How do high property awards impact spousal support?
Vancouver Spousal Support High Property Award Lawyers deal with high incomes and substantial property awards. Years ago, large property settlement awards often resulted in zero spousal support being paid. But in the mid 1980’s our highly rated Vancouver Spousal Support High Property Award Lawyers saw a trend that held a big property award no longer disentitled a spouse to substantial and long term spousal support award. The new Spousal Support Advisory Guidelines have a section discussing how high property awards might impact spousal support. Lorne N. MacLean, QC founder of our team of Vancouver Spousal Support High Property Award Lawyers has been tracking these cases as part of his high net worth and grey divorce family practice.
Specifically, Section 9 of the SSAG does not actually acknowledge that a large asset division is a crucial factor or exception to be considered in fixing the amount of support within the ranges generated by the formulas.
Vancouver Spousal Support High Property Award Lawyers
Lorne MacLean, QC, founder of our team of top rated* Vancouver Spousal Support High Property Award Lawyers notes that while a large property award might generate income for a recipient spouse it would also generate identical income for the paying spouse. In high income cases a denial of spousal support arguably still leaves the financial table tilted heavily in favour of the paying breadwinner spouse.
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Hire Vancouver Spousal Support High Property Award Lawyers Who Handle Big Cases To Help Secure Your Future
MacLean Law family lawyers are involved in cases where family property assets range from 20 million upwards to 1 billion and Lorne MacLean, QC has obtained recent awards of over $23,000 per month to over $80,000 per month of combined support. In these heady financial stakes cases the question remains – is there a certain amount of high family property awards that means spousal support isn’t justified?
In BC an award of $4 million in Chutter BCCA resulted in an amount of spousal support below the low end SSAG, in Martin BCCA an award of $6 million resulted in an award of spousal support above the high end SSAG and recently in the decision of M.A.T. v K.P.T., 2017 BCSC 1603 an award of 10 million resulted in spousal support of between $17,000 and $20,000 based on the husband’s income of $800,000 per year. The court set out the history of the long relationship and that it did not accept the highly qualified husband would earn a mere $200,000 per year.
The parties to this family law proceeding shared a very long relationship before separating in September 2013. They began living together in January 1988 and married ten years later, in August 1998. During the relationship, they raised the claimant’s daughter R. and had two children, a son, L., born in 1994 and daughter, A., born in 1996.
[3] In November 2016, they consented to an order that effects an equal division of family property valued at approximately $20,000,000 (the “Consent Order”).
[94] The respondent is now 54. He has entered what are typically the peak earning years for successful professionals. He is a very accomplished business person with significant expertise arising from the combination of his education and high level, multi-faceted, long-term involvement in the wireless telecommunications industry, both in North America and the UK. For many years now, he has played a key role in the governance and growth of several companies and engaged in various business ventures. He has also directed, along with others, the management of investments for the venture capital branch of one of Canada’s largest pension funds. It is obvious the respondent has tremendous talent, drive, and ambition. He appears to thrive on the significant demands of his various work and business commitments.
[95] I have no reason to believe he is not in excellent health. He described himself as a capable, if not, competitive athlete, who integrates exercise into his daily life.
[98] In other words, I find the respondent is entirely capable of earning a very high annual income, and it is likely he will continue to do so from several sources, through some combination of salary, bonuses, director’s fees and various forms of equity compensation.
[99] Based on my assessment of his earning capacity, I conclude it is reasonable to impute or attribute to him an annual income of $800,000 for 2016 onward. I consider this a fair income for both child support and spousal support purposes.
How do high property awards impact spousal support? Basis For Support Entitlement
Further, Madam Justice Fleming dealt with the basis for entitlement to the wife’s spousal support ad explained the two main support approaches:
[203] It is well settled 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. Compensatory support also addresses the economic disadvantages suffered by a spouse as a consequence of the marriage or its breakdown: Chutter v. Chutter, 2008 BCCA 507 (CanLII), at paras. 50-51, leave to appeal ref’d [2009] S.C.C.A. No. 41. The courts recognize that assuming primary responsibly for child care and management of the household, in particular, often results in lower earning potential and fewer prospects for financial success in the future: Chutter at para. 50.
[206] Non-compensatory support aims to narrow the gap between the needs and means of the spouses: Chutter at para. 54. The concept of need, however, goes beyond the basic necessities of life and varies with the circumstances of the parties: Chutter at para. 55; H.C.F. v. D.T.F., 2017 BCSC 1226 (CanLII), at para. 196; Loesch v. Walji, 2008 BCCA 214 (CanLII), at para. 39. The same is true for self-sufficiency. In longer marriages, the courts measure both need and self-sufficiency 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 (CanLII), at paras. 68-69.
[212] Given the length of the parties’ relationship, their standard of living during the marriage, the claimant’s inability to achieve self-sufficiency through employment, the relative drop in her standard of living since the separation, the principles enunciated in the jurisprudence, and the statutory objectives of an order for spousal support, I find the claimant is entitled to non-compensatory support. Prior to the Consent Order, her entitlement was strong. The claimant had no source of income apart from access to the joint account and then, from April 2014 onward, interim spousal support. Following the Consent Order, her entitlement continues, but its foundation is weakened.
