Grandparents’ Custody and Access Claims Enhanced by Amendments to Ontario’s Children’s Law Reform Act Parents’ separations can mean difficult transitions for children. Grandparents very often play a special role in these circumstances, providing their grandchildren with stability and unconditional love when they need it most. These times of transition, however, can also lead to parents and grandparents becoming estranged from one another, such that grandparents’ access to their grandchildren can be abruptly reduced or terminated. In Ontario alone, an estimated 75,000 grandparents have been denied access to their grandchildren (as reported here). Recent amendments to the Children’s Law Reform Act (the Act), in force since January 1 of this year, may help such grandparents. Section 21 of the Act has been amended to make specific reference to grandparents as among the parties who can bring an application for custody or access. Subsection 24(2) , which lists factors used to determine the best interests of the child, has been amended to specifically refer to “a parent or grandparent” as among those whose “love, affection and emotional ties” to the child must be considered. In context, the amendments are as follows: Application for custody or access (1) A parent of a child or any other person, including a grandparent, may apply to a court for an order respecting custody of or access to the child or determining any aspect of the incidents of custody of the child. R.S.O. 1990, c. C.12, s. 21; 2016, c. 23, s. 3; 2016, c. 28, s. 1. Merits of application for custody or access (1) The merits of an application under this Part in respect of custody of or access to a child shall be determined on the basis of the best interests of the child, in accordance with subsections (2), (3) and (4). 2006, c. 1, s. 3 (1). Best interests of the child (2) The court shall consider all the child’s needs and circumstances, including, (a) the love, affection and emotional ties between the child and, (i) each person, including a parent or grandparent, entitled to or claiming custody of or access to the child, (ii) other members of the child’s family who reside with the child, and (iii) persons involved in the child’s care and upbringing; What’s Changed? The amendments consist of only eight added words – fewer characters than your average tweet. While hardly revolutionary, some things certainly have changed. Grandparents were always able to bring applications for custody of, or access to, their grandchildren – they were simply included as “any other person” under section 21. Likewise, considering the “love, affection and emotional ties between the child” and others, including a grandparent, was always required of judges in determining what custody or access arrangement was in the best interests of the child (section 24). Now, however, judges must specifically consider these ties between child and parent, and child and grandparent, rather than simply between the child “and those entitled to or claiming custody or access.” In other words, the grandparent-grandchild relationship is now expressly considered as a component of the best interests of the child. While it is too early to tell whether and how the courts might seize on this amendment, one might expect that all else being equal, the courts would be more likely to make an order granting access to one’s grandchild. After all, to the extent the grandparents play a positive role in a child’s life, it will be difficult to argue that their role should be reduced or halted in the child’s best interests. Parental Autonomy Undermined? Some of you may be thinking, “Wait, what if the parent has a good reason to keep their kid(s) from their grandparent(s)? Aren’t parents better placed than courts to decide what’s best for their kid(s)?” These and other issues were raised during a parliamentary debate. To be clear, the amendments do not require that grandparents be given access or custody, just that their unique relationship with grandchildren be considered in making those determinations. Of course, a parent may have a sound, child-focussed rationale for denying grandparents access to the child. In such a case, it is the best interest of the child (or grandchild) which will determine the outcome. These amendments, appear to be aimed at cases where grandparents’ access is unreasonably withheld. Consider, for example, loving maternal grandparents, previously heavily involved in a child’s life, who are now denied access because the father, who was just awarded sole custody, has decided that it is no longer necessary for them to continue seeing their grandchildren. In this all too common scenario, the decision to deny access is not based on the child’s best interests. Indeed, it may well be harmful to the child. This is where the courts have been instructed by Parliament to intervene. Parental autonomy is important, but the law is clear: the best interests of the child are the courts’ predominant concern. Given these amendments, the grandparents in question may now have a better chance of asking a court to grant them access in the face of the parent’s objections. What happens next? These amendments will be welcomed by the thousands of grandparents who might find in them some hope of reuniting with their grandchildren. Some parents may instinctively object to the courts second-guessing their choices, but, as a society, we’ve long restricted parents’ behaviour where it is seen to harm their children. Thanks to these amendments, a judge must now specifically consider a grandparent’s important role in a child’s life. Are you a grandparent seeking access to, or custody of, your grandchild? The experienced family lawyers at Devry Smith Frank LLP can help. For any family law concern, please do not hesitate to contact us at 416-449-1400 in Toronto, 705-812-2100 in Barrie, or 289-638-3171 in Whitby, or send us an email at info@devrylaw.ca. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawMay 23, 2017June 23, 2020
