The Strategies: (8) Avoid Ownership And Joint Accounts; (9) Place Property In Trust

The law in Ontario presumes that property held by spouses jointly, including bank accounts, is to be shared equally, regardless of the source of the property.

So, for example, if a spouse who receives a gift of money during the course of the marriage deposits it into a joint bank account, he or she will only be entitled to exclude one-half of the account for his or her net family property unless the presumption can be rebutted by evidence of a mutual and contrary intention. This is so, even if the jointly held property can be traced back to the otherwise excludable property.

The Strategies: (9) Place Property In Trust

Property that is placed in trust for the benefit of your children or other loved ones does not form part of a spouse’s net family property. In a properly constituted trust, the person who provides property to the trust, the settlor, no longer has control over that property. A settlor is a person who settles property on express trust for the benefit of beneficiaries, meaning that the purpose for the trust is very well defined and specific. In some legal systems, a settlor is also referred to as a trustor, or occasionally, a grantor or donor. The trustee is the person who controls the trust property.

However, if the settlor retains or exercises control over the trust or the property itself, the court could disregard the trust and include the value of the property in the settlor’s net family property calculations. Furthermore, trusts created by one spouse after the marriage begins to experience difficulties or just prior to separation could be viewed as an intentional depletion of assets. In such cases, the value of the property could also be clawed back into the settlor’s net family property.

In addition to domestic trusts, consideration should be given to non-resident trusts, also known as offshore trusts. While the federal government has eroded the tax benefits of offshore trusts in recent years, they can afford assets a greater degree of protection from creditors than can domestic trusts, depending on the country in which the trust is resident. However, these are complex vehicles requiring competent professional advice with respect to both the laws of Canada and the offshore jurisdiction.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Strategies: (6) Maximize The Exclusion For Gifts And Inheritance; (7)) Ensure Trace-ability Of Gifts And Inheritances

The Act sets out certain categories of property, the value of which are not included in a spouse’s net family property. Specifically, gifts, inheritances, damages for personal injury and proceeds of life insurance policies received by a spouse during the course of the marriage are excluded from his or her net family property.

Importantly, the income derived from gifts and inheritances can also be excluded providing that the donor or the deceased has expressly stated that the income is to be excluded from the recipient’s net family property. Most substantial gifts and almost all inheritances are received from family members. They should be made aware that if they want you to enjoy the full benefit of the gift or inheritance, provision should be made in writing that any income derived from a gift or inheritance is to remain separate and not from part of your net family property. Failure to do so will mean that the income will not be excluded.

Gifts of property to your children or other loved ones can be an effective means of reducing your net family property. This is a sensible option particularly if you intend to make your children the beneficiaries of your estate in any event. Gifts can be made outright or through transactions such as the estate freeze. Tax and accounting advice is recommended before any decision about the structure of an intended gift is made.

*Beware: There is a potential catch to using gifts to reduce your net family property. If a court were to find that gifts were made to intentionally deplete your net family property, the value could be clawed back and become subject to equalization. Again, timing is everything.

The Strategies: (7) Ensure Trace-ability Of Gifts And Inheritances

The Act also excludes from net family property the value of property into which gifts, inheritances, damages for personal injury and proceeds of life insurance policies received during the marriage can be traced. However, these exclusions can be lost in a number of ways. As such, you will not be able to claim an exclusion if a gift or inheritance was used to purchase the matrimonial home or converted to that use. An exclusion may also be lost if the value of it cannot be accurately followed into property into which it is invested. The trail of investment must therefore be adequately documented in order to preserve the exclusion.

