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buyout vs suffering for years

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  • buyout vs suffering for years

    Ive been trying to sort out how this calculation works

    one thing I saw was:

    total amount (monthly x # months) x adjustment for present day value x adjustment for tax value x negative contingencies

    anyone have advice or gone through with this

    the contingencies for me is that the medical field is constantly getting clawed back and my salaried model is always at risk, the stbx is an RN who can easily get a job or work for her parents company and there is a high prospect of her remarrying

    on equalization for some strange reason, she would owe me 120k (it's actually amazing how it worked as mind boggling as it seems) so I could leverage that

  • #2
    Just a few comments for you to consider....

    I totally get your desire to "get it over with" with respect to spousal support and consider a lump sum. The gist of the calculation used for lump sums is to "discount" the amount payable to her since a dollar today is more valuable than a dollar tomorrow (or years from now). HOWEVER, you should still consider some type of monthly schedule since...

    1) Likely the biggest factor is that a monthly spousal support in a Sep Agmt or court order is a tax deduction for YOU (she pays the tax on it as income). I'm guessing you're in a 50% marginal tax rate - she'll be much less.

    Bottom line: the government is basically paying half of the spousal support for you.

    If you pay a lump sum - you CANNOT deduct it from taxes and she gets it tax free. I doubt she would accept a 50% reduction plus the "net present value" deduction as part of a lump sum (although you can try lol).

    2) I appreciate your concern about your income dropping and the desire to avoid going back to court with all the legal costs should that happen to try and reduce spousal. Perhaps consider...

    -negotiate a firm "termination date" of spousal support.

    -if you can, try and get it to terminate even earlier if she remarries or co-habitates for 3 years. Note that even if she remarries it's no guarantee you can stop spousal unless she agrees to in writing.

    -Arabian can give some advise to this but consider a "step down" spousal payment schedule. That is, each year the amount reduces say 10 or 20% until it finally stops.

    3) Potential concern about spousal lump sum is if she blows through it all and then comes crying back to the court that she's financially in danger of living in the street (through her own financial incompetence). The way courts are biased in favour of women (yes many will dispute this but many more will concur) I wouldn't be shocked if the court over rode the agreement and screwed you for more spousal support (it's happened before....).

    I would encourage you to explore the pros/cons of lump sum vs monthly with both a GOOD family law lawyer AND a good accountant. Again, in your marginal tax rate spousal support impacts taxes heavily and will factor into a final decision.

    If you go for a monthly amount, again, I would suggest the following be very well clarified...

    -FIRM end date

    -try and get earlier end date if she remarries and/or common law (define it - ie co-hab for X amount of time)

    -consider a firm monthly payment (to avoid hassles over amounts in the event of income changes over time for you or her) with a "step down" or steadily reducing schedule.

    Good Luck !
    Last edited by shellshocked22; 12-11-2018, 12:15 PM.


    • #3
      Originally posted by Kkc View Post
      total amount (monthly x # months) x adjustment for present day value x adjustment for tax value x negative contingencies
      I notice that your formula does not account for any positive contingencies...

      the contingencies for me is that the medical field is constantly getting clawed back
      Perhaps in real terms, but SS would also be going down in real terms, so you really need to look at the actual salary. That's a little mathy though, so you might get away with it, because judges are not really mathy.

      Physician salaries in Ontario went through an unprecedented increase over the last decade or so, so "constantly getting clawed back" would be a bit of an exaggeration.

      Anyhow, I think the key point is that you can calculate all you want, but your ex has to agree. I know you think you have leverage, but if your negotiating stance is "ok, this is what I would pay you in the future assuming an inflation rate of zero percent, and subtracting the tax benefits that I would receive, and subtracting some more because my salary might go down, and subtracting some more because I think you might get married"... I would not expect her to jump at the opportunity.

      If it comes to a judge, they would prefer monthly over lump sum, so you have to have a good reason to force lump sum. You do not seem to have such a reason.