How to Change Existing Child Support Payments and Visitation Agreements Family lawyer John Schuman was recently asked the following question: I want to change my child support amount and the visitation agreement. How do I go about doing that and what forms do I need? Answer By John Schuman: There are three ways to change child support: 1. If you and the other parent agree on the change – either because your income has changed or the children’s living arrangements have changed, you can do one of the following: Draft up an “amending agreement” to your separation agreement File a motion to change support on consent at the court, if you have a court order It can be dangerous to reduce your child support, even if your ex agrees. Without a formal agreement or court order, the other parent can go back and enforce the last formal agreement or court order, and you could end up owing a lot of money. 2. If the other parent does not object and you do not fall into one of the exclusions, you can use Ontario’s Online Child Support Calculation Service to adjust support. You cannot use the service if: You have shared custody Do not earn most of your income from a salary, or earn more than $150,000.00 per year. If a child is 17.5 years old or older and is still entitled to support. In these situations, child support may be more than a simple calculation. But, if your child support will be a simple calculation, for an $80 fee, the Ministry of Finance will get both parents’ tax returns and do the support adjustment for you. 3. If neither of the above options works for you, then you will have to bring a Motion to Change Support in Family Court. The procedure to change support is usually simpler than an initial divorce of Family Court Application. It may involve 2 appearances or less. Either parent can also use this process to change the support paid under a separation agreement if the other parent does not agree. To learn more about how to do this, listen to this podcast and watch this video. If you are not sure whether you should ask to change child support, listen to this podcast or watch this video on how to calculate your child support obligation. In any case, it is best to speak to a family lawyer about your situation and figure out which option works best for you. You may be able to save on legal fees by using unbundled services. Changing “visitation” or the “parenting schedule” may not be as straightforward. If you cannot agree on changes to visitation or the parenting schedule, then you should consider using a parenting mediator, or one of the other lower-conflict ways of resolving parenting issues. Finding non-confrontational ways to resolve parenting issues, including the parenting schedule, is much better for the kids. If you find that the other parent is being unreasonable or not acting in the children’s best interests, then you may have to go to Family Court. If the children might be harmed, or if you are not seeing them at all, you may be able to get an Emergency Custody Order. Otherwise, you would use the same “Motion to Change” procedure that applies for support. In making any decision about children, judges only do what is in the child’s best interest and have factors to consider in making that determination. Since those factors are what a judge will use, you should take them into consideration when deciding what kind of visitation or parenting plan to seek. There are many different types of parenting arrangements after separation and what works best depends on the child. If you are not sure or have concerns, then it is important to talk about your specific situation with a family law lawyer. In doing so, you will ensure the best result for your children. You can get a lot more information about Ontario Family Law issues, including a further explanation of child support, family court, child custody, and parenting legal issues by downloading this $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac or ordering the paperback version. However, it is always best to seek experienced legal support by meeting with a good family law lawyer. John Schuman is a Certified Specialist in Family Law. He is the partner managing the Family Law Group at Devry Smith Frank LLP, a full-service law firm located near Eglinton and the Don Valley Parkway in Toronto. Learn more about John! Call him at 416-446-5080 or 416-446-5847 or email john.schuman@devrylaw.ca Listen to the Ontario Family Law Podcast! Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For formal legal advice, hire a lawyer (many give a free first consultation). Contact John P. Schuman, C.S., or search the Lawyer Directory. By Fauzan SiddiquiBlog, Family LawApril 24, 2017September 9, 2022
The Dangers of the Online Separation Agreement In the age of the internet, the law is (at varying speeds) adapting to the online realities of the people it applies to. People can now file their taxes, issue small claims court applications and, most recently adjust some child support orders, at the click of a button. With the advent of websites such as lawdepot.ca and other sites which offer templates for legal contracts, people have started turning to the web to construct separation agreements. However, these agreements are no substitute for agreements crafted by experienced lawyers, and people should be aware of the very real dangers of relying on these agreements before using them. In Ontario, separation agreements, marriage contracts and cohabitation agreements (“domestic contracts”) are all subject to the same legal requirements. There are strict rules about the process for concluding an agreement, and the language contained in the agreement, that must be followed if the agreement is to be legally valid enforceable. In no uncertain terms, the strength of a domestic contract is dependant on how it was reached and the language it uses. The ‘Click-Click-Print’ Method Doesn’t Fulfill the Requirements for Negotiating a Domestic Contract In Ontario, domestic contracts must comply with the rules applicable to all contracts. They must be in writing, signed and witnessed by the parties, must not contain illegal terms, and must be made without undue influence or duress. The first few conditions are simple and can be satisfied with a downloadable agreement. While many people believe that short of openly forcing someone to sign an agreement means there is no duress, this is not the case. In terms of domestic contracts, duress can arise from unequal bargaining power (one party is better educated or more affluent than the other) or from situational factors (e.g. if a marriage contract is signed only weeks before a wedding). The best way to ensure that an agreement is not vulnerable to challenge based on duress or undue influence is to have a lawyer represent both parties during the negotiation of the agreement. Judges believe that lawyers provide a ‘buffer’ between the parties and can work to mitigate many types of duress or undue influence. Lawyers will typically negotiate the agreement in writing (such as through emails or letters between them), and this can be important evidence if the agreement is challenged later on. With online agreements, there is no buffer between the parties. There is no written record of negotiations or any evidence that possible sources of undue influence or duress were identified and addressed. Judges will assume that there was little to no negotiation about the agreement. If this is what the judge believes, it is very likely that the agreement will be set aside. The Language is Online Agreements is Basic, Not Comprehensive, and Not Creative No two families are the same and, because of this simple fact, no two domestic contracts are the same. When spouses marry, cohabit or separate, their circumstances are unique, and any domestic contract has to take account of this. Unfortunately, online