High Income Earners…here’s the tea on Spousal Support
Payment options:
One of the most challenging issues to resolve can be spousal support. Spousal support can be paid in one of the following ways:
monthly ( taxable and deductible) support, subject to variation in the event of significant changes, such as retirement, job change or remarriage or cohabitation
monthly support, subject to review at an agreed-upon time, such as when one of the spouses has completed retraining
monthly support paid for a fixed period of time
a lump sum (neither deductible non-taxable)
a combination of time-limited and lump sum
Factors governing support:
The amount and duration of support depends on many factors such as the income of each spouse, the age of the parties, the age of any children, the length of the marriage, the roles each spouse adopted during the marriage and ongoing parenting responsibilities. A spouse who has forsaken a career to assume home and childcare responsibilities will normally be entitled to a higher amount of support for a longer duration to compensate for his or her economic loss. When the relationship is longer than 20 years, or the parties are older, the duration of support under the law is considered to be without a fixed end date. Support can continue past retirement if the income earner continues to work, at a reduced amount if income goes down.
Resolving support:
A resolution of spousal support arrangements takes into account the above factors, the goals and interests of the parties, and a consideration of the advisory Spousal Support Advisory Guidelines – which provide a recommended range and duration for support. The Spousal Support Advisory Guidelines do not automatically apply to incomes over $350,000. For high income earners, spousal support cases resolved in a courtroom are highly discretionary and determined on a case-by-case basis. The court will rarely provide a fixed and final outcome, nor can a court provide a spousal support release. However, many clients wish to achieve a settlement that they control and determine, that creates as much certainty and finality is possible, and are prepared to explore options to satisfy each spouses’ goals. Therefore, high income cases provide an opportunity for creative, interest-based settlements which can address the particular priorities of the couple.
We begin by understanding you and your spouses’ goals and concerns regarding support arrangements. Do you wish to achieve as much financial separateness as possible? Do you wish certainty and finality in your arrangements? Alternatively, do you wish support arrangements that will change as your income and circumstances change in the future? How will each of you feel secure now and in the future? Are you comfortable assuming risk in return for reward or would you prefer a reduced amount that is certain? Do you agree upon approaches to money or do you wish financial autonomy as you go forward?
Once the goals of each spouse are understood and prioritized, we help create a variety of settlement options and negotiate a customized settlement that will meet your most important objectives and maximize tax opportunities. A neutral Financial Professional may help with budgeting, balancing financial knowledge, and providing future projections to allow both parties to assess choices and feel comfortable with the decisions being made.