      • #4
        actually they have gone down massively since I started working in 2014, and many of those crazy hikes were gone by the time I started. There is speculation that my salaried model may be dissolved and cut my salary in half. These are facts not my thinking. No positive contingencies because I cannot think of any, I'm not a lawyer

        I obviously know what my ex has to agree. My leverage is that equalization favors me massively, she has recklessly spent 35k in 1 month and there is combined household debt that will be split. She would need a buyout to buy a home. I'm not a lawyer so crafting arguments is not my job. Any sympathy for her financial situation is entirely her fault, if she was worried about finances then spending 35k on herself in a month (post separation date when accounts were combined and still are bc of a court order) should not have happened. This also got us sued bc I could not pay a contractor who just finished house renos and incurred an addition 10 K on the project. It's kind of BS that I'm even responsible for that 5K because I had the money to pay him but she depleted everything and I could not stop it. I was not even able to get a haircut or buy a t-shirt bc otherwise there would have been no money to buy groceries. It was very bad for a long time but settled now. My parents are paying my lawyer bc there is no money for me to do so. It has not been a good 3 months.


        • #5
          Originally posted by Kkc View Post
          There is speculation that my salaried model may be dissolved and cut my salary in half. These are facts not my thinking.
          Factual speculation?

          No positive contingencies because I cannot think of any, I'm not a lawyer
          Neither am I, but I can think of some:

          1) You get a different position that is much higher paying
          2) You get an additional position that pays (in additional to your regular employment)
          3) Four years from now physician salaries go through the roof

          Many of my friends are physicians, I'm not just blowing smoke. I know how it works. So does her lawyer who is going to laugh at an offer filled with "negative contingencies"

          I'm not a lawyer so crafting arguments is not my job.
          Be wary when it comes to relying on your lawyers too much. They do not care anything close to as much as you might think they care. The lawyer can come up with an argument for lump sum, but it probably won't fly, and you'll just end up paying legal bills.

          She would need a buyout to buy a home.
          Faced with a very unfavourable spousal buyout option, she might just decide to sell the home. If I was her lawyer that is what I would be telling her to do. In fact, that is what we tell almost everyone who comes on this forum determined to keep their house.

          Any sympathy for her financial situation is entirely her fault...
          Why do you constantly create lists of how much your ex sucks as if that is relevant in any way?


          • #6
            okay so i should clarify things how I got here. she pulled a rule 14 on me which had no basis and was destroyed fast but given that we had to live somewhere we ended up with a nesting order before actually having a case conference. I read generally how separations go with interim agreements and such but mine is ass backwards and I'm lucky to have what I have.

            the house is sold (closes march 1), we both live there at different times, we will each get half of the house but there is equalization that goes towards me (ie she had massive student loans that she did not disclose and are paid and a large rrsp whereas I have a lot of debt, this part is established and clear). She needs to buy a house. She does suck, but the relevancy is that we have a joint bank account and that is it. After separation she has spent into my half. she truly is a monster (makes fun of my brother for having cancer) that won't mean shit and I get it. Trust me I do. The objective is she spent and accumulated large amounts of credit card debt that is her responsibility.


            • #7
              the reason I bring this up with my salary is that my model of funding is in jeopardy and targeted by the MOH. If they actually enforce a schedule of hours on me, I can no longer keep it as I do side jobs. Medicine and funding is extremely complex and having the job and caring how I will get paid is much different than hearing from friends (although I believe you are much more informed than most people have been helpful for me in this). Ie the tax rules implemented by the feds have a massive implication on me as income splitting cannot happen this year.

              There's a lot about my situation that I may not be sharing and making it seem confusing and I apologize but between my life being ripped in half, my brother in rough shape and also rehabbing my vision from a concussion (and still working as normal) I can be scattered


              • #8
                Heres a nice little story...a relative and his wife quit their jobs to open a business. They built up their business really fast and big. She decided to cheat on him and when he found out told her the marriage was over. She proceeded to empty every account, charge up every card and remove a great deal from the house. They had to go bankrupt and while she got all the stuff she charged, he was left with nothing but debt and cs/ss. Ten years later he has a new home, great job and his kids. He survived and rebuilt and found happiness.