[219] …..In Kelly v. Kelly, 2007 BCSC 227 (CanLII), Barrow J. concluded that if the entitlement to support is based on need, the compelling factor is the “marital standard of living”, meaning that post-separation increases to the payor’s income should not be used to determine the amount of ongoing spousal support obligation. When the basis for support is compensatory, however, the courts have relied upon the post-separation income of a payor to calculate the amount, particularly where the recipient spouse has continued to contribute indirectly to the payor’s ability to earn increased income after separation.
$10 Million of Property Doesn’t Disentitle A Spouse to Spousal Support Explain Vancouver Spousal Support High Property Award Lawyers
Next the judge had to decide whether $10,000,000 the wife received would set her up financially for life as the husband argued. The Court decided that despite each party having $10,000,000 substantial spousal support was still payable.
[231] The respondent argues that a high property award can either change where in the range an award should fall, or result in an award below the low end of the range. Section 9 of the SSAG does not actually identify a large asset division as a factor to be considered in fixing the amount of support within the ranges generated by the formulas. It is discussed as a possible rather than explicit exception for departing from the ranges. The authors of the SSAG observe there is some conflict in the case law on this point. Some decisions reflect the view that high property awards should result in support awards below the range, while others take the approach a high property award should not in and of itself result in a significant reduction of spousal support because property and support awards are governed by different legal principles and serve different purposes (s. 12.6.2, April 2016).
[232] The respondent relies upon Chutter to support his position. In that case, each party received $4 million in assets. The Court of Appeal overturned the trial judge’s finding the wife was not entitled to spousal support, but awarded support below the SSAG range. In my view, the amount of the support order had as much to do with the relative impact of the particular assets held by each party, as their high value:
[123] There are two factors that militate in favour of an amount lower than the suggested range in the Guidelines. The appellant has the advantage of having a very substantial sum in RRSPs and any appreciation in the value of the plans, whether through interest, dividends, or increase in value of equities, is tax-sheltered until withdrawal. Unlike the respondent, the appellant is not faced with having to save money to ensure an adequate income upon retirement. The other consideration is the fact that the appellant’s home, valued at between $1,850,000 and $1,950,000, is a non-income producing asset and is increasingly likely to exceed her needs as she approaches retirement. In assessing the means and needs of the appellant in this case, it appears to me that the extent to which her choice of housing exceeds her needs, while still being commensurate with the marital standard, should also be considered in arriving at the amount of spousal support to be paid.
[233] Again, I have not been asked to include investment income in determining the prospective income of the parties, but the reality is the high asset division, much of which I have determined will be income generating, will enable the parties to earn a substantial amount of investment income. For the claimant, that income will reduce her level of need, therefore addressing to some extent the non-compensatory objectives of a spousal support award.
[234] Consequently, although I have not included any amount for investment income in the parties’ prospective incomes, I conclude their high asset division is a factor I may consider when determining the appropriate amount of prospective spousal support.
Income Over $350,000 Exception Analyzed By Trial Judge As Well As “Rule of 65”
Finally, our award winning Vancouver Spousal Support High Property Award Lawyers note that the Trial Judge awarded permanent indefinite support given the wife’s limited ability to earn income and the fact that her age and duration of the relationship totalled more than 65 in an amount of $17,000 to $20,000 per month.
[235] The fundamental underpinning of an order for spousal support is the doctrine of equitable sharing of the economic consequences of marriage and marriage breakdown: Chutter at para. 49.
[236] As I have indicated, because of the respondent’s high income, an individualized fact specific analysis is necessary to determine the amount of spousal support, which considers the marital and post-separation standards of living, the parties’ reasonable expenses, the strength of the claimant’s entitlement, work incentives for the respondent, and s. 7 expenses for the children, where appropriate, in the context of s. 15.2(4) and (6) of the Divorce Act. Bearing in mind the caution expressed in s. 11 of the SSAG regarding the application of the formulas to incomes over $350,000, I have also considered DivorceMate calculations, which, in my view, continue to provide a helpful reference point. In addition to setting out the range for the amount of support under the SSAG, they show the percentage of net disposable income (“NDI”) for the parties, associated with each amount within that range, an indicator of the equitable sharing that will result from any particular award.
[237] Of course, the calculations generated by the SSAG must be considered in light of the caution expressed in s. 11 regarding incomes over $350,000.
[244] Neither party made any submissions about the appropriate duration for ongoing spousal support. Under the SSAG, the award ought to be indefinite. The claimant was over 50 when the parties separated. Given the length of the marriage, the “rule of 65 applies”. In my view, based on the strength of the claimant’s compensatory claim, her age at separation, and the very long marriage, the award should be indefinite.
[245] On the narrow issue of how the parties’ future investment income may impact the amount of spousal support that ought to be paid, I grant the parties leave apply for a review no earlier than one year from today’s date, along with the requirement that a pre-hearing conference be scheduled before me.
Hiring a team of Vancouver Spousal Support High Property Award Lawyers who routinely handles this complex cases means you will get quick answers and a sound assessment of the pros and cons and the amount and duration of spousal support in cases involving substantial property awards.
Call Lorne N. MacLean, QC leader of our top* flight team of Vancouver Spousal Support High Property Award Lawyers today at 1-877-602-9900 if you have a high net income and net worth BC spousal support case you need help with.
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