In addition, an exclusion could be lost completely if the property is used for communal family purposes. Case law exists to the effect that where a gift or other potentially excludable property has been invested in property for the common purpose of the family, such as a family car, the value of the gift cannot be excluded.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Strategies: (4) Increase The Equity In Your Property Prior To Marriage, Leverage Your Property Prior To Marriage, And Increase Debt During Marriage; (5) Sell Your Existing Matrimonial Home

The Act specifically allows spouses to deduct from their net family property the value of property, other than the matrimonial home, that a spouse owns on the date of marriage after deducting any debts or liabilities existing on the date of marriage. The greater the equity you have in any given asset, the greater will be the deduction you can make at the end of the day.

The converse is true at the end of the marriage. Leveraging your assets during the course of the marriage will reduce their net value at the date of separation and, consequently, the value of your net family property. Increasing your debt over the course of the marriage will have a similar effect.

Either way, this means that your net family property will be reduced and that means you will have less to equalize when you separate. The smaller the cheque you have to write, the better. Who knows? Maybe your net family property will be low enough for you to be the recipient of the cheque. Would that not be nice?

But timing is everything. A court can essentially ignore a transaction that has the effect of reducing the value of a property if it is shown that the transaction was carried out to intentionally deplete the assets available for equalization.

The Strategies: (5) Sell Your Existing Matrimonial Home

As noted, the Act does not allow a deduction for the matrimonial home, which is given a distinct and special status under the Act. However, in order for a property to qualify as a matrimonial home, it must be ordinarily occupied as a family residence at the time of separation. If it is not, then it is not a matrimonial home. Thus, the value of a property brought into the marriage by one spouse is deductible if it is sold prior to separation, even if it was occupied as the family home. Furthermore, the deduction can be made even if the proceeds of sale are used to purchase another residence that is the matrimonial home at the time of separation. It is the value of the matrimonial home occupied as such at the time of separation that is not deductible.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Strategies: (3) Get It In Writing

Even if there is no immediate intention to get married, you should seriously consider entering a cohabitation agreement spelling out your respective rights and obligations in relation to property that is brought into or acquired during the period of cohabitation. A simple rule of thumb no matter where you are in the relationship is to conduct yourself as if you and your spouse are separate as to property. That is, whatever you acquired before or acquire during the period of cohabitation should be maintained in your name alone to the greatest extent possible, and your intention to exclude such property from your net family property, in the event you marry, should be expressed in the agreement.

Domestic contracts are equally useful for those who intend to get married or are already married. Like cohabitation agreements, marriage contracts, which include prenuptial agreements, can set out the spouses’ respective rights and obligations regarding the ownership and division of property, child and spousal support and other matters in the event that the marriage fails. They are an effective means of protecting assets from being subject to property disputes at the end of a marriage.

Care must be taken when entering such an agreement to ensure that it will be enforceable. Each spouse to the other must disclose all relevant financial matters. In addition, each spouse must have independent legal advice as to the advisability of entering into any proposed agreement. Finally, there must be no coercion or undue influence exerted by one spouse over the other.

Undue influence is defined as a judicially created defence to transactions such as executing a will to leave assets in a particular way, making a direct gift while alive, or signing a contract, that have been imposed upon weak and vulnerable persons that allows the transactions to be set aside. Virtually any act of persuasion that overcomes the free will and judgment of another, including exhortations, importunings, insinuations, flattery, trickery, and deception, may amount to undue influence. Undue influence differs from duress, which consists of the intentional use of force, or threat of force, to coerce another into a grossly unfair transaction. Blackmail, Extortion, bad faith threats of criminal prosecution, and oppressive Abuse of Process are classic examples of duress.

Four elements must be shown to establish undue influence. First, it must be demonstrated that the victim was susceptible to overreaching. Such conditions as mental, psychological, or physical disability or dependency may be used to show susceptibility. Second, there must be an opportunity for exercising undue influence. Typically, this opportunity arises through a confidential relationship. Courts have found opportunity for undue influence in confidential relationships between Husband and Wife, fiancé and fiancée, Parent and Child, trustee and beneficiary, administrator and legatee, Guardian and Ward, attorney and client, doctor and patient, and pastor and parishioner, just to name a few. Third, there must be evidence that the defendant was inclined to exercise undue influence over the victim. Defendants who aggressively initiate a transaction, insulate a relationship from outside supervision, or discourage a weaker party from seeking independent advice may be attempting to exercise undue influence. Fourth, the record must reveal an unnatural or suspicious transaction. Courts are wary, for example, of testators who make abrupt changes in their last will and testament after being diagnosed with a terminal illness or being declared incompetent, especially if the changes are made at the behest of a beneficiary who stands to benefit from the new or revised testamentary disposition.

