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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 04-28-2011, 11:06 AM
uwbrother uwbrother is offline
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Default Separation Agreement Questions ....

Hi all,


I am going through a separation / divorce. My ex and I have come up with a rather unusual separation agreement. We’ve done this without lawyers because we both know what we want. We both agree on all points. My question is, does our agreement contain any provision that’s against family law or that a judge will throw out when the divorce is filed? I’ve heard of cases where even though both parents agreed otherwise, court changed child support payments. Also of cases where they forced a 50% split of matrimonial homes without a party suing for it even though their separation agreement had a different split.


Here’s the situation: right now I have 100% of income, close to $200,000. She was going to college so obviously her income is $0. She is graduating now (writing her last exam this Friday), which is partly why she is moving now. However, she is looking for a job. We have three kids and we were together for just under 10 years.


I will have full custody of kids. She will have full access and generous visitation. We’ll probably go with a 35% / 65% split. We are both okay with it. Specific provisions I am concerned about :-


- All accounts and savings are in my name only, so I have to transfer stuff over to her. However, she doesn’t want RRSP. I told her she could cash it out and pay tax but she doesn’t want to do that. She is asking for 30% of RRSP account value in cash instead. I am okay with it. Will some judge look at this and say I need to give her 20% more?

- Right now I have 100% of income and she has 0%. But that’ll change in the future (in the near future since she finished college and is looking for a job and my income is unusually higher because of some stocks I was given, last of which will vest this year and then my income will drop). However, she wants to protect her future liability. I’ve agreed that regardless of what happens in the future, how my income fluctuates and whether I am unemployed, I still take full responsibility of :-
- 1) Private school tuition for our three children (they go to a private school, combined tuition in 4 figures every month). I have also agreed to sign that all decisions involving children’s health, education or religion (including something as simple as changing their school), will have to be made by both parents.
- 2) Full cost of their athletic programs (thousands a year) , medical, dental, summer camps, equipment, music lessons ... everything!
- 3) I will never ask for child support, regardless of how our incomes change
- 4) I otherwise accept full financial responsibility and liability as a custodian parent
- 5) As a CP, I am required to keep a hefty life insurance

- In return, she agrees to taking 12.5% of equity in the home (instead of 50%). That means in 5 years (when our youngest is only 9 and oldest is 14), even if she is making a 6-figure income and I am unemployed, I wont go after her for child support. There’s more on this in the spousal support area.
We are both okay with this. Will a court cause problems?


- I have an RESP account for three children with $60,000 in it. She expects me to be solely responsible for all childcare related costs. As part of that, she is requiring me to put $600 / month into the RESP until the maximum legal limit is reached. To verify this, she will get RESP statements every month from the account. In return, she will leave the account as-is (instead of spitting it), leaving me in charge. If there’s extra money in the account after our children graduate from post-secondary, I get to keep the money. But if there's shortage, I am going to be fully responsible for their post-secondary education.


- Since I make a lot of money ($200k, though it'll go down soon) and right now she makes nothing (though she'll have a salary soon), and since we’d been married for almost 10 years, she’s entitled to spousal support. But since i have legal custody of kids, it seems reasonable that the spousal support lasts 5 years (6 months for every year of marriage). Now she has asked for a reduced monthly payment ($2500 / month for first 6 months, $1500 thereafter) in exchange for me agreeing to pay for 14 years. Spousal support payment will be reduced by $500 / month everytime one of our children turns 18. She also wants me to agree to this amount (as a debt, ya know) even if our income changes or I lose my job or am unemployed for a while. So in 7 years if I am jobless for a while and she is a millionaire, I'll still owe her $1500 every month. This is also partly why she’s okay with taking 12.5% of equity in the home instead of 50%. I am okay with this. I’d rather give her $1500 / month for 18 years than $4000 / month for 5 years.


