When you have been married to or living with someone for a considerable period of time, it is likely that most aspects of your lives, both personal and financial, will have become intertwined. As you contemplate ending a relationship, it is natural to want to begin separating yourself from your partner. Many people also find that they want to make other life changes at this time, for example to their career, lifestyle, or parenting arrangements.
It is important to keep in mind that if you and your spouse are in court litigating claims for support, custody, or access, the court will give considerable weight to the arrangements you and your spouse had before separation, and will tend to evaluate your plans and actions against that former status quo.
There are some changes that, if you hope to make them in the near future, you should begin immediately, and others that you should not undertake.
Career & Income
If you are considering a change of career, you should ideally do this before separation, particularly if you would be changing from a higher-paying job to a lower-paying one. If you are the main income earner for your family and you suddenly switch to a lower-paying job after your separation, the court may perceive this as an attempt to escape support obligations and may still require you to pay child or spousal support amounts in accordance with your former income. This is called “imputing” income.
If your job is such that your income fluctuates from year to year, for example, if you own your own business and have had a particularly good year financially, you will want to make the court aware that the current year represents an unusually high income amount. When determining income for child support purposes, the court can, under the Child Support Guidelines, s. 17(1), take the average income of the last three years, if it determines that using the current year’s income would be unfair.
On the other hand, if you have had a bad year this year, your lifestyle should reflect that. Make sure that your spouse knows about your financial difficulties and that you cut expenses where possible and appropriate. When considering spousal support awards, courts look to the couple’s standard of living before separation, and measure a spouse’s future needs in light of that standard. You do not want to have a lifestyle before separation that is above your current means.
If your spouse has been a stay-at-home parent in the past, you may want to encourage them to return to work now, so that they already have an income when you separate.
If you own your own business, do not take discretionary expenses from your business, as this will only increase your income.
If you wish to sell your business, there is no reason you cannot do so before separation if you wish to. But if you are merely considering selling the business, it is best not to discuss with your partner how much you think the business is worth, or even if you have received an offer for it. You do not want your spouse arguing that your business is worth a certain amount of money if in fact you do not want to, or cannot, sell it for that amount. A business is worth what someone is willing to pay for it, when you want to sell it.
However, you may be required to value your business, and if so the valuator will ask you if there have been any offers to purchase your business. If there have been any, you must disclose this information.
If you are hoping to be a more involved parent post separation, you should make an effort to increase your involvement in your children’s lives immediately. Typically, it is fathers who have less time at home and who therefore are able to participate less in the day-to-day activities with children.
When deciding the issues of custody and access, courts look to the level of involvement each parent has had with the children before separation, and particularly things like who picks up and drops off the children at school or daycare, who accompanies them to lessons or activities, who watches their sporting events, and who puts them to bed and ensures their basic needs are met on a daily basis.
Start spending more evening and weekend time with your children now if you hope to do so post separation. This is particularly relevant if you are planning to seek shared custody of the children but think that you may not be perceived as having an equal level of involvement in your children’s lives currently.
Wills & Powers of Attorney (for Personal Care and/or Property)
You may want to make a new will and change your Power of Attorney for Personal Care and Power of Attorney for Property. If you had a will before you were married, marriage will generally have revoked that will. If you and your spouse made wills while married, you have likely designated each other as your beneficiaries. Now is a good time to make a new will, taking into account how you would like your affairs to be arranged in the future. Do not neglect or postpone making a new will indefinitely. If the unthinkable were to happen, you want your children to be taken care of.
In the event you had named your spouse as your Power of Attorney (for Personal Care and/or Property), you will want to make changes to these as well. This will ensure your spouse cannot make decisions on your behalf regarding personal care and/or decision on your finances, home, and possessions should you become mentally incapable of making them for yourself.
If you have records that indicate what assets you brought into your marriage, make sure those documents are in a safe and secure place. Assets you brought into the marriage are deducted from the net family property equalization calculation and will not be divided with your spouse. However, the burden is on you to show that you had those assets at the time of marriage. It is therefore important that you hold on to records indicating the state of your accounts at the time of marriage.
In general, you should also ensure you have up-to-date records relating to your finances and property. These records should be removed from the matrimonial home. We have seen many clients who were surprised to learn that their documents supporting date of marriage deductions were conveniently lost.
Depletion of Assets
Many people, fearing the prospect of a large property equalization payment or large support obligations post-separation, are tempted to try to hide or dispose of various assets beforehand. This is not a good idea.
It is important that you not do anything drastic or that would be perceived as dishonest by the courts. Do not transfer large sums of money to a relative, or give an unusually large sum of money to a friend or family member as a “gift” in order to avoid sharing it with your spouse. Do not try to hide money. In general, avoid any large or unusual transactions. It is easy for these to be misinterpreted by the courts, and they may then be less sympathetic to your case. Courts can also freeze your accounts if you look to be emptying them or trying to hide money. If you have joint credit cards or joint accounts with your spouse, do not suddenly freeze or deplete these.
Conversely, if you are worried that your spouse may begin depleting assets in order to lower his or her net family property, you can bring an application under s. 5(3) of the Family Law Act for an equalization payment. Keep in mind, however, that the Family Law Act specifies that once you apply to have the net family property divided in this way, you cannot apply again later for further division. This means that if you and your spouse do not actually separate until sometime after the equalization, you are not entitled to share in the value of anything your partner acquires in the time between the initial division of net family property and your ultimate separation.
Leaving the Home
Do not move out of the home, unless the situation is completely unbearable or you are afraid for your own safety. This is particularly the case if you hope to stay in the matrimonial home after separation.
As married spouses, both partners have an equal right to possession of the matrimonial home. But if you move out and are already living elsewhere by the time you go to court, this can reduce the likelihood that you will be granted exclusive possession of the home after separation.
If you or your partner has moved out, you may want to apply for an interim order for custody, and for support if necessary. The court can make interim orders for support, access, or custody that will remain in place until a final court order is made. However, please note that when you move out without a schedule, you may be creating a new status quo with respect to the children and this new schedule may impact the final schedule.
If you are concerned about your safety, for example if your spouse is abusive or has threatened violence against you or your children, you can apply for a restraining order. You should also then apply for interim custody of the children, and support for the children if you are a dependent spouse. Finally, if you are married, you can apply for exclusive possession of the matrimonial home. For more information on these protective measures and how courts will handle them, see our article: The Threat of Family Violence.
Make sure you take the right steps prior to your separation. For more information, call an Ontario separation lawyer at Feldstein Family Law Group P.C. at (905) 581-7222.