Nevertheless, courts will examine the facts closely before finding that a transaction has been tainted by undue influence. Mere suspicion, surmise, or conjecture of overreaching is insufficient. The law permits loved ones and confidants to advise and comfort those in need of their support without fear of litigation. Courts are also aware that the doctrine of undue influence can be used as a sword by the vindictive and avaricious that seek to invalidate a perfectly legal transaction for personal gain. When undue influence is found to have altered a transaction, however, courts will make every effort to return the parties to the same position they would have occupied had the overreaching not occurred.

*Beware: The courts can set aside a domestic contract on any of these grounds. And the fact that the other spouse has received independent legal advice is no guarantee that a domestic contract will be upheld if the conduct of the more economically powerful spouse leading up to the signing of the agreement is sufficiently lacking in good faith as to warrant the intervention of the court.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Strategies: (2) Know What You Own

Given that it is the value of the spouses’ net family properties that is equalized, it is vitally important to draw up a detailed inventory of all forms of property in your portfolio, as well as your debts and liabilities, and to ascribe a value to each as of the date of marriage. Any court ordered equalization of marital property would be based on a Financial Statement form filed with the court setting out all of the assets and liabilities of each spouse at the date of marriage and at separation. Claims regarding the value of particular properties, or allowable deductions and exclusions, will have to be substantiated with documentary evidence. Cataloguing your assets and liabilities at the time of marriage will help establish those claims with evidence that might otherwise be lost with the passage of time.

Financial Statements play a crucial role in the division of matrimonial property. The services of highly skilled financial professionals with a firm understanding of the law of family property are indispensable. In certain cases, particularly where the value of a significant asset is in dispute, the evidence of an expert valuator will also be required. Retaining respected professionals has to be a priority if one’s views regarding the value of assets are to have any chance of prevailing in what can often become a war of expert opinions.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Strategies: (1) Do Not Get Married

Unlike matrimonial property, the assets owned by common law spouses remain separate and apart, and are not subject to equalization. Thus, the equalization of family property regime under Ontario legislation can be avoided if you and your mate choose to live as common-law spouses.

Beware, however, that the assets of one common-law spouse are not necessarily immune to claims made by the other. A common-law spouse may be able to establish a trust interest in property owned by his or her partner. Such a trust might be found to exist on a constructive basis if the non-owning common-­law spouse can establish that he or she contributed, financially or otherwise, to the other’s property in a manner that would make it unjust for the owning spouse to retain the benefit of the other’s contribution.

While the courts prefer to order a payment of money to remedy such an unjust enrichment, whether it is based on contributions made to particular property or to the “family enterprise” in general, property can be impressed with a constructive trust if, in the court’s view, an award of money is insufficient. So, if you want to keep your property, including your business, free from any claims by your spouse, do not accept money or work from your spouse without a loan agreement or proper recompense for services rendered.

Also beware that an express or resulting trust interest in favour of a non-­owning common law spouse might be found to have been created where there is an express intention, or evidence of a common intention, that the non-owning or non-titled spouse is to have a beneficial interest in the property legally held by the other. So, be very careful what you say and do. If you want your property and business to remain exclusively yours, do not say or do anything that could be construed as an intention to give your spouse an interest in your property or business.