agreements are ‘boiler-plate’ and the language is drafted in such general terms as to apply to as many people as possible. The limitations of using these agreements is apparent – you are limited to including the terms that the website provides and in the language it uses. There is no room for crafting an agreement that works best for your family. This is why it is always recommended that you have an agreement drafted by an experienced family lawyer, who can advise as to what form of agreement will work best for you and your family. There is no substitute for this. As well, the generality of the language in these agreements can make parties vulnerable if the agreement is challenged. Experienced family lawyers are aware of recent and important cases about domestic contracts, and craft contracts to reflect what these cases say about how contracts should be worded. For instance, the clause for waiving spousal support in the law depot standard online separation agreement is six lines long. Most clauses drafted by lawyers are over a page and include specific language to consider the cases to which I just referred. Without this protection, a lawyer could easily challenge the agreement and have it set aside. The Final Word Domestic contracts are like insurance policies – they are contracts entered into to protect oneself against future liability, be it disability from a car crash or spousal support from a divorce. Just like insurance policies, the value of a domestic contract is not when it is signed but is years down the road when an issue arises. Just as one should want to make sure their insurance policy is valid and enforceable, they should want their domestic contract to be airtight. Unfortunately, online agreements just don’t get there. Many people don’t see the need to hire a lawyer to help them draft an agreement. They think an online separation agreement is sufficient and, let’s be honest, most people don’t enter into these agreements believing they will ever be used; most people don’t buy home insurance because they expect their home will burn down. This can be a costly mistake. Without a properly negotiated and worded contract, people are exposed. They can lose hundreds of thousands of dollars in property and be liable for years of support if agreements are set aside. The up-front cost of hiring a lawyer to do the agreement properly is minimal in comparison. If you are in the process of negotiating a domestic contract, are moving in, getting married or separated, or would like to learn more about domestic contracts, contact a member of our Family Law Team. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiUncategorizedMarch 17, 2017July 5, 2023
Help! Will My Foreign Divorce Be Recognized in Canada? DSF’s family lawyer was recently asked the following question: If someone gets divorced in Tennessee, is the divorce legal in Ontario if they haven’t registered their divorce in Canada? I am planning on getting married again in Ontario. In the 21st century, it is important that the law keeps pace with the realities of an increasingly globalized world, one of which is the increasing flow of people between countries. In the context of family law, the shifting of families, children and individuals across borders has created a host of challenges for family lawyers, judges and legislators alike. One of the areas that continue to be the subject of focus is the recognition of foreign marriages and divorce. While the traditions, ceremonies and requirements for marriage and divorce vary from country to country, when it comes to recognizing them in Canada, there is only one set of rules. Whether you are divorced in New York or New Delhi, the test is the same. If you want to get remarried in Ontario after obtaining a divorce in a foreign jurisdiction, you have to establish that the foreign divorce is recognizable in Canada. Under s.22(1) of the Divorce Act, a foreign divorce will be recognized where one of the spouses was ‘ordinarily resident’ in that country for at least a year immediately before obtaining the divorce. However, that is only the first step to being able to remarry in Ontario. Before the Ontario government will issue you a marriage license, you have to obtain an authorization from the Registrar-General. To do this, you have to provide the following documents to the Office of the Registrar-General, Marriage Office: A marriage license application completed by you and your new spouse; The original divorce order or notarized copy of the divorce order. If the divorce judgment was written in a language other than English or French, you will have to obtain a court-certified translation of the document; A completed Statement of Sole Responsibility, which is a document that attests that you and your new spouse understand that the granting of a new marriage license does not necessarily mean that the foreign divorce would be recognized by an Ontario Court. A legal opinion letter from a lawyer, addressed to you and your new spouse, giving an opinion that the foreign divorce would be recognized as valid in Ontario and giving the reasons for their opinion. Once you have submitted these documents, the Registrar General will provide an authorization allowing you to obtain a marriage license. Only then will you be free to remarry in Ontario. It is important that you speak to a lawyer before embarking on remarriage. There are a number of legal hurdles to get over, and you will need a lawyer to draft an opinion letter in any event. If you are planning to get remarried in Ontario and need some advice, assistance or an opinion letter, contact a member of our Family Law Team. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawMarch 9, 2017June 18, 2020
Is My Acceptance of a Separation Agreement over E-Mail Valid, Even Without My Signature? DSF’s Family Lawyer John Schuman was recently asked the following question: My soon to be ex-wife proposed an agreement between us concerning business, property, child access etc. She sent me a draft via email for negotiation purposes and I agreed for the most part and sent along with the changes I wanted. She then went to her lawyer and had an agreement drawn up, with the changes I wanted to be omitted of course. She now says my acceptance via email is binding, without my signature! Please tell me this is not true. Domestic contracts of any type (marriage contract, cohabitation agreements and separation agreements) are subject to the same rules about the process that must be adhered to, to have a valid contract and the subject matter that the contracts are legally allowed to cover. While the question as to what subject matter a contract can cover is best left to another day, your question raises important points about executing domestic contracts. Do I Need One at All? A domestic contract is, in my view, the most time-efficient, cost-effective and civil means of addressing the issues arising from a