The Federal Child Support Guidelines (the "Guidelines") list 4 objectives. One is to simplify the calculation of child support. In the majority of cases this is achieved by the Guidelines. So, I'll start by telling you how you would calculate child support in a simple case.
First, you need to know about 12 pieces of information (some simple, some not so simple):
1. Number of children (simple usually);
2. If any of the children are over 18 and still in school (not always simple)
3.The custody/parenting arrangement (definitely not always simple);
4. Which Province the payor parent r esides in (probably simple);
5. The father's income (not always simple, the Guidelines have 3 pages to help with this);
6. The mother's income (not always simple);
7. The after-tax cost of child care for employment or schooling (takes a bit of investigation);
8. Health care -- the child's portion of health insurance (usually simple);
9. Health care -- the uninsured health expenses -- might be ortho, extra dental charges, etc. (simple?)
10. Extraordinary school expenses (simple?)
11. Extraordinary extracurricular expenses (simple?)
12. Post Secondary expenses (simple?)
If you and the other parent can find a way to make this simple and are able to put the above listed information together, you are off to the races and child support will be simple to calculate. For the rest of parents who cannot agree on the above 12 items, things get complicated in a hurry. I can advise that I have dealt with complication to each and every item listed.
Back to the simple example, if the parties agree the variables are as follows:
1. There are 2 children;
2. None over 18;
3. Custody is with the mother and the father has access;
4. The father/payor lives in Alberta;
5. The father/payor earns a gross income of $75,000 a year working for the government;
6. The mother earns a gross income of $25,000 a year working for a store;
7-12. The parties agree that the after tax daycare cost is $500 per month and there are swimming, soccer and music lessons during different times of the year, which cost an average of $100 per month.
The determine child support using the above listed factors, now there are 2 more steps:
First, the base child support is determined using the Guideline tables for the Province in which the payor lives, the number of children and the payor parent's gross annual income. This is a link for the Alberta tables. http://www.justice.gc.ca/eng/pi/fcy-fea/lib-bib/legis/fcsg-lfpae/index.html#ab
The link shows that payors in Alberta earning $75,000 gross per year who have two children must pay $1082 in child support every month. This payment is after tax for the payor and the recipient receives it tax free.
The second step is to determine the sharing of the Section 7 expenses. In this case, the Section 7s cost $600 per month -- $500 for net daycare and $100 for extracurriculars.
These expenses are paid in proportion to the parties' incomes. In this case, the Husband earns $75,000 and the Wife earns $25,000. The family total is $100,000. The Husband must pay $75,000 divided by the family total of $100,000 or 75% of the Section 7s. 75% of $600 is $450.
Summary: The Husband pays a base amount of $1082 + $450 in Section 7s.
Simple right?? The Legislators and the Courts think it is sufficiently simple that they expect it to be paid. And even if it is not simple, they expect you to figure it out, by agreeing, using lawyers, using government services to help you and reading up on this on government websites. From personal experience I can advise that it is probably about 80% simple and straightforward.
As I always suggest: speak to a lawyer about this. There are a lot of exceptions and other rules to the Guidelines that could increase or reduce your support. You need to be aware of these because child support can be changed every year, or with changes to incomes or with self-employment income or changes to custody and parenting or Section 7 expenses or a host of other factors. As they say 'the devil is in the detail' and there are a lot of details which can come into play. Get a lawyer to tell you how it works and to warn you of things that could happen if circumstances change.
Saturday, March 27, 2010
Saturday, March 6, 2010
Pre-Nupt Top 10 Myths Busted
These are 'busted myths', in other words although people tend to think that the statements below are true, 9 times out of 10, these myths are wrong:
Myth 1 -- A cookie cutter, "standard" pre-nupt exists;
Myth 2 -- The parties can hire one lawyer;
Myth 3 -- You don't need lawyers at all;
Myth 4 -- You can get a good pre-nupt without providing details of your assets;
Myth 5 -- As long as it is signed it is good;
Myth 6 -- It won't cost a lot of money;
Myth 7 -- It will be easy;
Myth 8 -- It's ok to leave it until 2 weeks before the wedding;
Myth 9 -- Once you sign it, you can forget about it;
Myth 10 -- You can ask your fiance to sign off major rights and it won't impact the relationship.
This is a very tricky, technical area. Make sure you get really good legal advice.
Myth 1 -- A cookie cutter, "standard" pre-nupt exists;
Myth 2 -- The parties can hire one lawyer;
Myth 3 -- You don't need lawyers at all;
Myth 4 -- You can get a good pre-nupt without providing details of your assets;
Myth 5 -- As long as it is signed it is good;
Myth 6 -- It won't cost a lot of money;
Myth 7 -- It will be easy;
Myth 8 -- It's ok to leave it until 2 weeks before the wedding;
Myth 9 -- Once you sign it, you can forget about it;
Myth 10 -- You can ask your fiance to sign off major rights and it won't impact the relationship.
This is a very tricky, technical area. Make sure you get really good legal advice.
Friday, March 5, 2010
Child Support Enforcement How and Why
Why to Enforce
Once you have a child support order, you should enforce it. This might sound obvious, but there are some people who do not. I'm not sure why: perhaps the recipient knows that the payor parent is in a bad financial situation, perhaps they have some arrangement to the contrary, perhaps the kids have switched homes, perhaps there is a threat of abuse, etc. Whatever the reason, enabling non-payment or under-payment is ultimately problematic in the long run.
In my practice, I meet with both the people who have failed to enforce or update child support orders and the people who have failed to pay.
The ones who have failed to collect or to collect the right amount over the years, are told that if the payor's income has increased, the law allows them to apply to vary the ongoing child support and to receive the difference between what has been paid in previous years and what should have been paid (we call that a retroactive adjustment).
