Money Smart and Financially Savvy Spousal Support
No one wants to talk about Spousal Support, and we all understand that no one wants to pay it either, especially for a long period of time. Still Spousal Support is a reality and is part of most divorces in Ontario when there is a difference of income levels. However, there are ways to come up with support solutions that you can all live with.
When you put aside the emotions (which we get, is really tough to do), a spousal support negotiation is fundamentally a business negotiation. There are assets and liabilities to be divided and as noted, there very well be may be a support obligation. In most cases, these two aspects are dealt with separately – the assets and debts are divided equally and then support is decided. In many situation, there can be a creative solution that works better.
Unlike child support, spousal support has tax implications – both to the payer and to the receiver. And also unlike child support, which is clearly defined by Ontario provincial guidelines and non-negotiable, spousal support has all kinds of room to negotiate and to be financially creative.
Remember, paying or receiving spousal support may place you in a different tax bracket, meaning your income may be taxed at a higher or lower rate. Depending on how that plays out for you, this may be a good or bad scenario. In the same way paying or receiving too much spousal support may disqualify you from being approved for a new mortgage. The other question to think about is, how much do you want to be financially tied to, or dependent on a spouse for income?
A money smart and financially savvy negotiation team can offer solutions. For example, it may make financial sense for one spouse to keep a larger percentage of the family home, an investment or a bank accounts, etc., in order to reduce support payments. There can be lump sum payments, or monthly payments. There could even be certain important assets that may be traded in lieu of spousal support, or part of a support obligation. A skilled family negotiator like a CDFA (certified divorce financial analyst), can work with both you and your spouse to explore these options to see if there is an alternative that works better for your situation.