breakdown in a relationship. It is the preferred way to bring predictability, certainty and finality into a situation that, most likely, has been lacking those for some time. The only other means to resolve family law issues is by going to court, which can cost tens of thousands of dollars and take years to resolve. If there is even a remote chance that spouses, with the assistance of competent counsel, can resolve matters without going to court, it is always preferable to work towards a domestic contract. Can’t My Spouse and I Just Write Up an Agreement or Use One We Find on a Website Like Law Depot? Spouses are free to write a domestic contract in any form- they can even use a quill and parchment to do so. As long as it says “Separation Agreement” and is signed and witnessed by both parties, it is technically a valid contract. However, the difference between a valid contract and a contract that will be enforced by a court is stark and, in reality, it is the latter one that matters. I have noticed an increase in the number of people approaching me regarding contracts they plan to make or have made on lawdepot.ca or other contract generators. Every one of these contracts has had provisions or lack of provisions that I (and a number of lawyers consulted) would never consider using. For instance, the provision for waiver of spousal support in a law depot contract is six lines long. Every spousal support waiver clause I have seen drafted by competent counsel has been upwards of a page and a half. Lawdepot agreements do not contain any of the standard references to the governing statutes, which is quite important. These are basic facets of drafting an enforceable agreement – It is clear that a practicing Ontario family lawyer did not write the law depot template. If you need an agreement drafted, retain competent counsel to do so. Investing a bit at the outset in a solid agreement may save you tens of thousands down the road if the agreement is ever challenged. Think of it as an insurance policy against a future disaster – you will want to be well protected. So How Is A Valid, Enforceable Agreement Concluded? For a domestic contract to be valid and enforceable, it must first comply with the general law of contract. This means: Both parties must agree as to the subject matter of the contract; The contract must be in writing; The contract must be signed and witnessed; The contract must not contain any illegal bargains or promises The contract must be made without undue influence or duress. In addition to these terms, s.56(4) of the Family Law Act lays out additional grounds on which a judge can set aside a domestic contract, such as if one party did not make full financial disclosure or if a party did not understand the nature or consequences of the agreement. To ensure that there has been proper financial disclosure, you need to speak to a lawyer. Only a lawyer will be able to accurately tell you what assets need to be disclosed and what is the best way to ensure that the financial information you provide is sufficient. The sufficiency of financial disclosure is a common reason why agreements are set aside, years after they are concluded. Most judges feel that for a party to understand the nature and consequences of an agreement, a layperson needs to hire a lawyer. It is not simply enough that they understand the meaning of the words and have a simple appreciation of the consequences. The case law is clear that the person must understand all the legal repercussions of their agreement, in a variety of circumstances. Once represented parties agree to the terms of the agreement, and each has made full disclosure of their debts and liabilities, they are in a position to execute the contract. At this stage, each party will meet with their lawyer who will explain the nature and consequences of the contract through a process known as Independent Legal Advice. Once ILA has been given, a party will sign the agreement and the lawyer will attest that they have explained the nature and consequences of the agreement to the party. Once all interested parties have signed off, there is a valid and enforceable agreement. If you are moving in together, getting married, separated or just have a question about domestic contracts, please contact one of our Family Law Team. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawMarch 8, 2017July 5, 2023
Can I Kick My Abusive Husband Out of the Family Home? One of our Family Lawyers was recently asked the following question: Is it legal to kick my abusive husband out of our house until our divorce is settled? The house is in my name and I am the only one paying the mortgage. Unfortunately, domestic violence and spousal abuse is an all-to-common occurrence and one that often factors into the breakdown of a marriage. While many would think that the answer to this question is a resounding “Yes!”, the answer is actually “No”. Or perhaps more accurately “Not really.” While many of the same laws apply to married and non-married spouses (such as obligations for spousal support, child support and the ability to enter into domestic contracts), the law regarding possession of the family (or ‘matrimonial’) home is very different for common-law and married spouses. While married spouses have an equal right to possess the home (even if only one spouse owns it), common-law spouses do not have any right to possession of the home. A common-law spouse who owns their home can kick their partner out at any time, for any reason (although it’s always recommended you speak with a lawyer before doing so!). Married spouses cannot. Until a divorce is granted or a court orders otherwise, both spouses have a right to live in the matrimonial home. While paying the mortgage may have an effect on the division of property, paying the mortgage or utilities does not affect the rights of spouses to occupy the home. If a spouse takes any steps to kick their spouse out of the home, they can find themselves in deep legal trouble. In some circumstances, a judge may order the offending spouse to leave the home. Judges are very skeptical of those who engage in self-help regarding their home. The case law is clear – you need to ask the court’s permission to kick your spouse out of the home (or the police if it’s an emergency). If a married spouse is abusive or makes you fear for your safety, you can ask the Court to kick your husband out – in legal parlance, you can ask the Court for ‘exclusive possession.’ Under the Family Law Act, judges are directed to consider a number of factors in determining exclusive possession, such as how it would affect any children, the ability of either spouse to find alternate accommodations and any violence committed against the spouse or any children. Orders for exclusive possession are not common, even in cases where violence is alleged. Litigants face an uphill battle when asking judges to order exclusive possession – judges are hesitant to kick people out of their home for a variety of reasons – they may not have elsewhere to go; if they have to rent, the added cost may put them at a disadvantage in pursuing other rights (such as hiring a lawyer to contest custody); and a general belief that people should only be removed from their home in the clearest of circumstances. If you think you need to pursue exclusive possession of your home, or are facing a claim for exclusive possession, it is important to talk to a family lawyer right away. These are not simple claims, and ones that should not be addressed without legal advice. The consequences of these claims can be huge – you can be removed from your house. It is important to get good advice and counsel from the outset. If you have any questions about exclusive possession, contact a Toronto Family Lawyer. By Fauzan SiddiquiBlog, Family LawMarch 1, 2017November 14, 2020
