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Divorce & Family Law This forum is for discussing any of the legal issues involved in your divorce.

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Old 08-16-2014, 12:29 PM
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Default Section 7/extraordinary expenses when a spouse chooses not to work

We aren't in this situation yet, but I anticipate we will be in due time.

The facts: My husband's former spouse receives full child and spousal support. It is more than enough to live off as my husband is a high income earner. Her spousal will be ending in a few years. We have children more than 40 percent of time but still pay full CS by way of an order on consent. While the Order states that "there are no section 7/extraordinary expenses with the exception of post secondary education, which will be reviewed at a later date" we continue to pay a substantial amount of "extra's" such as dental, insurances, para medical claims, extra curricular activities, clothing, etc. etc. etc.

The mom in this equation had been running a day care in her home for the past few years. It was a successful day care and she was earning at least $40K per year and potentially up to $50K per year as her rates are posted online and we have seen her income tax returns. Of course, on her taxes she claimed enormous business expenses (I believe 53% of her income earned) which reduced her income on line 150 significantly.

Recently I noticed a local ad that advised that she is closing her full time day care and electing to work only before and after school for a fraction of what she was making. As far as we can see, she will be working only 2 to 2.5 hours a day now. As it stands, the ad that is on line shows that she has no children in care at present, so she has essentially shut down her business and she is waiting for kids to sign up to her newly revised schedule. Given her hours of availability are posted on line and are very small in comparison to other child care providers I'm willing to bet many people will not be interested given most people work an 8 hour day and her hours don't allow for that... I point this out because it will hamper many people's interest and reduce her employ-ability.

So my question is, when it comes time for their children to go to post secondary school the costs are typically shared proportionately between the child and the parents. If she continues to not work, or work only 2 hours a day, would a judge likely impute income given she has worked for a few years already full time with her day care and is now intentionally underemployed?

I should add, their agreement for spousal support was for 8 years for a ten year marriage. She was a stay at home mom for all but one year of the marriage. When they separated her boyfriend moved in within six months of separation and yet full (and high) spousal support was continued with no claw back. My husband elected to pay her full spousal for a fixed term of almost 8 years because he felt that was in everyone's best interests, she agreed. She also wasn't very motivated to work or go to school and she was lying about her boyfriend living with her even though he moved from the coast and into her bed lol. It just wasn't worth the headache of trying to prove any of her falsehoods and he genuinely wanted to be fair to her. I only add this because most spousal support is to end when the recipient is "back on their feet" and this isn't one of those cases...and anyhow, she did get back on her feet with her daycare and even worked at a community facility full time for a while all the while she was making good money with full SS and CS with no penalties while living common law to boot.

I'm not interested in the "how silly my husband was" with his generosity with CS or SS. I'm curious of your opinion on what will happen when kids go to university and how mom's employment status and history will be viewed when calculating "proportionate share" of education costs.
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Old 08-16-2014, 01:22 PM
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So right now, her income matters not at all, because he pays full table CS (even in an offset situation) and the usual section 7 expenses are not being paid proportional to income. This means that the first time she'll be required to disclose her income is in ten years or whenever the first kid hits post-secondary? Although since you've seen her tax returns, maybe I'm wrong?

I'd be doing whatever possible to get disclosure going regularly before that point, so the battle to impute income happens long before the university expenses hit. By that point, you should have a regular pattern of disclosure going. Maybe the ending of SS would be a good break point to do some re-evaluation.

What was the reason for doing full CS and not having to pay section 7 expenses? Did the numbers work out better that way in theory for some reason? It sounds like that fell by the wayside in practice, so I would imagine he would be well within his rights to formalize the system they ended up in. If he pays some section 7 expenses anyways, his CS should be reduced to offset. Or he could cite the existing order and revert to not paying extraordinary expenses at all. Maybe have that fight soon, before SS ends, so it doesn't happen all at once.

It would definitely be better to do all this as soon as her income drops, so that she can be seen to be recently deliberately underemployed and her income imputed to its previous level. If you wait till university expenses kick in, she could have established a history of ten years of making little money and then I think it would be much harder to impute an income to an amount ten years beforehand.

