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  • Complicated CL Separation

    OK, I have been through almost every message posted in this common law forum, but haven't had all my questions answered. Thanks in advance for any advice. We currently are living in Ontario.

    Spousal Support/"Unjust Enrichment"?
    We have been living common law for 5 years and have 3 children together. She couldn't keep much of a job right from the beginning and did the whole housewife thing for the first 4 yrs, shes currently making about 25K/yr. I have been making ~45K every year since the beginning including this yr. From the beginning I have been consistently trying to improve the lives for us and the children - I bought a house in my name solely, early in the relationship (with a downpayment loaned from parents but was later turned into a gift). I did many renovations on that house using my own labour and my own line of credit (bank would not lend to someone unemployed). She did the bare minimum - watching kids most of the time but helping out once in a while. I also purchased many items that would enhance the quality of life for us and the kids - brand new car, furniture, etc, all on my own credit.

    By making an effort to better the quality of life for the family, did I give her something that will now cost me if spousal support/unjust enrichment is considered?

    After a few years I sold the house for a decent profit and used that profit towards a new house. We decided that we wanted a house that we would live in for awhile so we bought a bigger house jointly, mainly because we needed the credit for both of us to afford this house. However, as luck has it, about a month after moving in, she got laid off. We then proceeded to rack up about 10K in debt (keep in mind this is all on my line of credit) paying for renovations to house (house was bigger and nicer but still needed some known issues resolved) as well as paying the bills on a single salary. She was unemployed for about 3 months until she was able to get a comparable job.



    Where we are today
    • Jointly owned house mortgage amt: 209K, value approx 240K
    • 30K in two line of credits both only in my name
    • 2 car loans, both about 12K outstanding, both loans in my name but she is willing to take the car she drives and the loan that goes with it
    • she wants full custody of kids, I have no issues with this and I am willing to pay my legal requirements of this
    • I have no issues "giving her" the house (including losing equity) as long as all fees (ex. legal fees to change deed) are covered by her and I am getting something in return
    Questions:
    My line of credits - are they 100% mine, no ifs ands or buts? She initially offered to take 50% of LOC debt but that was before seeing lawyer, and I assume she'll take that back. Also, if the LOC debt ends up being mine, could I try unjust enrichment on her being that I went into debt providing for her while unemployed and providing a better quality of life?

    Car loans - could she just leave the car she drives with me and be done with it? I bought it brand new and it lost quite a bit of equity so its an upside down loan.

    Gifts - There were two substantial gifts given from my parents thoughout the relationship, one being a forgiveness of a loan for downpayment of first house, and the other was a christmas present. Both over 10K and I believe the card that came with the cheque was addressed to both of us but the cheque addressed only to me. Or does this matter?


    I apologize for being so long winded but I wanted to make sure I got everything. Luckily we are still on decent speaking terms but we both don't want to agree on anything based on the principle of if one of us gets taken advantage of somehow.
    Last edited by singlealone; 12-29-2008, 11:05 PM. Reason: location

  • #2
    Well, there's basically no equity in the house, so whoever keeps it takes over all the loans... including the line of credit. I doubt with her income that she could get her own mortgage. She should be able to take over the car loan.

    3 kids in 5 years is a job in itself, so I don't think it matters how much money she didn't make.

    Sell the house and pay all the debts. There will probably be nothing left over. Let her take out a loan to take over her car. Pay child support.

    Basically, you'll both start from scratch. This is mostly my opinion. Some of it is legallity.

    Comment


    • #3
      Originally posted by paris View Post
      Well, there's basically no equity in the house, so whoever keeps it takes over all the loans... including the line of credit. I doubt with her income that she could get her own mortgage. She should be able to take over the car loan.

      3 kids in 5 years is a job in itself, so I don't think it matters how much money she didn't make.

      Sell the house and pay all the debts. There will probably be nothing left over. Let her take out a loan to take over her car. Pay child support.