My Boyfriend Has Been Denied Access to His Son. Can He Fight for More Rights to Him? My boyfriend’s ex-girlfriend had his son in late November 2016. He is unable to see his son often and she won’t allow him to have him alone as she doesn’t think he can care for him. There is no paperwork in place yet but he’s worried she will ruin his life if he does not comply with everything she wants and says. Is there any advice for this situation on how he could get more rights to his son or how he should go about this? Answer by John P. Schuman, C.S. Unfortunately, young mothers refusing to allow their child’s father to be involved in their young child’s life is a very common situation. Young mothers often feel that they need to protect the child and only a mother can provide appropriate care for an infant or young child. That approach is not consistent with the current research in social science and child development. Even at a very young age, children benefit from having both parents actively involved in their lives. Most family court judges recognize this. One parent refusing to allow the other parent to have any contact with a young child is a situation where it is possible to get an emergency family court order. It is very important for children to have frequent, meaningful contact with both parents. That means both parents should be involved in feeding, bathing, and other parenting tasks (not just playing), at a minimum, several times a week. Due to young children’s short memories and perception of time, the frequency of contact is very important – more important than long periods of time. Although young age is not necessarily a reason why a child should not be spending overnights with both parents. What is often best for a young child is to allow that child to develop a secure attachment to both parents through having both parents actively and frequently involved in the child’s care. Denying a child contact with one parent, or exposing the child to a lot of conflicts, especially at a young age, can lead to long term problems. In order to keep tensions and conflict down between parents, because conflict between parents is very harmful to the child, and to provide the best hope for a joint custody situation, it is best for parents to try parenting mediation, with a parenting professional, before going to court. The parenting professional can help the parents understand the children’s needs and help them work out a parenting plan that best suits the child’s needs at each stage of development. If the other parent will never agree to mediation, it is still important to propose it because judges get angry at parents who refuse to try to work out things for the kids without a fight. Before a parent goes to court, it is important for that parent to understand that judges base decisions on what is in the child’s best interest. There are several factors that judges consider when deciding what is in a child’s best interest. Before going to court, it is important for a parent to have evidence that what they want is in the child’s best interest. It is also important for separated parents to understand the difference between different types of parenting arrangements and when each will work best for the child. That will help them come up with the best parenting plan for the child or, if they have to go to court, to know what types of orders the judge will be inclined to make. But, if a parent is not seeing a child at all, or is not having meaningful contact with a child, then that parent should see a family lawyer right away to know your options and how best to ensure the child has the best possible relationship with both parents. You can get a lot more information about Ontario Family Law issues, including a further explanation of child custody and parenting legal issues by downloading this $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac or ordering the paperback version. But, to keep out of trouble, it is always best to speak with a good family law lawyer. John Schuman is a Certified Specialist in Family Law. He is the partner managing the Family Law Group at Devry Smith Frank LLP, a full service law firm located near Eglinton and the Don Valley Parkway in Toronto. Learn more about John! Call him at 416-446-5080 or 416-446-5847 or email john.schuman@devrylaw.ca Listen to the Ontario Family Law Podcast! Please note that this is for informational purposes only and does not constitute legal advice to you. Legal advice pertaining to your particular situation can only be provided by a lawyer who has met with you to obtain all pertinent background information necessary to give you a formal legal opinion. For legal advice contact one of our family law lawyers. “This article is intended to inform and entertain. Its content does not constitute legal advice and should not be relied upon by readers as such. If you require legal assistance, please see a lawyer. Each case is unique and a lawyer with good training and sound judgment can provide you with advice tailored to your specific situation and needs.” By Fauzan SiddiquiBlog, Family LawFebruary 28, 2017June 18, 2020