Your material change in circumstances to open all this would be her voluntary drop in income. She has gone from supporting herself and her children to being significantly underemployed. Now instead of balancing two parents' support of the children between households, one parent is being expected to carry both households. That's a big change overall, even if his amounts paid to her haven't actually changed. Though you have to expect that she would soon start whining about him paying even more of the extraordinary expenses he isn't supposed to be paying at all once her income drops.
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Old 08-16-2014, 01:47 PM
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Quote:
So right now, her income matters not at all, because he pays full table CS (even in an offset situation) and the usual section 7 expenses are not being paid proportional to income. This means that the first time she'll be required to disclose her income is in ten years or whenever the first kid hits post-secondary? Although since you've seen her tax returns, maybe I'm wrong?
We have seen her income tax returns because we have spent the last few years in court and it was required with her financial statements.

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I'd be doing whatever possible to get disclosure going regularly before that point, so the battle to impute income happens long before the university expenses hit. By that point, you should have a regular pattern of disclosure going. Maybe the ending of SS would be a good break point to do some re-evaluation.
No chance lol, she won't.

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What was the reason for doing full CS and not having to pay section 7 expenses? Did the numbers work out better that way in theory for some reason? It sounds like that fell by the wayside in practice, so I would imagine he would be well within his rights to formalize the system they ended up in. If he pays some section 7 expenses anyways, his CS should be reduced to offset. Or he could cite the existing order and revert to not paying extraordinary expenses at all. Maybe have that fight soon, before SS ends, so it doesn't happen all at once.
Because that was the only way mom would allow dad to see the kids more without going to trial. And we were tired of getting nickled and dimed for school teacher presents etc. We thought that this clause would prevent us from paying for the section 7 expenses but it doesn't. We pay for far too much to be honest but it is easier to pay for the counseling, and extra curricular than argue with her about her requirement to pay (she just wouldn't pay, she didn't even pay her insurance costs for four consective years despite a clear order with policy number for her to do so, she is just all around very difficult). All that to say, its just easier if we pay for most of it as it makes our lives simpler (and its pretty hard to show up to an extra curricular activity without having paid lol).

As for the CS should be reduced to offset, obviously she wouldn't agree to this. I suppose we track it all and then bring it up when/if we go back to court as I suspect we will when kids go to school.

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It would definitely be better to do all this as soon as her income drops, so that she can be seen to be recently deliberately underemployed and her income imputed to its previous level. If you wait till university expenses kick in, she could have established a history of ten years of making little money and then I think it would be much harder to impute an income to an amount ten years beforehand.
The spousal support will end before kids go to post secondary. She could still live of the CS quite nicely to be honest but her spouse's kids would be in post secondary as well and I suspect he will be on the hook for their education. I would think she would have to work some, if not more. We have been screen shotting her ads online to demonstrate the history of her employment ads.
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Your material change in circumstances to open all this would be her voluntary drop in income. She has gone from supporting herself and her children to being significantly underemployed. Now instead of balancing two parents' support of the children between households, one parent is being expected to carry both households. That's a big change overall, even if his amounts paid to her haven't actually changed. Though you have to expect that she would soon start whining about him paying even more of the extraordinary expenses he isn't supposed to be paying at all once her income drops.
More whining? Ugggg, We hear too much from her already!

Obviously we are overpaying now. We don't want to be on the hook for the majority of the kids post secondary just because she doesn't have to or want to work given the amounts of CS and SS. Its a great deal for her and I understand the concept of "why work if you don't need to" but the issue is, she wouldn't be contributing to the children's post secondary if she continues this path.
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Old 08-16-2014, 03:41 PM
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Isnt she really high conflict and difficult? And only abides by court orders (if that)? Maybe start compiling the day care info and prepare a year or two in advance for an imputed income? She obviously can run a home business and successfully manage tax preparation (my mom did in home daycare and I did her taxes in my teens--I know how hard it is to figure out the expenses etc.).

And just because shes advertising one thing doesnt mean shes actually sticking to that. Many (MANY) in home daycares do work under the table and without receipts so your best bet in my opinion is to go the imputed income route. If shes losing spousal before post sec, you know shes going to figure out a way to earn money under the table.
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Old 06-09-2015, 01:39 PM
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Very similar circumstance. Ex has own business. Claims 6000 annual income. Every year. CRA does nothing. Remarried to a guy making 120 annual. My divorce order is so bad I have to go back to court to get the spousal dropped. Let's not get into why. Self represented, etc. etc. My question however is in relation to the section 7 and spousal support. When it comes to apportioning should not the spousal support be deducted from my income and added to hers? Have had various lawyers give me different answers on this and reading through the law it's not that clear to me
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