Now my question is, given that we have a few unusual provisions around future financial liability (spousal support, child support), division of matrimonial home (the 87.5% / 12.5% split), RRSP (she gets 30% of value in cash), my future rights (I'm signing off on everything and relieving her of all financial responsibilities she may be able to afford in the future) and spousal support payment calculation ... in my mind it’s okay because both she and I are okay with it. We came up with this together and are both happy about it. My question is, will some judge look at this when we file divorce and throw this back at us? Is there something in here that violates the family law or something that judge will say “sorry, I am changing this?” We dont want that to happen, because changing even one provision throws out the entire agreement and we’ll have to start from scratch (eg. if the judge says “sorry, matrimonial home has to be 50/50”, then I wont be okay with signing away the ability to ask for child support in the future or agree to spousal support for 18 years etc.


What do you guys think? It took a while to come up with this. We've been separated 9 months but living in the same house (I sleep on the floor in my home office) because neither one of us wanted to move out until everything was figured out. We are both ready to sign this and move on with our lives, but I am worried about judges potentially causing an issue when we file for divorce.
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Old 04-28-2011, 11:16 AM
HammerDad HammerDad is offline
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One glaring one is the "no child support" clause. That will most likely be deemed unenforcible should this ever end up in front of a judge. Parents do not have the authority to waive child support as it is the right of the child to be supported financially by both parents. What would be more likely to work is that you agree to pay spousal support in an amount equal to what she would be entitled to pay in child support and agree that such amounts offset each other.

Anything else is what you agree to. But.......

BE SURE THAT BOTH OF YOU GET INDEPENDANT LEGAL ADVICE (ILA) PRIOR TO SIGNING IT. Should she not get ILA and have a neutral lawyer review the agreement, the agreement could be set aside by the courts if she ever wanted to challenge it in the future.
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Old 04-28-2011, 11:43 AM
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Thanks HammerDad. It basically came down to the cost know (who gets what right now) vs. future liability (who assumes risk in the future). She wants to take less than she is entitled to know in return for me assuming all future potential liability.
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Old 04-28-2011, 02:29 PM
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I personally think that while you both agree to it, it is extremely confusing and non-standard and judges may not like it. And I see a number of flaws in it. The main one being that you are setting a lot of unfair things in stone for the future for circumstances you cannot predict.

Usually, there are four aspects to a divorce that need to be examined, and they are best kept quite separate. These are child support, spousal support, equalization and access. So you would do better to keep them as separate in your agreement as possible. But there are ways to do that and still set up things the way you have tentatively planned. So let me suggest some rearranging:

Child Access: sounds like you have this down pat. But be sure to strictly outline where the children will live and when access will occur. It's fine to say "generous" access now but you never know what may happen in the future. So spell it out explicitly in the agreement, even if you immediately begin to deviate. Then, if something goes sour in your coparenting, you have the legal setup to fall back on.

Child Support is the right of the child. It absolutely cannot be given up by either parent in an agreement, and a judge is probably not going to allow it. If by some chance it goes through, it can still be revisited and reopened at any time for change by a different judge! So concessions granted in return for no child support turn out to be gifts and you get stuck paying child support anyways! But what you describe kind of mixes child support up with spousal support, which I suspect would also raise big red flags with a judge, and makes it unecessarily complicated. There are standard amounts of child support (the 'table') based on your income, and you should probably be using them. Arrange your access to somewhere between 40-60% with each parent, and you both owe each other child support. This is called the offset method. Essentially, you owe her based on your income, and she owes you based on her income, so you offset one from the other and the higher income person pays the lesser income person the difference. A judge expects to see both parents supporting their children, and this is how it's represented. Put it in that this gets adjusted every year based on income on your tax returns. And have a clause saying when it ends, usually when a child moves out, turns 18 or finishes post-secondary, whichever is last. This keeps the money linked to the children, and is flexible to change if, for example, one or more children decide they want to live solely with one parent, or (hopefully not) a child dies. You also want to keep flexibility in the section 7 expenses (university tuition, braces, sports fees, anything extraordinary). This is usually linked to income, as in you both pay proportionate to what you make. As you are currently the higher earner, by a significant amount, you'll be paying her a substantial amount every month at the start. Which brings us to the next topic.