*Note: An important distinction must be drawn between the equalization of matrimonial property and trust interests. The latter is an ownership claim that can be advanced by anyone against the property of another. The former is a right available only to married spouses entitling the non-owning spouse to be paid a portion of the value of the property despite the fact that the entitled spouse is a non-owner. It should be noted that the constructive, resulting and express trusts are not confined to common law relationships.

Thus, the courts in cases where the Act itself does not provide an adequate remedy for property issues between married spouses might be taken full advantage of by your spouse. Either way, unless you employ one or more of the strategies outlined in this Report, you are at risk. If you are married, just because you are the sole shareholder of your business does not mean that you will not have to pay your spouse a portion of its value when you separate or divorce. Even if you are not married, your spouse may try to claim an ownership interest when you separate, especially if he or she worked in the business. In short, be very careful what you wish for.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

How To Protect What Is Rightfully Yours: Fifteen (15) Killer Divorce Strategies – Total Wealth Protection And The Law

Robert Berman here. Thirty years as a Trial Divorce Lawyer and successful business owner has taught me more than a few tricks of the trade. I know how difficult it is to build a profitable business and how easy it can be for “meat grinding” Divorce Court Judges to demolish them by transferring half of their value to an undeserving ex-spouse. I hope to get you thinking about keeping your business out of Divorce Court when you begin to contemplate starting a life with your loved one or are faced with the unfortunate burden of breaking that bond. But at least it does not really need to be a burden.

These articles briefly set out some of the top wealth protection strategies that can be employed to protect the money and assets you have earned from a former spouse determined to exploit the “family” property laws of Ontario. You will no doubt be shocked to learn just what these laws consider to be “family” property subject to sharing upon divorce or separation. Unless you strongly consider the strategies outlined in these articles, be ready to pull out your cheque book and forfeit half the value of everything you own, including the business you built with your own blood, sweat and tears. The Canadian Revenue Agency may well become a regular pigment on your back, and to add salt to the wound, your ex-spouse could remain the major beneficiary of the growth of your business. So learn how to keep what is rightfully yours.

The Ontario Family Law Act (the “Act”) sets out specific and sometimes complicated rules regarding the treatment of marital property. Essentially, the Act requires married spouses to share equally in any increase or decrease in the value of their property over the course of the marriage. Property is defined in the Act very broadly and encompasses “any interest, present or future, vested or contingent, in real or personal property”. Anything that can be considered property will be considered property for the purposes of the Act.

The process requires each spouse to determine the net value of all of the property he or she owns at the end of the marriage and to subtract from that amount the net value of the property owned as of the date of marriage, taking into account certain exclusions permitted by the Act. The value arrived at is referred to in the legislation as a spouse’s net family property. The spouse with the lesser net family property is entitled to receive, typically by way of cash payment, one-half the difference between the two net family properties. That is, the net family properties are equalized.

Having said that, a spouse can minimize the amount of any equalization payment he or she might be required to make through careful structuring of his or her portfolio in a manner that takes full advantage of the deductions and exclusions allowed by the legislation. Being proactive about protecting your wealth is essential. Waiting until you and your spouse have agreed to separate or divorce before starting to implement wealth preservation strategies is not an option.

As a prudent businessperson, you must plan to minimize taxes. Like all other entrepreneurs, your goal is to minimize expenses and maximize profit. Yet, when beginning or ending a relationship, business people seldom plan to protect their assets from the consequences of marriage or separation. Please read these articles and implement the strategies that follow to apply the planning you do to grow and protect your business.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

Divorce in Ontario

In the province of Ontario, divorce rules can be complicated, depending on the length of the marriage, whether there are any marital children and the ability of the spouses to come to an agreement regarding property division and support rights. The following is a summary of the rules regarding obtaining a divorce.

One of the grounds for a divorce in the province of Ontario is the breakdown of marriage based upon the separation of spouses for more than one year. During this time, the spouses must live separate and apart, meaning that they may not cohabit for more than ninety days during this period. However, even if the spouses live apart, they are not legally divorced until they enter into a separation agreement or have a divorce judgment entered by a court of competent jurisdiction. The rules surrounding jurisdiction, as well as the specific grounds for divorce, are specified by the Divorce Act.

