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MacLean Law’s Retirement Spousal Support Reduction Lawyers handle cases where aging spousal support paying spouses wish to retire for health reasons or just to be able to retire like everyone else. For non-separated spouses this is usually a decision both spouses are in agreement on. But for separated spouses who are paying or receiving spousal support there is often disagreement on whether a person can retire and stop or at least reduce spousal support. Mandatory retirement no longer exists and people may work past 65. Our Retirement Spousal Support Reduction Lawyers help spouses deal with this potentially divisive issue and the financial fallout.

Call our Retirement Spousal Support Reduction Lawyers today across BC and in Calgary. 

Retirement Spousal Support Reduction Lawyers -604-602-9000

Can a paying spouse retire at will and have their spousal support cease? Are they never able to retire or if they do must they use their savings to keep paying spousal support? What if they have a pension income and are starting a new venture that needs to retain profits so it can grow? In today’s blog, articled student, Fraser MacLean son of founder Lorne MacLean, QC explains the rules that apply.

A recent case of C.P. v. K.W.A. 2018 BCSC 332,  explains how the Court will approach retirement when the spouses disagree over whether it is a good or bad idea.

Retirement Spousal Support Reduction Lawyers – The Law Explained

The Judge in CP v. KWA ultimately felt the husband’s decision to retire at 65 was reasonable, in part because he had substantial pension income and was starting a new business that needed capital retention and did not require the husband to pay support on an attributed  income he would notionally have kept earning if he had not retired.

Here is the law that guided the Judge:

301      In situations where a spouse has retired, courts will look to the circumstances of the retirement to determine whether income should nevertheless be imputed. In Greco v. Greco, 2017 BCSC 172 (B.C. S.C.), Dorgan J. stated at para. 28:

[28] A payor spouse who has reached the expected age of retirement, or who retires for medical reasons, may fairly be relieved of an obligation to continue spousal support payments, or have that obligation reduced. However, a payor spousal may not be relieved of their spousal support obligations if the retirement is voluntary and the retirement was motivated by the desire to avoid maintenance payments: see Young v. Young, 2011 BCSC 887 at paras. 38-39.

302      However, a court does not need to conclude that a spouse is acting in bad faith or intentionally evading support obligations in order to impute income. Instead, the court must determine whether a spouse is earning to his or her capacity: see Beissner v. Matheusik, 2015 BCCA 308 (B.C. C.A.) at paras. 30, 44. The court in Beissner stated at para. 44:

Retirement Spousal Support Reduction Lawyers – Attributing Income Law

…The test for a finding of underemployment from Donovan v. Donovan, 2000 MBCA 80, was adopted by this Court in Watts v. Willie, 2004 BCCA 600 at para. 16, and followed in McCaffrey v. Paleolog, 2011 BCCA 378 at para. 46:

[16] In Donovan v. Donovan (2000), 190 D.L.R. (4th) 696, 2000 MBCA 80, Madam Justice Steel gave the judgment of the court and wrote at para. 21:

  1. There is a duty to seek employment in a case where a parent is healthy and there is no reason why the parent cannot work. It is “no answer for a person liable to support a child to say he is unemployed and does not intend to seek work or that his potential to earn income is an irrelevant factor” (Van Gool v. Van Gool(1998), 166 D.L.R. (4th) 528(B.C.C.A.)).
  2. When imputing income on the basis of intentional under-employment, a court must consider what is reasonable under the circumstances. The age, education, experience, skills and health of the parent are factors to be considered in addition to such matters as availability of work, freedom to relocate and other obligations.
  3. A parent’s limited work experience and job skills do not justify a failure to pursue employment that does not require significant skills, or employment in which the necessary skills can be learned on the job. While this may mean that job availability will be at the lower end of the wage scale, courts have never sanctioned the refusal of a parent to take reasonable steps to support his or her children simply because the parent cannot obtain interesting or highly paid employment.
  4. Persistence in unremunerative employment may entitle the court to impute income.
  5. A parent cannot be excused from his or her child support obligations in furtherance of unrealistic or unproductive career aspirations.
  6. As a general rule, a parent cannot avoid child support obligations by a self-induced reduction of income.

Retirement Spousal Support Reduction Lawyers – Husband’s Approach Reasonable

Analysis and Conclusion

327      The parties agree that Mr. A has undertaken un-remunerative employment in Mother Nature’s since 2012. However, Mr. A was nevertheless earning to capacity: Mr. A was receiving a substantial income from the Gerling pension that would have been reduced by the amount of any salary from Mother Nature’s. Further, it is reasonable that Mr. A would not draw a salary during the first few years of the company’s operation, when it would have been important to retain capital.

328      The issue is whether Mr. A will persist in un-remunerative employment by working at Mother Nature’s, now that he has turned 65 and could receive an income without affecting his pension payments. If so, the court must determine whether, by doing so, Mr. A is not working to his earning capacity. Another relevant issue is whether it would be possible or reasonable for Mr. A to direct Mother Nature’s to pay him a salary.

329      I find that J has taken over many of the financial and accounting jobs as a director of the company, previously performed by Mr. A. Therefore, I do not find that Mr. A has continued to work as much as he did during the first few years.

330      I accept Mr. Ounsted’s testimony on cross-examination that in 2015 Mr. A’s work as a shareholder should be valued at around $30,000.

331      I also accept Mr. A’s testimony that he wishes to retire in the near future. Mr. A is now 65 years old, an age when many people retire. Mr. A gave evidence and I accept that he intended to build up Mother Nature’s to create an asset for the benefit of his children. I do not believe that Mr. A intended to create a long-term job for himself at Mother Nature’s. Further, as one of four shareholders, Mr. A cannot unilaterally give himself a salary.

332      In these circumstances, I believe it is unfair to impute an income to Mr. A. Mr. A will earn a substantial income from his two pensions. Further, I do not find that Mr. A will continue to work for Mother Nature’s in a substantial capacity or that he is able to unilaterally take a salary for any work he does perform.

Retirement Spousal Support Reduction Lawyers – Support Order Not Binding On Estate

In certain cases spousal support and child support can be held binding on the estate. This approach has been criticized by many family lawyers as a prescription for disaster.

[366]     I will also not order that spousal support be binding on Mr. A’s estate. This is prejudicial to his estate and his beneficiaries, which is not warranted on a ten-year relationship. There is no basis for Ms. P to receive 50% of the ERGO pension income after the spousal support terminates for the duration of either party’s life. In my view, the objectives of the legislation and case law will have been met by the award that has been ordered.

Call our Retirement Spousal Support Reduction Lawyers today so your golden years aren’t tarnished by a spousal support disaster.