      Basically, you'll both start from scratch. This is mostly my opinion. Some of it is legallity.

      Thanks for the advice. She wants the house as she knows that is the only way she can afford to live in a house of that size. It also is in the best interest of the kids, which I agree with. One thing I did not mention, however, is that she does have parents and other family members with money, and they are willing to do what it takes to "sort things out". Could be a bluff I suppose.

      Also, the house does have some issues, and being way the real estate markets are right now, I don't want to sell unless its absolutely necessary.

      Comment


      • #4
        Get the financial statement forms (Form 13.1 and 13.B found at http://www.ontariocourtforms.on.ca/english/family/). You will need to fill out those forms and you will see if you follow the calculations that each of you needs to determine your "net family property" (NPV) for the purposes of establishing an equalization payment, which itself is calculated as one half the difference between the two NPV figures with the higher NPV paying the lower NPV the one half amount.

        Your debt is your debt and will be considered as such when you calcluate the NPV. You will get credit for having gone into debt on your own when the equalization payment is calculated, which you will see when you run the numbers and which should answer most of your money questions above.

        By putting her on title to the house, you have effectively gifted her the money given to you by your parents, but the amounts involved ($20K +) are not enough to warrant arguing about it, especially through the lawyers where it will be eaten up in legal fees in no time. That she wants the house and you agree means that she will have to buy you out. Hopefully her family money can be used for that purpose as opposed to litigating. The unjust enrichment claim can be used as a bargaining chip, but then again, she did presumably work pretty hard raising the three kids while you swung the hammer.

        Since you seem to agree on custody, and the money isn't really significant, hopefully you will settle everything amicably and without letting the lawyers take too much.

        You should be thankful that she has an income that will affect her spousal support entitlement. If she has primary residence with the kids as you suggest she will, the spousal support could have an indefnite duration (as in till the kids are finished post-secondary school, or longer even), notwithstanding that you will be paying child support. At least with her having an income of $25K, that will affect the quantum of support to which she is entitled.

        You should research the 60/40 rule on time spent with each parent in order to understand it's effect on the amount of child support you would have to pay, which in turn could affect spousal support. To say nothing of keeping yourself involved in the kids lives as much as possible. They need you too.
        Last edited by dadtotheend; 12-30-2008, 12:34 AM.

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        • #5
          Thanks, dadtotheend, for the reply. Makes me feel better financially. I don't think spousal support will be an issue, it has to be requested and justified by the other party, correct?

          Comment


          • #6
            Well yes spousal support has to be requested, and it is based on your means and her needs. There's lot of spousal support info on this site.

            Comment


            • #7
              dadtotheend has alot of good points.
              However, I think that the debt would not be his sole responsibility.
              I find it hard to wrap my head around the fact that men are responsible for all debt and women get half of all assets? I’m a woman that took nothing from my first marriage of 15 years, not the house, not the content, not SS, neither of the vehicles or snow machines etc. I was happy to finally be free of the nightmare (an understatement). But had I not been in such a difficult relationship I would have taken on half the debt in exchange for half the assets. It just seems logical to me, and I know FL is neither logical nor fair on any level, but if they can work out an agreement why not split everything equally?

              Being that this is a CL union, I understand that what is his is his and her's is her's because CL does not follow the equal entitlement as a legal marriage does.

              But if he can demonstrate that the debt was to increase the value of both homes, and one was sold to purchase a better one, there is a possibility the courts may agree that the debt is joint regardless of him only having his name on it.

              As stated the equity in the home is minimal however, I think it would be reasonable to offer her sole ownership of the home, (if she takes on the mortgage) in return for a reduced debt load relative to his share of the equity regardless of the amount. Plus carry the loan on a car if she decides to take one.

              I also feel he should ask that a portion of the debt be taken into consideration either to reduce any possible SS claim. Or am I being naive?

              As stated by dadtotheend, SS is based on the needs of the recipient and means of the payer, coupled with the length of the CL union, and anything lost as a direct result of the union or subsequent divorce.
              Just my two cents worth.

