Spousal Support - is lump sum support achievable?

The right to spousal support arises out of the breakdown of a relationship where there is a financial dependency created through the relationship. The overriding questions that must be asked are: is there a need for spousal support and is there a corresponding ability to pay spousal support? The underlying purpose of the law of spousal support is to make certain that the Government of Ontario/Canada is not left supporting a dependant spouse with publicly funded Social Assistance. Dependency is found, generally, based on the roles played by the parties in the relationship and the resulting financial positions of the parties at the end of the relationship. If a dependency relationship has been established, it could be said that the dependant spouse has met the criteria to receive spousal support, subject to his/her spouse’s ability to pay support. This is the threshold for the award of spousal support.

Once entitlement is determined, one needs to determine the quantum of support and the duration of the support. The analysis is very much fact driven, based on the level of dependency and the respective incomes of the parties, or, put another way, a balance of the dependant's need and the payor's ability to pay. The Court when fixing the quantum of spousal support refers to the Spousal Support Advisory Guidelines. These guidelines are not binding on the Court but are now being slavishly followed. You can access the Spousal Support Advisory Guidelines at no cost by going to the site www.mysupportcalculator.ca. Generally, spousal support is paid on a monthly basis and is taxable income to the recipient and not taxable to the payor. This is known as periodic spousal support. However, support can also be resolved by way of a non-taxable (to the recipient) lump sum spousal support payment.

A Judge at a motion (before trial) cannot order lump sum spousal support. Absent an agreement, in order to secure lump sum spousal support one needs to have a trial. Before you can have a trial, there are a number of court appearances you are required to keep, including a Case Conference, Settlement Conference and Trial Management Conference. Although it is impossible to predict how long it will take to get a trial date (depending on court availability), it takes place usually between two months to a year after the Trial Management Conference. Accordingly, one brings a motion after the case conference to ask the court for interim periodic spousal support. The same factors apply as to the quantum of spousal support but the duration is usually until trial when a final order as to spousal support is made or refused.

Even at a trial there is no guarantee a Judge will be prepared to Order lump sum spousal support. Recent case law suggests that lump sum awards are limited to very unusual circumstances and most spousal support orders will be in the form of periodic support. Specifically, in order to receive a lump sum amount, a court will need to be satisfied that the payor has the ability to make a lump sum payment without undermining the payor's future self-sufficiency.

Predicting if a court will award a lump sum amount is very difficult and fact specific. With the overriding purpose of awarding a lump sum payment being to relieve financial hardship, the Court will examine the issue in the broader context of the entire proceedings (i.e., division of net family property). For example if both sides will be receiving a substantial amount of money from the sale of the matrimonial home, this will play a factor when a Court is determining if a lump sum amount is required to relieve any financial hardship. Due to the fact that periodic spousal support is tax deductable to the payor, while a lump sum amount would not be, it is not likely the payor spouse will agree to a lump sum payment. If the payor was agreeable to a lump sum amount, he/she would likely want any amount paid to be reduced to reflect the tax benefits he/she is not receiving but otherwise would receive if there were periodic spousal support payments.

In light of the above and the difficulty in achieving a lump sum payment when the other party does not consent, one should look to achieve a monthly periodic spousal support payment, firstly on an interim basis and then on a final basis either by agreement or order at trial.

March 2015