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  • NCP recently unemployed & changed CS

    6 figure earning NCP recently lost his job and decided to reduce his CS based on what he "expects" to receive from EI. Is this reasonable?

    Is there any expectation that he access his assets to continue with his regular support given his 2011 tax return which will show his 6 figure income which will be what determines his CS next year when he provides his annual disclosure obligations? Based on his education, training and experience he will continue to be capable of earning 6 figures.

    Any thoughts?

  • #2
    Isn't there a maximum payment for EI? He would get that which is predictable.

    If he has to go to court to change his CS Order, then you can argue that he has ample assets to pay CS in the interim till he gets new job. I don't know if that would work because CS is based on income but it might depend on if he has luxurious toys that could be easily liquidated. Not a sure bet.

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    • #3
      to me the assets should not come into play. CS is income based and not asset based.

      Try working with the guy on this, ask him to show you the papers stating how much he will be recieving and use the tables to figure out his new amount. Make sure you have an agreement written up that states when his income goes up then the cs goes up to reflect that.

      Comment


      • #4
        Originally posted by officenurse View Post
        6 figure earning NCP recently lost his job and decided to reduce his CS based on what he "expects" to receive from EI. Is this reasonable?

        Is there any expectation that he access his assets to continue with his regular support given his 2011 tax return which will show his 6 figure income which will be what determines his CS next year when he provides his annual disclosure obligations? Based on his education, training and experience he will continue to be capable of earning 6 figures.

        Any thoughts?
        Are you saying you adjust CS yearly based on the previous year's tax return?

        In that case, he should follow that plan and NOT reduce CS - it will work out in the end when he does his 2012 tax year adjustment. If he can't afford to pay CS now because he lost his job etc, he should fill in the gap with credit or assets.

        The whole purpose of adjusting yearly based on previous year tax return is to simply pay CS according to income - suddenly adjusting it when you lose your job is stupid and complicates things.

        In my current proposed separation agreement I have added this clause (CS is updated yearly based on previous year tax return)

        The Husband and Wife agree that significant financial change in circumstance for either the Husband or Wife (ie, job loss, etc) is covered in this Child Support agreement. Loss of income shall be covered by the Husband or Wife using their respective assets or other means until adjustments due to income changes are accounted for in subsequent yearly Child Support adjustments as stated in this agreement. The Husband and Wife agree that it is their individual responsibility to stay in a position to adhere to the current Child Support payment and agreement until changes to the Child Support payments reflect the new financial situation and neither will hold the other responsible to assist the other. Increase in income will be accounted for by future Child Support yearly adjustments.

        Comment


        • #5
          officenurse: Your ex has to apply for a motion to change if he is now unemployed. I am guessing that you are currently using the previous years income tax to determine payment, as you mentioned this in your post. He cannot arbitrarily change CS, and it is required that he provide you with some paperwork (EI paystub) showing you that he is in fact unemployed. If/when he does give you proof, then you can decide to negotiate a lower CS, go with the new guideline, or fight it. NOT based on his current income, or inability to pay, but based on the fact that any changes in income will be accounted for in the yearly adjustment, and so in his 2012 adjustment.

          I am going through this exact thing now. Except that we have BOTH been unemployed. I am willing to continue with the CS payment according to our order (CS determined by last years line 150), but he wants to go with current income.

          I have no assets to cover my payments to him. EI will pay me at the top threshold, but this is only $485/week before taxes. he is on WSIB and earning more than me.

          Stupidly he still insists on a CS adjustement, even though the changes would be addressed in July 2012. Which means he will have to PAY me.

          Comment


          • #6
            In Ontario at least, assets have almost ZERO to do with CS. If the assets are substantial and quantifiable they MAY be asked to contribute at approximately 2% per year. For example if someone has $100,000 asset and no income the CS would be $2000 per year or even less because it is below the threshold.
            If the person is underemployed you can seek to have an income imputed but it is not straight forward. The notion that if someone loses their job they must sell their assets to provide CS rates based on an old level of income until presumably that person has nothing left is nonsense and not in any child's best interest.
            Try working with the parent. There may be genuine reasons they lost their job. Maybe the global recession has something to do with it?

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            • #7
              Our case, on EI most of 2011 kept current with previous CS amount (difficult on EI), worked last 3 months. Looked FWD to decreasing CS in 2012, but ex went to lawyer who forced me to pay increased amount d/t my current income. According to my atty, and the court, it should be based on what I expect to make in 2012, not the lower amount of 2011. Ugh!

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              • #8
                One question I have is if he was given any severance package?

                Comment


                • #9
                  According to my atty, and the court, it should be based on what I expect to make in 2012, not the lower amount of 2011. Ugh!
                  I hope you argued for a reduction based on the over payment you made the prior year. You had status quo in determining CS, and that you had made payments more than you should have due to your understanding of it.

                  It's stupid to fight about, if you adjust yearly, it all comes out in the wash. By the letter of the law, you should be calculating your CS EVERY payday, but since that is stupid and pointless, often times line 150 with a yearly calculation is used.