Important Tax Information for Parents with Shared Custody A recent Canadian Tax Court Case has important implications for parents with shared custody and the way child support is paid and collected. The decision in Harder v. The Queen changes the way parents with shared custody must deal with child support. It is likely that most parents with shared custody will have to change their child support arrangements and the Family Responsibility Office will have to change its procedures to prevent running into tax problems. How Shared Custody, Child Support and Taxes Used to Work The Supreme Courts set the rules for child support in shared custody in it decision in Contino v. Leonelli- Contino. At paragraph 49 of that decision, the Supreme Court said that the starting point for calculating child support in shared custody, which persists unless it results in an unfair sharing of the costs of raising the children, is that the parents calculate what each of them would owe under the Child Support Guidelines Tables and set those amounts off against each other. In the majority of shared parenting situations, consistent with the Supreme Court’s decision, parents agreed to use set-off the child support amount such that the parent with the higher income made a child support payment that reflected the set off amount. Part of the basis of this set-off approach is that each parent gets some of the tax benefits associated with caring for the children in a shared custody situation. The amount of child support under the tables takes into account the tax deductions/benefits available to parents for having children. The CRA’s policy on tax credits and benefits for parents in shared custody situations states that when parents share custody of their children, they must rotate the benefits/credits for the children such that each parent gets the tax benefits for the children for six months of the year. That policy was last updated in July 2015. As a result of this policy, parents with shared parenting set off support against each other and each claimed half the tax benefits for the children for whom they had shared custody. The Significant Changes to Child Support to Avoid Tax Problems According to Justice Block in his tax court decision in Harder v. The Queen, the Courts, Family Arbitrators, Family Mediators, Family Lawyers and separated parents did not properly consider the Section 118(5) of the Income Tax Act in making the above-described child support arrangements. That section of the Income Tax Act states that a person who has to pay support for a dependent cannot claim tax deductions or benefits with respect to that dependent. Children are dependents. So, that means that, notwithstanding the Canada Revenue Agency saying that benefits must be rotated in shared custody situations, a parent paying child support may not claim those benefits. Based on the Supreme Court’s decision in Contino about setting off support in shared parenting, and the CRA’s policy that benefits be rotated in shared parenting, it seemed logical to interpret the “set-off support” paid in shared custody situation as parents notionally paying each other, but simplifying the logistics of that by having the payments flow only one way – from the higher-income parent to the lower-income parent. This is how child support orders and agreements were written and how the FRO processed support. However, in Harder v. the Queen, Justice Block stated that interpretation was wrong under tax law. Where parents set-of child support amounts, this resulted in only one parent receiving support and one parent paying support. Under the wording of section 118(5) of the Income Tax Act, the parent paying support could not claim the benefits and credits in relation to the child or children for whom that parent was paying child support. According to the decision in Harder v. the Queen, the correct thing to do is for each shared custody parent to actually pay the full table child support amount to the other parent so that the full table support is flowing both ways. The Family Responsibility Office should collect the full child support amount payable by each parent and pay it to the other parent, essentially having the support between the parents cross paths as doing a “set off” will have negative tax consequences for at least one of the parents. There are some obvious practical problems with the approach set out in Harder v. the Queen. For example, a lower-income parent may not have the funds available to make the support payment until receiving the support from the higher income parent. That would cause one of the support payments to “bounce” and one parent to “overpay” by not getting the support back to which he or she is entitled. It will also dramatically increase the cost for the Family Responsibility Office, and the support collection agencies in other provinces, to enforce child support in shared parenting arrangements. However, as Justice Block points out, this complicated and tedious approach to child support in shared parenting is required by section 118(5) of the Income Tax Act and it is the way things must be done until Parliament changes the law. 32 – How to Change a Support Order Justice Block’s decision in Harder v. the Queen means that most parents with shared custody will have to change what they are doing for child support. It may also mean that they have to change their child support order or separation agreement to reflect how the Income Tax Act requires child support to be paid so that both parents can get the tax benefits related to raising the children. The Ontario Family Law Podcast and this video give some general advice about how to change a support order or agreement. However, the rules for separation agreements require that separated parents and spouses consult with a family lawyer, and they will probably speak to a lawyer who understands both family law and tax law to make sure the agreement or court order does what they expect. Obviously, parents who have just separated and who are planning on sharing custody of their children will want to make sure that their child support order or separation agreement complies with the requirements to maximize the tax relief for them. Again, they should contact an excellent family lawyer to make sure that happens. To learn even more about child support, get a copy of this easy to understand book on the basics of Ontario Family Law as a paperback, or download it immediately as a $9.99 e-book for Kindle, Kobo, or iPad/iPhone/Mac. You may also want to listen to this podcast or watch this video. You can also use the search on the right to find lots more articles about marriage and divorce. Obviously, there can be a lot of money involved in child support cases and only could really help a child with his or her needs (or not). You need to get the help of a lawyer immediately to avoid financial hardship. Contact Certified Specialist in Family Law (and author of the book above), John Schuman, by emailing him or by calling 416-446-5847. We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate). By Fauzan SiddiquiBlog, Family Law, TaxJanuary 30, 2017June 16, 2020