Spousal support. You want this completely separate from child support, which you are already paying. You anticipate her finding a job, and you don't want to be stuck paying if she gets lazy and doesn't, or worse yet, stuck paying if she gets a job that pays better than yours. You also want a firm end date. Usually it's 5 to 10 years for a ten year marriage. If, as you say, she is likely to soon find a good job, suggest the 5 year length, as she'll be getting money from you much longer in the form of child support (at least until her income overtakes yours). That way, you are supporting her generously for a little while, till she gets her career underway and becomes self-sufficient.

Equalization: I'm not sure of the reason why she wouldn't want half the house value and half the RRSP. Having a big asset right away would let her buy a home for herself and the children to reside in. But if she'd rather have a greater monthly payment from you in return for less equalization, don't call it spousal support, call it a monthly payment for the equalization. So you end up paying her, say 5% of the total of her half per year for ten years, it accomplishes the same thing, and keeps the concepts separate. But it doesn't have to be perfectly half of everything, it is half the total net value, so it's entirely appropriate to give her less house and more RRSP, or whatever. If you're staying in the house and that's the biggest asset, it will be her that ends up with a cash payout. But if you can arrange with her to pay her monthly till the full amount is reached instead of giving her a big one-time payment, I would think that would be okay with a judge. I'm not sure why she'd want that; was it the only way to avoid you losing the house or something?

With a lot of these changes, keeping the different areas distinct, I think you have a lot better chance of getting your agreement signed by a judge. And depending on the amounts, keeping in mind that the child support amount is set by law, you can end up with something that functions a lot like what you have described as previously agreed to.

Honestly, the main problem you have is foreseeing the future. In ten years, when you're both remarried, do you really think you're going to still be okay with paying your ex a monthly amount when you are out of work, your new wife is pregnant with twins, your three earlier children have all decided to live solely with you, and your ex and her new hubby both make six figures? Based on significant reading in here, things change over time, and an amicable split may become negative later. You want to make a clean break, live your life and let your ex live hers. And you want to be fair, now and in the future. Taking a greater portion of equalization now and agreeing to keep paying her even if you lose your job and she wins the lottery, is just painfully unfair to both of you in different ways, and can build resentment over time, diminishing the amicable relationship you want to maintain for continued effective parenting.

Be fair now, and work it out so that the agreement ends up with fairness at all points down the road. And honestly, the more you make it "look like" an agreement lawyers and judges are used to seeing (CS as per table, normal SS range and amounts, and 50-50 equalization) the more likely it is to go through.

Boy that turned out long.

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Old 04-28-2011, 02:36 PM
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Quote:
We came up with this together and are both happy about it. My question is, will some judge look at this when we file divorce and throw this back at us? Is there something in here that violates the family law or something that judge will say “sorry, I am changing this?”
The child support one is killer. You CAN"T have that there. Technically the judge isn't supposed to do so. Write is a provision to have it re-evaluated each year based on the table guidelines. If you DON'T require it, you don't HAVE to take it from her, but if ANYTHING happens it's not a huge fight. It protects the KIDS down the road.
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Old 04-28-2011, 02:52 PM
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Thanks everyone, this is really helpful. So what I am hearing is :-

* Child support based on table and income
* standard spousal support calculation
* She forgoes part of her equalization and I pay her for it over the years, separately from the above two items

Some background :-
* I dont know why she doesn't want RRSP. She wants cash for it instead. I can't give her 50% of value in cash, so she's okay with 30% value. I'll ask her to just take RRSP and then cash it out herself. I think she doesn't want to deal with tax hassles.

* With the house the problem is that we both agree that kids should have the same home they're accustomed to. The problem is that if I have to give her half the equity, it'll put mortgage at a level that'll be hard to afford if I have to make spousal support payments and act as a custodian parent. It's not that she doens't like money, she understands that if she insists on money, her kids lose their home and have to move etc. With that understanding, she's willing to take a smaller sum now (so I keep the house) but get support payments for longer period. So at the end it all works out, she still gets money. But in addition to that she wants to reduce her future liability. She is okay with it if it means she walks away with some cash and monthly payments but then I can't come after her for money.