                You donít want her debt, you donít want to pay, you donít want this mess. Youíve got it though. Trying to scream at the wind is pointless. Pick a number you want and pick one you can live with. Agree on one you both can meet with.

                Arguing about who is responsible for what and how much money you want and who pays what simply increases your legal bill. If you donít want to lose money, stop spending it on a lawyer. You will have to pay child support based on income PERIOD. You can work on a step down for ss (AND MAKE SURE IT ENDS BEFORE YOU REMARRY). Working out mathematical scenarios where you spend more money than you save is a waste.


                • #9
                  Thank u for the advice
                  In terms of the 35k...when she tried pulling her stunt she set the separation date as 3 weeks prior and then spent it all. Well c how it plays out


                  • #10
                    perhaps I'm missing something...

                    If your wife spent a gaggle of money AFTER separation date then I believe that is her problem and would be considered depletion of matrimonial assets would it not?

                    When you do your respective financial statements it is for the period up until separation.

                    In order to cover yourself though, you should have separate bank accounts as it's difficult to recover money she owes you until equalization is completed. In some instances that can take a very long time. Just because house closes in Spring that doesn't mean the two of you get your hands on the money, particularly if the two of you are not in agreement. There are people on this forum who have funds from sale of matrimonial home tied up in lawyer's trust account 6 years later. Longer lawyer can drag it out the more billable hours and lawyers are the first to be paid from the spoils.

                    This is something to consider. I often warn people about their "wonderful" lawyers who encourage them to fight to the bitter end instead of making formal offers to settle (which your lawyers should have already made by now).


                    • #11
                      Yes u r is depletion of assets. I wish I could get my own account but that court order makes me fund the one we used and I cannot fund elsewhere.

                      Our equalization is very straight forward. 1 house 1 bank account obvious debt on my side. Except when she did hers she left stuff out.

                      She needs the cash to buy a house. I need mine to pay my taxes.

                      It's interesting i just got her case conference's basically a copy and paste job and written by a teenager. I will basically have a much better brief. She will have no evidence to support her claim meanwhile I have a 1 inch binder...I hope it works


                      • #12
                        A brief is supposed to be.....brief, not a manuscript. Hopefully the bulk is primarily exhibits? (My lawyer used to reassure me when my ex presented huge submissions: all the more for them to hang themselves with - and he was correct). Also, judges tend to get very, very bored with lengthy briefs... they've heard it all before... lunchtime beckons. While it is very important to you, your matter is kind of like plugged ear or ingrown toenail to the justice. If the brief is too long they simply scan it.

                        Do you not have your income deposited to a company/business account?
                        Your interim order states what specifically with regards to "funding the account"? Perhaps you are misinterpreting? Is there not a monthly amount that you are obligated to deposit (temporary interim child and spousal support)?
                        How odd.

                        Interesting strategy your wife and her lawyer have taken. They will use the current activity in the bank account as argument for support unless you can show some business expenses coming out of that account. Hopefully you have accurate records to show 3 years worth of business cycle?

                        You have a CA to prepare your income tax?


                        • #13
                          BTW I work for a specialist. Stubborn, type-A who did his own taxes for years... paid mega taxes (way more than top wage earners make a year). Finally, after a few decades, hired a CA. Thing with MDs... banks typically like you and are only too willing to extend credit - they love the regular health-care billings/income.

                          Does the wife's family have any financial claims? (that can make things extra messy). Did your wife support family while you went through med school/interning?


                          • #14
                            I've only had the corp since mid 2016. My money goes into there then flows to my joint account. The funding said as I normally did which regualr payments.

                            When I mean a binder it's basically details on the financials.
                            When it all went down my mom I spent 4 hours a night picking apart her bogus claim and coming up with and digging through facts to put together.
                            Like I said my situation is ass backwards and will look normal probably after case conference


                            • #15
                              No her family has not made claims
                              I finished training in 2014. We were married in 2013 had our daughter 2012. I have a CA who does it for me and he was my neighbor growing up


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