Calgary Lump Sum Spousal Support

Calgary Lump Sum Spousal Support

Calgary Lump Sum Spousal Support is often sought by one or both spouses in a Calgary spousal support case as a way to achieve finality after a Calgary family law separation. Our Calgary Lump Sum Spousal Support know that in disputed cases these Calgary Lump Sum Spousal Support awards will be rare. There is no tax deduction for a Calgary Lump Sum Spousal Support payment unless it can qualify as a lump sum for past periodic arrears.

Calgary Family lawyer and founder of MacLean Law, Lorne N MacLean, QC

Calgary Lump Sum Spousal Support Contingencies Really Matter

Further, a proper calculation of Calgary lump sum spousal support should factor in positive and negative contingencies for risk of death, job loss, remarriage, disability, windfalls, payor salary increases and the like. Our Calgary family lawyers are often asked what are the rules for Calgary Lump Sum Spousal Support? A Calgary Lump Sum Spousal Support calculation is only as accurate as the incomes used to calculate it so be sure to factor in proper incomes including potential increases and decrease in income of the recipient and paying spouse.

Don’t Make A Huge Calgary Lump Sum Spousal Support Mistake!

Our Calgary Lump Sum Spousal Support lawyers are intimately familiar with Calgary high net worth support issues involving the $150,000 exception for child support and the $350,000 cap for spousal support and we’ll explain these to you at our initial consultation.

We often warn our high net worth Calgary family law clients that additional discounts for risks should be made to the Divorcemate calculation program. Don’t make a huge mistake on your Calgary Lump Sum Spousal Support case. Call us now at our downtown Calgary office at 403-444-5503. Click here to book an appointment online to meet with us so we can plan a cogent and powerful Calgary lump sum spousal support strategy for you.

Calgary Lump Sum Spousal Support

A recent Calgary lump sum spousal support appeal decision of Kohan v Kohan, 2016 ABCA 125 sets out the rules a court will apply to ensure proper Calgary lump sum spousal support is calculated:

[40]           The appellant argues that the ultimate lump sum spousal support award of $500,000 is not explained in the reasons. The trial judge summarized the claim:

[57]      I find that she has entitlement to spousal support. Using the Spousal Support Advisory Guidelines, Mom claims a lump sum for retroactive spousal support from the time of the separation until Nakita turns 18, which was February of 2014. The claim is in the amount of $884,956.67 based on the lower end of the range and over a million dollars based on the high end of the range. Again, blind adherence to tables is not required nor is it, in my view, desirable in a case such as this which is unique. The goal is to achieve fairness in dividing the economic consequences of the relationship and its demise.

The trial judge concluded “I award under this head the sum of $500,000”.

[41]           The issue here is not whether the spousal support should have been ordered payable as a “lump sum”. Section 15.2(1) of the Divorce Act confirms that spousal support can be awarded as a lump sum, although lump sum payments are the exception: Lauderdale v Lauderdale (1997), 1997 ABCA 201 (CanLII), 200 AR 198 at para. 5, 29 RFL (4th) 34 (CA). The term “lump sum” is however used in several different ways:

(a)   Sometimes the quantum of arrears of spousal or child support will be calculated, and the resulting sum will be payable immediately because it reflects arrears of support. In that context the phrase “lump sum” simply refers to the mathematical total of all of the periodic arrears.

(b)   A trial judge may find an entitlement to future periodic spousal support, but rather than ordering that it be paid periodically, the judge may order the present value of the future sums to be paid in a “lump sum”. That is sometimes to promote a “clean break”, to address past or future problems with enforcement, to allow for set-offs against other payments such as matrimonial property equalization payments, etc.: Rockall v Rockall, 2010 ABCA 278 (CanLII) at paras. 23-4, 35 Alta LR (5th) 1, 490 AR 135. The phrase “lump sum” is most accurately used to describe this type of support award.