              Comment


              • #8
                An equalization payment is designed to true up the change in equity of each of the two partners over the life of the union. If one partner takes on debt alone, it will affect the value of the equalization payment differently than if the debt had been incurred jointly. If the debt is held solely than that partner's NPV will be lower than if it was jointly, and the other partner's NPV will be higher than if held jointly, which will change the equalization payment in favour of the person who held the debt. So it doesn't matter whether the debt is held solely or jointly because it all gets washed out in the equalization payment.

                I'm very financially literate (it's my career), so I only imagine how confusing and misleading this is for many folks. It took me many hours of analysis and uncertainty to figure it out.

                The calculation of the equalization payment is a difficult process to wrap one's head around. My $450/hour lawyer was unable to properly explain certain aspects of it to me, and I operated on false assumptions for over 8 months until I finally confirmed that my initial calculations were correct, such that the equalization payment was only $40K instead of $100K. Nice surprise but I wish I had it confirmed at the outset, instead of worrying for 8 months about whether I was going to be able to keep our house after paying off my ex.

                I feel like offering a service just to help people through this complex calculaton. If anyone wants to know more PM me. I also have a spreadsheet to share that will help illustrate the concept.

                Sorry for hijacking this portion of the thread.
                Last edited by dadtotheend; 12-31-2008, 10:16 AM.

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                • #9
                  Thanks dadtotheend, no apology necessary when such useful info is shared.

                  Comment


                  • #10
                    Thanks for the replies, everyone.

                    Dadtotheend: Would the financial calculations be the same if the house was sold? IE After the house was placed on the market and sold, would the same calculation be done, of course with the windfall of the house (after all fees have been paid, mortgage, real estate agent, lawyer, etc of course) be considered into the equation?

                    Man common law is so complicated!

                    Thanks

                    Comment


                    • #11
                      Originally posted by singlealone View Post
                      Thanks for the replies, everyone.

                      Dadtotheend: Would the financial calculations be the same if the house was sold? IE After the house was placed on the market and sold, would the same calculation be done, of course with the windfall of the house (after all fees have been paid, mortgage, real estate agent, lawyer, etc of course) be considered into the equation?

                      Man common law is so complicated!

                      Thanks
                      Yes, they would.

                      Comment


                      • #12
                        Hi Dadtotheend:

                        Just got back from my lawyer. They told me that the form 13B is only used for marriage, not common law. Common law is "whats yours is yours and mine is mine", meaning my debt is my problem. But this is only a starting point, I can argue that she did benefit from the debt. I guess we'll see how it goes, but I am pretty confident we can settle something out of court and then get it legally enforced.

                        Just clarifying, not trying to launch a personal attack or anything. Your advice has been very helpful, and I understand you are not a lawyer or anything like that.

                        Comment


                        • #13
                          When I said the calculations would be the same if the house were sold, I meant vs having to value the house. Common-law couples are definitely treated differently than married couples when it comes to the marital home. Common law couples only have to split the increase in equity over the time they were together, not the entire equity at separtion as with married couples.

                          Form 13B may be for married couples (sorry for that error), but common law couples still have to divide the value of family property.

                          If I have a cottage in my name only and if the equity in that cottage increased by $100K over 10 years of common-law union, I believe my common law spouse is entitled to $50K. The cottge is still mine, but the $50K goes into the basket of assets and debts called family property to be divided.

                          Just ask someone who just had to give his/her long term common law spouse half the value of his/her pension benefits.

                          I'm pretty sure on this but if I'm wrong please tell me so I can cover my face with egg.
                          Last edited by dadtotheend; 01-07-2009, 12:40 AM.

                          Comment


                          • #14
                            I'm pretty sure on this but if I'm wrong please tell me so I can cover my face with egg. [/QUOTE]


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                            Click 'divorce' to get to the homepage.
                            Under DIVORCE RESOURCES there is a common law section.

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