                  Comment


                  • #10
                    Originally posted by FaithandMorals View Post
                    ...The notion that if someone loses their job they must sell their assets to provide CS rates based on an old level of income until presumably that person has nothing left is nonsense and not in any child's best interest...
                    If you are referring to my post, then I disagree.

                    If you adjust your CS yearly based on the previous year income, then losing your job, is NOT a reason to suddenly adjust CS. Job loss will be covered at the yearly adjustment.

                    If you don't have the money on hand to pay for the CS after you lose your job, you should use your assets, or whatever means possible to pay the CS in this case.

                    The simple point is that over the time that CS is applicable, the parents should support their kids in proportion to their incomes. Adjusting CS every year based on previous years income makes this happen. How the parent pays the CS or comes up with the money is not relevant, and should not be of concern of the other parent.
                    Last edited by billm; 01-23-2012, 01:45 PM.

                    Comment


                    • #11
                      I went through a similar situation: layoff, went on EI and CS/SS changes: my agreement contains clauses for such matters including yearly reviews, variation based on material change in circumstances and overpayments/underpayments. Because of this I immediately provided proof of my material change in circumstances and requested a variation for CS and SS due to my layoff. My ex and I agreed and made the variations. I had done some research on top of what was already apparent in our agreement, just in case and had no problem finding similar cases on Canlii where variations had been made immediately to reflect updated income information.

                      I kept the following excerpts from one case:
                      [21] Problems arise, however, when incomes fluctuate. For the purposes of this decision, I will describe the payor as “he” and the payee as “she”, although of course the issue of child support is gender neutral.
                      [22] When adjustments are required to be made as a result of a change in the payor’s income, the theory is that the payor should have saved some of his previous year’s higher income with which to pay the previous year’s adjustment. Payments for the current year could be adjusted (and likely should be adjusted) to reflect the current year’s anticipated income if it is expected to be different from the previous year.
                      [23] This presupposes that payments are being made as ordered, information is being exchanged as ordered, and that adjustments are made as soon as possible after the exchange of financial information.
                      [24] When the payor’s income goes down, and his payments are current, that will likely have a significant effect on the recipient. Ongoing payments will be reduced, and the payor may have overpaid both for the previous year, and the current year to date. The effect of that may be significant, and could (in circumstances where there has been a dramatic drop in income) result in the recipient receiving very little until the calculated overpayments have been caught up by the payor making reduced payments, or perhaps even no payments.
                      [25] I suppose the theory in these circumstances is that the recipient should be saving some of the support from the “good” times as a contingency against support being reduced in the future.
                      [26] This assumes that the recipient has enough income to provide a reasonable standard of living for the children and still have some savings, and also has the discipline to avoid living to the fullest extent of her income.
                      [27] These assumptions are in many cases a big stretch. Often, there is not enough income to go around. And sometimes counted-on support is not paid. And even a careful budgeter may not be able to prepare for a major drop in income, or even a period where no income is coming in because of previous overpayments. Much of this is out of the control of the payee, as she may not know until June 30 that she has been overpaid support since January 1st of the previous year, and that she may have to repay the previous year’s (and year to date’s) overpayment by way of reduced or even no payments until the overage is eliminated.
                      [28] There is theoretically no unfairness in this, because support should be based on actual incomes, and if the parties were still together, income fluctuations would be something they would have to deal with together as a family in real time, fluctuations will undoubtedly cause hardship. But the loss of cash flow can be devastating where the parties live close to the line.
                      [39] That being said, the mechanism in the separation agreement is clearly unworkable. There is no provision for payment of any shortfall or over-payment. It makes little sense to have child support based on an income that is already 6 months out of date (if the parties use tax returns and not current pay stubs, or if the parties are late exchanging information). Child support should be based on the most current, accurate information. Sometimes that is tax returns and that is often the case where employment is stable. Where employment is less stable, current pay stubs may be the preferred way of proceeding.
                      [44] This case illustrates the need to revisit child support issues as soon as there is a material change in circumstances. So long as the payor’s income is going up, there may be little difficulty in making appropriate adjustments. But if the payor’s income decreases, there is little point having ongoing maintenance based on an out-dated income. That will undoubtedly lead to arrears, problems for the payor with MEP, and cash flow problems for the recipient and the children.
                      [45] I am not suggesting that applications be made each time there is a fluctuation. Certainty, or at least the absence of conflict, is highly desirable in matrimonial matters. But where the payor can reasonably identify a trend that is likely to result in a reduction of maintenance, the responsible thing is to seek an appropriate variation. All of this depends on full and timely disclosure of financial information. The same can be said for expected increases.

                      Both my ex and I agreed to do the: "responsible thing" and made the "appropriate variation".

                      Comment


                      • #12
                        thanks so much for that case. Can you post the link?

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                        • #13
                          Originally posted by first timer View Post
                          My ex and I agreed and made the variations.

                          Both my ex and I agreed to do the: "responsible thing" and made the "appropriate variation".
                          I am glad for you that your ex is "reasonable", mine was not!

                          Thanks for the info!

                          Comment


                          • #14
                            Its a case out of Alberta;

                            CanLII - 2010 ABQB 534 (CanLII)

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