Difference between revisions of "Basic Principles of Spousal Support"

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==Calculating spousal support==
==Calculating spousal support==


It is difficult to predict how much spousal support will be paid in any given case. You can, however, get a rough idea by looking at each spouse's expenses and the disposable income available to each of them, especially the payor. You should also look at the Spousal Support Advisory Guidelines, which lawyers and the court routinely rely on to determine spousal support payments. This chapter discusses these in the section on the [[The Spousal Support Advisory Guidelines|Spousal Support Advisory Guidelines]].
Once it is decided that a person is entitled to spousal support, the amount of spousal support has to be calculated.  It is difficult to predict exactly how much spousal support will be paid in any given case. Many different factors can influence the amount spousal support.  However, in British Columbia the Spousal Support Advisory Guidelines are frequently used by the courts to determine the amount of spousal support and so the Guidelines are a good starting point. 
 
In order to decide what should be paid, assuming of course that the recipient is entitled to receive support, it is critical that each party prepare a sworn financial statement where a court proceeding has started or not. You must use the Financial Statement (Form F8 in the Supreme Court and Form 4 in the Provincial Court). The financial statements set out each party's income and assets, expenses and liabilities. Exchanging sworn financial statements is an excellent starting point for figuring out the amount of support that ought to be paid.
You can visit DIVORCEmate’s website for their free spousal support calculator, [http://mysupportcalculator.ca mysupportcalculator.ca].  This calculator is very good for simple situations, but if there is anything complicated about your circumstances you may want to meet with a lawyer who has bought DIVORCEmate’s expensive commercial software. The lawyer should be able to give you some fairly fine-tuned numbers.  This chapter’s section on the [[Spousal Support Advisory Guidelines]] discusses the Advisory Guidelines formulas in a lot more detail.  
 
===Calculating spousal support without the Advisory Guidelines===
In addition to considering the Spousal Support Advisory Guidelines, it is important that each party prepare a sworn financial statement whether a court proceeding has been started or not. In provincial court, the Financial Statement is called a [[PCFR Form 4 Financial Statement|Form 4]] and in Supreme Court, the Financial Statement is called a [[Form F8 Financial Statement|Form F8]]. The financial statement sets out each party’s income and assets, expenses and liabilities.  
 
Assuming that the Advisory Guidelines will not be used, you can use this process to get a rough idea about how much spousal support will be paid.
When a spousal support calculation is done by the Spousal Support Advisory Guidelines, the calculation sets out three amounts of possible spousal support: a low amount, a mid amount and a high amount ([http://mysupportcalculator.ca/ mysupportcalculator.ca] only provides the high and low amounts, not the mid amount of the range). There can be hundreds of dollars difference between the low and high amounts of spousal support. The expenses of the parties that are set out in their financial statements can help decide whether spousal support should be at the low amount, the mid amount, the high amount or even outside of the amounts suggested by the Spousal Support Advisory Guidelines entirely.  
 
*First, figure out what the reasonable monthly expenses of the recipient are. These needs will include things like paying the rent, utilities, groceries and so forth. ''Reasonable expenses'' won't usually include things like savings for RRSPs, vacations or days at the spa; these are luxury items, not necessities.
Ideally, a spousal support payment will leave both parties with enough money to look after their living expenses, not just the party who earns more money. The court will not bankrupt a payor in order to meet the dependent spouse’s needs.   In many cases, this mean that both parties must adjust their standard of living to be able to live within the pool of income available to them. The parties’ expenses on their financial statement can help show how much money each party needs to meet their living expenses and how much money the payor has left over to pay spousal support after his or her reasonable monthly living expenses for things like rent, utilities, groceries and so forth are met.
*Second, subtract from the recipient's monthly expenses any income he or she might have. Typical sources of income include employment income, child tax benefits, baby bonus payments and so forth. The shortfall between the recipient's income and his or her expenses will be the amount of the recipient's monthly needs.
*Third, figure out what the payor's reasonable monthly disposable income is. Take the payor's net monthly pay, subtract the payor's reasonable monthly expenses, and subtract any child support payments. The resulting amount will the be payor's monthly disposable income, which is the amount of extra money the payor has each month for discretionary spending, to put into savings or to provide to his or her spouse.
*Fourth, compare the recipient's monthly needs to the payor's disposable income. If the recipient's needs can be met from the payor's disposable income, a support order will likely be made in that amount. If the recipient's needs can't be met from the payor's disposable income, go back to step one and be more conservative with both parties' expenses.
 
The payor's monthly disposable income is an obvious place to begin talking about how much spousal support he or she can afford to pay. However, if there is a shortfall between the payor's disposable income and the recipient's need, someone needs to trim some expenses somewhere. Ultimately, if a compromise can't be reached, one of the parties may have to accumulate some debt over the short term. This will usually be the party better able to shoulder the financial burden, which is typically the payor.
 
The court will not bankrupt a payor in order to meet the dependant spouse's needs. Obviously, there must be a balancing. In many cases this means that both parties must adjust their standard of living to be able to live within the pool of income available to them.
 
Finally, once a starting figure has been reached, it can be important to look at the income tax consequences to the recipient from receiving support and the income tax benefits to the payor from paying it. Then readjust the amount of support to be paid if desired.
 
The tax consequences of spousal support sometimes suggest that the basic amount should be adjusted. Because support is a deduction for the payor, he or she will pay less taxes and have more money left over at the end of the year; for a recipient, taxes will be owing on the support payments, and he or she will have less money than expected at the end of the year.
 
These tax issues are usually resolved in one of three ways:
 
#the tax consequences of spousal support can be ignored altogether (this is the most common approach),
#more spousal support could be paid each month to offset the year-end tax consequences, or
#the payor could agree to pay any tax debt owed by the recipient resulting from the spousal support.
 
Where an order or agreement for spousal support does not address these tax issues, it is very important that the recipient set aside a portion of the support he or she receives to pay the tax man. Few recipients are able to pay unexpected tax debts without difficulty.
 
===Calculating spousal support with the Advisory Guidelines===
 
Assuming that the Advisory Guidelines will be used, you can visit DIVORCEmate's website for their free spousal support calculator, [http://mysupportcalculator.ca mysupportcalculator.ca]. This calculator is very good for simple situations, but if there is anything complicated about your circumstances you may want to meet with a lawyer who has bought DIVORCEmate's expensive commercial software. The lawyer should be able to give you some fairly fine-tuned numbers.
 
This chapter's section on the [[The Spousal Support Advisory Guidelines|Spousal Support Advisory Guidelines]] discusses the Advisory Guidelines formulas in a lot more detail.


==Orders and agreements on spousal support==
==Orders and agreements on spousal support==
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