An uncontested divorce happens when one spouse files an application for divorce and the other spouse does not file an answer. In failing to file an answer, the spouse is essentially stating that he or she does not contest the divorce. However, for an uncontested divorce to be valid, the following must also be true:

• The grounds of divorce must be the breakdown of the marriage based upon one year of separation
• The spouse receiving the application for divorce was properly served

The parties must have resolved all corollary issues, such as child support, child custody, child access, child visitation, and spousal support, through a separate agreement or court order. Once an application for uncontested divorce has been received and the one year separation period has passed, the judge will grant the divorce judgment.

Contested divorces are more common, especially with couples who have been married for a longer period of time, have children, or have a large deal of property to divide. Contested divorces may be settled outside of court, or they may be carried out by following formal divorce procedures.

If spouses wish to negotiate a divorce settlement outside the courtroom, they may enter into a separation agreement. During negotiation, they discuss the legal rights and obligations that they wish to enter into upon their separation. Each spouse must provide financial information to the other spouse. By sharing this information, they will be able to make a fully informed decision about how to divide the marital assets. Once an agreement is reached, the parties will express their agreement in a written separation agreement. This agreement will then be presented to the court and incorporated into a final divorce decree.

If the parties are unwilling, or unable, to come to an agreement outside the courtroom, they may obtain a divorce through the formal court process. First, the spouse petitioning for divorce must file an application for divorce and financial statement with the court. The application for divorce states the grounds for divorce and often includes corollary issues, such as requests for child custody, child support, spousal support, or the appropriate division of marital assets. This application must be “issued” by appropriately serving your spouse with the divorce papers. Once the spouse has been presented with the divorce application and financial statement, these documents must be filed with an affidavit for service with the court.

The spouse receiving the divorce application must respond by serving the petitioning spouse with an answer and financial statement. They must then file these documents with the court within thirty days of receiving the divorce application. The answer must include any points of disagreement between the two spouses. Once the answer is received by the petitioning spouse, that spouse must file a reply within ten days if he or she disagrees with any statements contained in the answer.

Once all the proper papers have been served and filed with the court, a case conference is held where the spouses will discuss preliminary issues, such as disclosure, scheduling, and appointment of a Children’s Lawyer, if there are children involved in the divorce.

Following this meeting, the parties begin the discovery process, through which financial documents are exchanged and the parties are given an opportunity to question the other party about any outstanding issues. If, during the discovery process, any issues must be resolved in a timely fashion, either party may bring a motion to resolve the issue. Examples of such issues include the failure of a spouse to pay interim child support that is necessary for the wellbeing of a child, or the failure of one of the parties to comply with all procedural requirements.

After the discovery process has been completed, the parties will meet for a settlement conference. During this conference, the parties will attempt to resolve any outstanding issues so that the case need not proceed to trial. This conference occurs in the presence of a judge, who will ask questions of the parties and, if necessary, provide advice as to how he or she would resolve the case. The parties need not wait until the settlement conference to reach a settlement agreement and, even if no settlement is entered into during the settlement conference, they may settle at any time prior to trial.

If the spouses are absolutely unable to reach a settlement agreement, the case will proceed to trial. During trial, witnesses will be examined by each of the parties, exhibits will be presented to the judge, and the parties will each argue their case. Following the trial, the judge will make an ultimate decision and enter a final judgment.

Divorce in Canada is not based upon the place of marriage, but rather based upon residency. Even if two spouses were not married in Canada, they can still be granted a divorce if they are residents of Canada for at least twelve months preceding the divorce application.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

The Divorce Act: An Overview

The 1985 Divorce Act is a federal mandate that changes the rules by which a court assumes jurisdiction for divorce petitions. This Act not only establishes jurisdiction, it also sets a new standard for grounds of divorce, creates the option to file a joint petition for divorce, and establishes set procedures for when a divorce decree becomes effective.