For everyone lucky enough to hear that they might be able to receive this helpful adjustment/windfall, someone else is about to learn that they suddenly owe a back debt of child support. And sometimes these debts can be substantial. So enforcement and regular adjustments simplify everything and avoid accumulated arrears/retroactive debt. Most people, particularly with the benefit of hindsight, would have found a small adjustment to have been easier then a massive adjusting payment years later. For this reason, early enforcement is best.
I can advise from experience that retroactive applications can be costly to both parties. While at first blush, it may seem like a simple task to calculate the support retroactively, it can be quite difficult to gather the evidence and work out the calculation. This becomes particularly complex when a lot of time has passed, when the payor is self-employed, when the situation is complicated, and when the payor resists (which is often). Additionally, there are some defences to retroactive applications which should be anticipated and addressed when preparing to apply for retroactive child support. These applications contain risk to both parties, which is costly in terms of mounting the best application, as well as in anxiety and stress. So, again, early enforcement and regular updates are best. Or, if it is not possible to expect the payor to pay for legitimate reasons, then the child support order should be varied to a lower amount and enforced (courts rarely waive unpaid child support.)
How to Enforce
Once you have a child support order in place, you can take steps to enforce payment. The easiest way to seek enforcement is to register your child support order with the Alberta Maintenance Enforcement Program. MEP has the power to garnishee wages, to cancel the payor's driver's licence, to impose interest and penalties, to garnishee tax refunds and to prevent a person from obtaining a fishing or hunting licence. In rare circumstances, the power can extend to more serious penalties such as jail time. Anyone registering with MEP is invited to report any outstanding payments so that MEP can enforce those amounts plus the ongoing payments. Overall MEP can put a lot of pressure on a person to pay their child support. Most people end up wishing they had just paid in the first place, particularly when substantial arrears are involved.
The law has become increasingly clear with respect to the need to pay the correct amount based on current earnings, even if a court order or agreement is in place to pay a lesser amount. In order to help recipient parents receive the correct amount of support, the Alberta government started the Maintenance Recalculation Program in January 2010. This is designed to adjust child support annually for those cases in which annually income can be determined fairly easily (i.e. for employees, but probably not for business owners).
It is generally best to take steps to increase support annually. If payors fail to increase payments, they risk owing the accumulated difference between what is being paid and what should have been paid. For those who receive child support, they should be vigilant in seeking updated financial disclosure and ensuring that child support is updated annually (this may include registering for the recalculation program.)
Once you have a child support order, you should enforce it. This might sound obvious, but there are some people who do not. I'm not sure why: perhaps the recipient knows that the payor parent is in a bad financial situation, perhaps they have some arrangement to the contrary, perhaps the kids have switched homes, perhaps there is a threat of abuse, etc. Whatever the reason, enabling non-payment or under-payment is ultimately problematic in the long run.
In my practice, I meet with both the people who have failed to enforce or update child support orders and the people who have failed to pay.
The ones who have failed to collect or to collect the right amount over the years, are told that if the payor's income has increased, the law allows them to apply to vary the ongoing child support and to receive the difference between what has been paid in previous years and what should have been paid (we call that a retroactive adjustment).
For everyone lucky enough to hear that they might be able to receive this helpful adjustment/windfall, someone else is about to learn that they suddenly owe a back debt of child support. And sometimes these debts can be substantial. So enforcement and regular adjustments simplify everything and avoid accumulated arrears/retroactive debt. Most people, particularly with the benefit of hindsight, would have found a small adjustment to have been easier then a massive adjusting payment years later. For this reason, early enforcement is best.
I can advise from experience that retroactive applications can be costly to both parties. While at first blush, it may seem like a simple task to calculate the support retroactively, it can be quite difficult to gather the evidence and work out the calculation. This becomes particularly complex when a lot of time has passed, when the payor is self-employed, when the situation is complicated, and when the payor resists (which is often). Additionally, there are some defences to retroactive applications which should be anticipated and addressed when preparing to apply for retroactive child support. These applications contain risk to both parties, which is costly in terms of mounting the best application, as well as in anxiety and stress. So, again, early enforcement and regular updates are best. Or, if it is not possible to expect the payor to pay for legitimate reasons, then the child support order should be varied to a lower amount and enforced (courts rarely waive unpaid child support.)
How to Enforce
Once you have a child support order in place, you can take steps to enforce payment. The easiest way to seek enforcement is to register your child support order with the Alberta Maintenance Enforcement Program. MEP has the power to garnishee wages, to cancel the payor's driver's licence, to impose interest and penalties, to garnishee tax refunds and to prevent a person from obtaining a fishing or hunting licence. In rare circumstances, the power can extend to more serious penalties such as jail time. Anyone registering with MEP is invited to report any outstanding payments so that MEP can enforce those amounts plus the ongoing payments. Overall MEP can put a lot of pressure on a person to pay their child support. Most people end up wishing they had just paid in the first place, particularly when substantial arrears are involved.
The law has become increasingly clear with respect to the need to pay the correct amount based on current earnings, even if a court order or agreement is in place to pay a lesser amount. In order to help recipient parents receive the correct amount of support, the Alberta government started the Maintenance Recalculation Program in January 2010. This is designed to adjust child support annually for those cases in which annually income can be determined fairly easily (i.e. for employees, but probably not for business owners).
It is generally best to take steps to increase support annually. If payors fail to increase payments, they risk owing the accumulated difference between what is being paid and what should have been paid. For those who receive child support, they should be vigilant in seeking updated financial disclosure and ensuring that child support is updated annually (this may include registering for the recalculation program.)
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