What marriage contracts or cohabitation agreements cannot do A previous blog discussed the many benefits to having a marriage contract or cohabitation agreement. That blog described how couples can have certainty in their lives, if they are married through a marriage contract, or if they are living together through a cohabitation agreement. There are many ways that they can set up their lives to be better than they would be if the couples stayed under the provisions of the Family Law Act, or went to court to resolve the matters between them. However, the law prohibits marriage contracts from doing eight important things: Marriage contracts cannot set parenting terms (address issues regarding custody or access). Judges always have the right to make the custody or access order that they feel is in the “best interest of a child”, regardless of an agreement between the parties. While the Family Law Act specifically allows marriage contracts and cohabitation agreements to address the educational and moral training of children, the Act also says that judges can override the contract if doing so is in “best interest of the child”. A marriage contract or cohabitation agreement cannot restrict either married spouse’s right to be in a possession of a matrimonial home. On separation, married spouses have an equal right to stay in any matrimonial home, and there can be more than one. Marriage contracts cannot require one spouse to leave a matrimonial home. They also cannot authorize one spouse to sell, mortgage or otherwise encumber or dispose of a matrimonial home before the spouses are divorced or they have a separation agreement or court order addressing the issue. Only married spouses can have matrimonial homes, so this restriction does not apply to cohabitation agreements unless the parties marry with the agreement still in effect. (Note: A cohabitation agreement could create rights to a property that are same as matrimonial home rights for parties who are married.) A marriage contract cannot opt parties out of the Child Support Guidelines unless the provisions benefit the child as much or more than the Child Support Guidelines. In any event, the court always has the right to make an order that is in accordance with the Child Support Guidelines if the judge does not like the terms of the agreement. A marriage contract cannot require that the parties go to mediation or arbitration instead of court after separation. The Family Law Act only allows parties to agree to mediation or arbitration after the dispute between them has already arisen. The parties can say that they would like to maintain a good relationship and use a more amicable process than court after they separate, but those terms in the marriage contract are not binding on the parties. Marriage contracts are not recognized under the Income Tax Act with regard to the treatment of support. Periodic spousal support paid during or after the marriage pursuant to the terms of a marriage contract or cohabitation agreement will not be deductible to the payer and taxable in the hands of the recipient. Unless the parties sign a separation agreement, or obtain a court order, confirming those terms. People who are living together cannot agree that one will pay support to the other to shift the tax burdens to the person who pays tax at the lower rate. Marriage contracts cannot waive a spouse’s entitlement to receive disclosure before signing the contract or signing a separation agreement. The Family Law Act gives judges the power to set aside any marriage contract, cohabitation agreement, or separation agreement that was negotiated without the parties receiving full financial disclosure. A marriage contract or a cohabitation agreement also cannot waive a spouse’s right to obtain independent legal advice on either the marriage contract, cohabitation agreement, or a subsequent separation agreement. Again, judges always have the power to set aside an agreement that one or both spouses did not understand. The best evidence that the spouses understood an agreement is for them to have had independent legal advice. A marriage contract or a cohabitation agreement is also not enforceable in relation to circumstances that the parties did not contemplate at the time that they signed it. If the couple wants their marriage contract or cohabitation agreement to be enforceable no matter what circumstances happen in the future, it is important that the agreement state that they have contemplated all possible future happenings and have still decided that, no matter what happens, they wish to be bound by the marriage contract or a cohabitation agreement. (Ensuring that a marriage contract meets this requirement is one of the trickier aspects of marriage contracts and it is another reason why lawyers need to be involved in the creation of a marriage contract.) The above are some of the restrictions on the creation of marriage contracts or cohabitation agreements. As long as couples stay away from the above restrictions, they will likely have an agreement that the court will enforce that will give them some certainty with regard to their affairs after marriage breakdown. By Fauzan SiddiquiBlog, Family LawJune 26, 2016July 7, 2023
Tax Treatment of Family Law Matters Divorce and separation are understandably difficult periods in a person’s life. Often, they are focused on issues such as the parenting of children, dividing matrimonial property or ensuring that there is sufficient financial support for them or their children. Rarely do minds wander into the realm of wondering about the tax issues that can arise in the context of family law litigation. However, these issues are significant, live and should be diligently considered. In this article, I provide but a general overview of some of the tax issues that can frequently arise when spouses or parents separate. Each of these topics, by themselves, could warrant an article. The aim of this short piece is simply to highlight some of the more common tax issues that arise in the context of family law litigation so that parties can remain attuned to how any possible settlement or resolution can affect their tax liabilities. Tax Treatment of Spousal Support Provided that it meets the requirements in the Income Tax Act, spousal support is generally deductible from income for the payor spouse, and is included as income for the recipient spouse for tax purposes. However, there a number of different payments that could constitute ‘spousal support’ and it is important to examine them carefully to determine their tax treatment. What Qualifies As “Spousal Support” In many cases, it will be very clear what amount of money is being paid as spousal support pursuant to a written agreement or court order. However, in some cases, parties fail to apportion ‘support’ amounts as ‘child’ or ‘spousal’ and these designations (or lack thereof) can have some significant implications come tax time. In the case of orders made, or agreements entered into or altered after April 1997, only amounts that can be clearly identified as spousal support or payments for the benefit of the former spouse are considered spousal support. All other amounts are considered child support. In the case of these agreements or orders, only spousal support amounts are taxable/deductible. In case of orders made, or agreed to before May 1997, all payments for support are deductible to the payor and attributable to the recipient. As well, one must always remember that child support takes priority over spousal support. If a court order or agreement specifies that both