We may have to get lawyers to get a solid agreement drafted. Another problem is that she and I both know people who reached agreements, got lawyers only to have one partner get influenced by lawyers and change mind. I am smart enough to know the risk I am taking, she is smart enough to understand what she's giving up, neither one of us can comprehend why the legal system potentially has an issue with two adults coming to an agreement.

Afterall, if we were married we'd do things our way and no court would tell us otherwise.

I often think about my parents. They came close to divorce when I was in highschool. I worked throughout highschool to save for university and was completely independent when I was 17. However, if my parents did get divorced, somehow my father would be expected to pay child-support for me since I was in university, even though I was completely independent anyway ... paying for my tuition, rent when I was in school, books, clothing and everything else. Strange.
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Old 04-28-2011, 02:55 PM
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Quote:
Originally Posted by NBDad View Post
The child support one is killer. You CAN"T have that there. Technically the judge isn't supposed to do so. Write is a provision to have it re-evaluated each year based on the table guidelines. If you DON'T require it, you don't HAVE to take it from her, but if ANYTHING happens it's not a huge fight. It protects the KIDS down the road.
Thanks, apprciate the response. I am only learning about this stuff now. At a personal level I dont understand how it protects kids, since we both know (deadbeat) mothers who take child support and spend more on themselves than children. Also, table tells me even if my wife and I shared custody (50%), the CS payment would be around $2500 of aftertax money, plus I'd be responsible for S7 costs like private school tuition, sports etc since our income spilt is 100%/0%. I promise you our kids do not cost $2500/month. Add that and standard spousal support payment and I'll have to rent a basement apartment. That means I wont be able to have kids for 50% of time since I wouldn't be able to give them their own bedrooms etc that they have here. If I follow all standards then I'll only get to see my kids occassionally on weekends. I dont want to be a McDonald's father. WTF! We have no choice but to do a non-standard agreement because otherwise I'll have to go from being an involved father to just a bill-payer with no life of his own. I had no idea "standards" were so one-sided.
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Old 04-28-2011, 03:05 PM
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One more question: would she be able to give me a part of equilization payment back as "gift", on the condition that I use that to draw any future claim I may have on her income (whether it's reducing SS or getting CS). She'll only owe me money after I've depleted the "gift".

In theory she can take this money, invest it and whatever and if she owes me money since I am the CP, she can pay me CS from it. In practice doing so means first) kids no longer get to live in their home and second) her future income stays at risk. She is willing to give things up now as long as she gets to walk away and be financially free. I am willing to give up future claims on her now if it means I get to live in the matrimonial home with children as the CP. We both want same things, we just don't want judges to be confused by it

I wonder if we can do two separate agreements (one standard separation agreement and the other where she gives me a gift and in return, I promise to draw from the "gift" whatever her future committment may be)
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Old 04-28-2011, 04:32 PM
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Unfortunately, any provision you put in the agreement that in anyway appears to discharge her obligation from c/s, if ever the agreement ends up in court, will be struck by a judge.

C/S is based off of her income, which would be reviewed each year. A gift to you, would be a gift. You cannot qualify a gift as c/s. You could have her transfer money back to you as a lump sum c/s payment, and after the amount is used up vs her annual salary, she would then be obligated to make the monthly payments.

Mind you, this only becomes and issue should this end up in court. If you never step foot into court, these issues become moot.

Last edited by HammerDad; 04-28-2011 at 04:36 PM.
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Old 04-28-2011, 04:39 PM
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Mind you, this only becomes and issue should this end up in court. If you never step foot into court, these issues become moot.
Thank you sir, I really appreciate it. But isn't a divorce supposed to be filed in the court? Wouldn't a judge review the separation agreement?

And either way, she (understandably) won't give me anything extra if she doesn't get anything in return. She is looking to give up what she is entitled to today if I give up what I may be entitled to in the future. What I am hearinng is that I can't give up future potential child support payment, no matter what happens today. That's a good feedback. We'll go back to the drawing table and rework somethign else out.
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