A court in the province of Ontario has jurisdiction over divorce proceedings if one or both spouses have resided in Ontario for at least twelve months preceding the filing of the divorce petition. Following the divorce, requests for variation of the divorce decree may be made to any court in the province in which either spouse resides, even if it is not the same court where the original divorce was granted.

Under the Divorce Act, the only ground for divorce is marriage breakdown. Marriage breakdown can be demonstrated in cases where:

• The spouses lived separately for at least one year prior to the divorce judgment
• The spouse against whom the divorce is sought (i) committed adultery or (ii) treated the other spouse with physical or mental cruelty of a kind to make it intolerable to live together

Where the grounds for divorce is marriage breakdown based on one year of separation, the time of separation begins on the date the spouses began living apart. During the time of separation, either spouse may make an application for divorce at any time, even before the spouses have been living apart for one year, but the divorce is not granted until one year has passed. During the one year period of separation, if the spouses resume cohabitation for a period of more than ninety days, the calculation of the one-year period will begin anew, following the last date of separation.

Under Section 11 of the Divorce Act, certain activities will bar the grant of a divorce. Such activities include:

• Collusion between the spouses
• The parties fail to make support arrangements for the marital children
• A divorce has been sought on cruelty grounds but there has been no condonation or connivance

The Divorce Act introduced the option to file for divorce jointly. Using a joint petition, the spouses can claim divorce based upon the breakdown of the marriage when the spouses have been living apart for at least one year. Such petitions may include claims for spousal support, child support, child custody and child visitation. If the spouses wish to simplify the process even further, one spouse may file for divorce and the other spouse can agree not to respond to the divorce petition, thereby creating an uncontested divorce and eliminating the need for the spouses to appear in court.

Spouses who reconcile prior to filing a divorce petition, or who reconcile prior to fulfilling the one year requirement for living separate, are still married and must do nothing to maintain their marital status. If the spouses attempt to reconcile and begin to cohabit during the one year requirement for living separate, the waiting period for divorce starts over if the spouses cohabit for more than ninety days. The purpose of this ninety-day reconciliation period is to permit the spouses to repair the marriage without penalizing them if the reconciliation is unsuccessful.

Negotiation is the process through which the spouses negotiate a favorable settlement agreement. During the negotiation process, the two parties essentially compromise, with each side offering certain allowances in exchange for other provisions that they wish to include in the property settlement agreement.

Mediation is another alternative to litigation that allows spouses to quickly resolve their differences and come to a settlement agreement regarding their property, children, and support issues. During mediation, a professional, non-partisan mediator facilitates conversations between the spouses to assist them in coming to a reasonable agreement.

Once a settlement has been reached, whether through mediation or through negotiation, the parties will express their agreement in a written separation agreement. This agreement will then be presented to the court and incorporated into a divorce judgment that makes the agreement more easily enforceable.

Under the Divorce Act, a divorce judgment becomes effective thirty-one days after it is granted. In certain circumstances, the court may shorten the thirty-one day requirement if the parties agree to the shortened period and agree not to appeal the judgment. However, a certificate of divorce certifying that the judgment has taken place is not made available under thirty-one days after the judgment was entered. Such certificates are required to remarry.

The Divorce Act also covers corollary issues such as spousal support, child custody, child access and child support. Corollary relief is any relief sought that is separate from the actual divorce. Such relief may be sought by the petitioning spouse in the petition for divorce, or by the responding spouse in a counter-petition. The divorce itself may be severed from the corollary relief sought, so that a summary judgment for the divorce may be obtained even though the parties are unable to agree on issues such as child custody and support. Additionally, while the divorce is being finalized, either spouse may petition for interim corollary relief, such as interim orders that grant custody of the children to one parent while the corollary issues are being resolved.

