para. 120; emphasis added.]
[46] In this instance, the husband’s retirement has reduced his income by one-third, but he continues to make a comfortable income. He now receives, post-retirement, $186,612 from his annuity and CPP. Yet it is proposed that Ms. Parrett’s support end completely. On an optimistic view of future interest rates, her projected income would fall to $30,000 now and might rise to $42,000 by the time she reaches age 72. Her housing and medical expenses alone amount to some $24,000. She requires continuous medical treatment that is expensive and time-consuming and makes it impossible for her to continue to work even part-time. Her situation is clearly unlike that of Ms. Puiu, who was living a “comfortable lifestyle” and could marshall income of $46,000 per year from her share of the divided assets.
[47] Conversely, Mr. Parrett’s circumstances are unlike those of the husband in Puiu, who had received his severance and was living solely on pension income. His income had been fully taken into account in the asset division and the spousal support order agreed upon in February 2007. In contrast, Mr. Parrett suffered a reduction of his judicial annuity of only $20,903 (before indexing) – a small amount in comparison to his continuing entitlement. The balance of his annuity entitlement has not been affected. He also remains able to participate in other medical, dental and insurance benefit programs. The result is a large disparity in the parties’ standards of living that in my view distinguishes this case from Puiu.
[50] In the case at bar, both parties have experienced a reduction in income, but the reduction and its effect are much more severe in the wife’s case than in the husband’s. Absent any specific suggestion from counsel for Mr. Parrett as to how the support might better be determined, I see no reason why the SSAG should not be resorted to as Ms. Ellis suggests. She provided a calculation that used the figure of $149,660 for the husband’s annuity income (i.e., the annuity to which he is entitled less the amount ($20,900) by which his annuity was reduced on the division) and $2,519 for his CPP benefit, and for the wife, an annual income figure of $4,548 (being the net amount of OAS she receives). To do so, however, would ignore the wife’s potential income from her investments – a result that contravenes the principle that she must “look to her assets in an income-producing way” (Boston, at para. 74) and cannot simply build up an estate for her heirs. I would apply the SSAG, but would carry out the calculation on the basis that Ms. Parrett is able to earn investment and pension income of $30,000 per year. I would leave it to counsel to carry out the calculation and would choose the “mid” figure under the Guidelines. The figure so calculated would be reviewable in the event of any change in circumstances within the meaning of s. 17 of the Divorce Act. If counsel are unable to agree on the calculation, they may make submissions in writing to this court.
When you are involved in a grey divorce spousal support case you have no margin for error. Call Lorne N MacLean, QC at 1-877-602-9900 to ensure your golden years are not threatened.
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