(c)   On other occasions a trial judge may determine that there is an entitlement to past or future support, but rather than calculating the periodic entitlement the trial judge will just select a “lump sum” award. Because periodic payments are subject to different income tax treatment, this approach must always be used cautiously, especially when the Spousal Support Advisory Guidelines are used as a basis for the calculation:Samoilova v Mahnic, 2014 ABCA 65 (CanLII) at para. 28, 41 RFL (7th) 83.

Because all of the spousal support in this case related to prior time periods, the entire amount was “arrears” when the judgment was pronounced, meaning that the award potentially fell into the first category of “lump sum” support payments. The $500,000 spousal support award in this case properly falls, however, under the third category; the amount was simply set “at large”. The trial judge did not identify the quantum of the periodic support, nor the income levels supporting the underlying analysis, and simply pronounced the award. When this type of “lump sum” spousal support is ordered without an adequate explanation for the calculation, the adequacy of the reasons will be called into question: Rockall at paras. 26-8.

[42]           The trial judge did refer to a few of the issues that had been raised. He noted that the respondent’s financial records were inadequate, but concluded that she was not intentionally trying to withhold information. He did not deal in detail with the various specific inconsistencies identified by the appellant. He was prepared to accept the respondent’s explanations, and found that her reliance on her accountant was reasonable. In calculating child support he did attribute $40,000 per annum of income to her in 2009, 2010 and 2011. He presumably used those same income numbers when determining spousal support.

[43]           The respondent argued that she had provided the appellant with all of the raw data about her finances, yet the appellant had done nothing with it. She criticized the appellant for not retaining a forensic accountant to analyse the information. The burden of proving the entitlement to spousal support was, however, on the respondent. The appellant had no obligation to retain a forensic accountant to prove her case for her, and since the respondent did not retain a forensic accountant the appellant had no need for rebuttal evidence. The trial judge’s statement that: “In any event, Dad had all of the production related to her financial situation” does not answer the point. The appellant identified a number of discrepancies in that information and was entitled to put them to the respondent at trial.

[44]           As previously noted, the trial judge erred in including the appellant’s bonus income in the spousal support calculations, at least without making some significant adjustments. Further, it appears that the Spousal Support Advisory Guidelines range referred to ($884,956.67 to over $1 million) did not include the extra $40,000 of income attributed by the trial judge to the respondent for 2009, 2010 and 2011. In addition, the Spousal Support Advisory Guidelines calculations assume that the payments are to be periodic, and will be deductible by the payor and taxable in the hands of the payee. The lump sum payment ordered may not be taxable and deductible unless it could be qualified as a “Qualifying Retroactive Lump-Sum Payment”. The trial judge made no mention of these issues.

[45]           The largest concern about the $500,000 lump sum payment is, however, that its source is completely unexplained on the record. While “fairness” is the conceptual objective of any adjudication, an award of spousal support must be tied back to the evidence and the criteria in the Divorce Act. The observation in Moge that a “minute detailed accounting” is not called for does not encourage pulling numbers out of the air. A payor spouse who is ordered to pay such a large sum in spousal support is entitled to know how it was calculated. It follows that the lump sum spousal support payment cannot be sustained.

[46]           This litigation has been ongoing for over a decade, and the parties have already been through one trial. There is no point in re-litigating some issues that have already been adequately canvassed. The broad entitlement to spousal support has been established, if not the precise years in which it would be payable. The finding that the respondent acted reasonably in her career choices should not be disturbed. In light of the appellant’s position at trial, his income in any year should be capped at $350,000. Considering all the factors in this case, including the lengthy period between separation and trial, and the fact that the bonuses were triggered by unprecedented market conditions, this outcome is fair and just to both sides.

[47]           The quantum of spousal support must be referred back to the trial court. The appellant’s and respondent’s income must be established for each year for which spousal support is payable. The amount of spousal support payable for each year should be established, having regard to the provisions of theDivorce Act. The parties are undoubtedly aware of dispute resolution options other than reopening the trial.