spousal and child support, then any payments made by the payor will first be considered child support by the CRA. Once the full amount of child support has been paid, then the remainder of payments will be considered spousal support by the CRA. However, these rules do not apply when child support and spousal support are payable under different agreements or court orders. The Basic Rules In order to qualify for the support tax treatment under the Income Tax Act, payments must be: Subject to the recipient’s discretion (the payments must be with ‘no strings attached’) Made on a periodic basis (lump-sum payments do not qualify for these rules) Paid for the support of the recipient; and Paid pursuant to a written agreement or Court order. While most support payments made pursuant to Court order or marital agreement meet these requirements, it is nonetheless important to receive legal advice to ensure that you are not running afoul of the Act or the CRA policy. Lump-sum Payments Lump sum payments are not deductible by the payor or included in the income of the recipient. This isn’t common knowledge and, while it may play into the favour of support recipients, is certainly not the avenue to get preferable tax treatment as a payor. While the difference between ‘periodic’ and ‘lump-sum’ may seem clear, it (like most tax law formulae) is not. The following example should be illustrative. Parties A and B separate and enter into a separation agreement. If the agreement stipulated that the recipient would receive $12,000.00 in spousal support, payable in monthly installments of $1,000.00, this would most likely constitute a lump sum payment, and would not attract the special tax treatment. If the agreement stipulated that the recipient receive base spousal support in the amount of $1,000.00 per month, this would be a periodic payment. While the foregoing example is overly simplistic, it highlights the need for careful drafting and characterization of payments to ensure that parties reap the benefits of the special tax treatment. In order to avoid the CRA deeming periodic payments as lump-sum payments, it is important to consult a family law lawyer to ensure that the amounts are properly characterized. Third Party Payments In most cases, spousal support will be paid directly to the recipient. However, there are situations where payments are made by the payor to a third party, which are in the nature of spousal support. In order for these payments to qualify, they must meet certain requirements under the Income Tax Act. To qualify, the payments must be: Made pursuant to a written agreement or Court order; The agreement or order must specifically refer to ss.56.1(2) and 60.1(2) of the Income Tax Act or contain sufficiently clear language confirming the parties’ understanding that the payments will be considered spousal support and will be taxable/deductible; Paid for the support of the recipient. If the payments are for specific living expenses, such as medical, rent or mortgage expenses, they may not be included in determining the amount of deduction available. Made in the current or immediately preceding taxation year. While the above list may make third-party payments seem straightforward, they are, in reality, complicated. And because of their susceptibility in being employed in tax evasion schemes, these arrangements are subject to special scrutiny by the CRA. If you are planning on incorporating a third-party payment arrangement into your separation, it is advisable that you consult a lawyer prior to entering into the agreement or order to avoid any issues come tax time. Tax Treatment of Child Support Like spousal support, there is a divergence in the tax treatment of child support payments depending on the date on which the order or agreement was made. If the order or agreement arose after April 1997, then the child support is not deductible by the payor and is not included in the income of the recipient. For agreements or orders made before May 1997, child support is deductible by the payor and included in the income of the recipient, unless one of the following exemptions apply: Changes to the Quantum of Support – If the amount of support payable is changed after April 1997, then the child support will not be deductible/included in income. A New Court Order of Agreement – If 1) a new order or agreement is made after April 1997; 2) the previous order or agreement remains in effect; and 3) the effect of the new order or agreement is to change the overall amount of child support payable, the post-April 1997 tax rules apply to both orders or agreements. Express Terms – An order or written agreement may specify that child support payments made after a certain date (not earlier than May 1, 1997) will no longer be taxable and deductible Election – If there is an order or agreement prior to May 1997 and a person wishes, they can make an election with the CRA that the post-April 1997 rules will apply to the payments. Tax Treatment of Family Law Legal Fees In certain circumstances, legal fees incurred in the context of family law litigation are tax-deductible. Under Lines 221and 232 of your tax return, the following legal fee expenses can be deducted by a support recipient from their income: Legal fees incurred to establish entitlement to spousal or child support; Legal fees incurred to increase the amount of spousal or child support payable; Legal fees incurred to claim retroactive spousal or child support or to enforce arrears of support; Legal fees incurred to try and make child support non-taxable. However, a recipient cannot claim a deduction for the following legal fees: Legal fees incurred to get a divorce or separation; Legal fees incurred to obtain an equalization of family property, or any other division of property; Legal fees incurred in relation to custody and access; For a payor spouse, there is no income deduction for legal fees associated with contesting or negotiating the amount of support payable. How to Take Advantage of the Tax Benefits The best way to ensure that any support arrangements are taxed in a preferential way is to speak with a lawyer, preferably one well-versed in both family law and tax law. They will review any marriage, cohabitation or separation agreement to ensure that it is structured to maximize any tax benefits. They can help you file your income tax return to make sure it is in compliance with the Income Tax Act, its regulations and CRA policy. If you are engaged in family litigation, an experienced family lawyer can help you put your best foot forward in court to increase the likelihood that any orders will be in a form that allows you to minimize the tax payable on any support you receive. A good lawyer will take the necessary steps to ensure that the order or agreement is registered with the CRA, and is in compliance with their rules. By Fauzan SiddiquiBlog, Family LawMarch 16, 2016November 25, 2020