For more information on divorce and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer

Child Support Continued…

Child support consists of monthly payments made by a non-custodial parent to the custodial parent for the support, maintenance, and care of a child. Both parents have the obligation to provide financial support for their children and, once a child’s parents separate, the non-custodial parent has a duty to pay child support to the custodial parent.

The specific amount of child support to be paid is set by the Child Support Guidelines and depends on the gross income of each parent, the number of children involved, and the province in which the parents live.

Often, a child may have special or extraordinary expenses, such as childcare, medical or educational expenses, that must be paid by the child’s parents in proportion to their respective incomes. Accordingly, the non-custodial parent may be required to pay more than the amount set by the Child Support Guidelines to cover these additional expenses. The non-custodial parent is required to pay the determined child support regardless of any decisions made concerning child visitation.

Child support arrangements are monitored and enforced by the Family Responsibility Office (FRO), a governmental agency responsible for ensuring that families are given the financial support that they are entitled to receive. The FRO receives all support orders issued by Ontario courts. Once the FRO receives a divorce decree and/or support order, it contacts both the payor parent and the parent receiving the child support payments and provides them with a case number and personal identification number to use in communications regarding their support order.

Typically, support payments are made through an employer who will deduct the amount of payments from each paycheck and send the money to the FRO. The FRO then sends these payments to the custodial parent receiving child support. If there is no employer, the payor parent can send payments directly to the FRO, which will then send the payment to the recipient parent. Payments can be made to the FRO using the following methods:

• Telebanking
• Online banking
• Pre-authorized payments from a bank account
• Checks or money orders

Once the FRO receives a payment, it will be sent to the recipient parent within 48 hours. Payments can be made to recipients either by direct deposit to a bank account or by mailing a check to the parent’s address.

If the payor parent falls behind in his or her child support payments, the FRO will first attempt to come to an agreement with the parent where past due payments are paid in installments. Such an agreement is referred to as a Voluntary Arrears Payment Schedule (VAPS). Regardless of whether a VAPS has been agreed to, the FRO can collect past due payments from tax refunds due to the parent and can issue a writ of seizure and sale against the parent’s property to pay off the arrears. If the parent fails to pay off any arrears, the FRO may also take the following actions:

• Reporting the incident to the credit bureau
• Garnishing the payor parent’s bank accounts
• Suspending the parent’s driver’s license
• Suspending passports and other federal licenses, such as a pilot’s license
• Taking the payor to court to collect on the past due payments

Typically, child support cannot be an amount less than that required by the Child Support Guidelines . However, in certain instances, the courts may permit a reduction in the amount of child support paid. Such circumstances include:

• Undue hardship
• When the child has reached the age of 18
• Where there is shared custody

Undue hardship occurs when there are circumstances that cause hardship for one of the parents and that parent has a lower standard of living than the other parent. Examples of circumstances that may cause undue hardship include: unusually high costs associated with access to a child or a legal duty to support another person. When undue hardship is demonstrated by the payor parent, the court may reduce the amount of child support to an amount that is reasonable based upon the discretion of the court.

If the child support agreement, or court order, was entered into prior to May 1, 1997, the payor parent can deduct child support payments on his or her income taxes and the parent receiving the child support must claim the payments as income on his or her income taxes. If the child support agreement, or court order, was entered into after May 1, 1997, the child support payments are not deductible for the payor parent and the recipient parent is not required to pay taxes on the payments.

Under the Child Support Guidelines, there is no set termination date for child support. Normally, child support is paid as long as the children are enrolled in school on a full-time basis. This includes primary school, college and post-secondary education. Once a child reaches the age of 18, however, the child’s income may be examined to determine whether the amount of child support should be altered.

For more information on child support, and other family law matters, please visit MyOntarioDivorce.com or BermanBarristers.com.

Sincerely,

Robert Berman B.C.L, LL.B
Founder & Family Law Lawyer