My soon to be ex-wife and I went through the mill that is known as Canadian Divorce Law and by the time it is all said and done (which is never) she will have received over one million from me (thus my online name).
I will keep the emotional part out of this message and describe my situation. I am a government employee. When I became a government employee (before I met her) I apparently became entitled to one week of severance pay for each year I worked. This is a very generous amount and the government has recently started the process of ending severance as an entitlement as part of recently negotiated contracts. Yes, I am fortunate to have this benefit and yes it is out of whack with other contracts outside of government and yes it is time for it to be over. I now have the option of pulling a portion or all of this amount out now (before the end of January) or waiting until I retire or end my service with the government (eleven years from now).
When we entered into the process of disclosing and settling on assets I was quite surprised to have to disclose the amount of severance pay that had accumulated during our time of marriage. I really had no expectation to see this money until I retired and thought it was simply an extension of my employment period. I thought that when I retired I would just continue to get 28 weeks of salary, every two weeks, and then go on pension. This is not the case. Government severance, at the time of our settlement, was paid as a lump sum on retirement.
I considered severance as a theoretic asset as I could not access the money or transfer it out as I could with my pension. Living in a government town, all local family law experts are well versed in the Pension Benefits Division Act (PBDA), and how to access accumulated pension and how to divide it on divorce. Severance pay is not considered as part of pension and was not accessible to me; in other words, my ex was about to receive a cash advance on money which, at the time, I would not be able to touch or see for well over a decade. Based on the advice given to me by my lawyer I really had no argument to hold onto her portion of my severance until I actually received it and therefore listed it on the Net Family Property Statement. Her portion of the after tax value was determined to be valued at more than $10,000 and she got it, as a cash advance in my view, and it hurt me financially and I carry current personal debt as a result.
The asset has now turned into potential income.
Our agreement bases child support payments on my annual income. If I pull all of the severance pay out before the end of this year I am obligated to pay close to an additional $10,000 in after tax child support next year. Read this again if you like – additional. I presented, as my position to her, that since we had agreed to my severance as an asset, rather than income, she should not have access to any portion of it as the issue is settled. There was accrual of this asset prior to marriage, there was accrual of this asset after marriage, and there was an increase in value since the settlement. Our final agreement states that each of us may dispose of property (assets) as if “he or she were unmarried”. She very graciously will allow me to not include the portion we settled on (in 2008) for purposes of child support next year, however she will not consider the pre or post marriage portions as an asset and will not consider the increase in value since the time of separation. She wants any amount over what is listed on the property statement to be considered as income and wants this amount to be used in the calculation of child support.
Based on what she is allowing me, I will only have to pay an additional $5,000 in after tax child support next year. Read this again if you like – additional.
OK, so yes, based on the current views of the courts severance is income and income is relative to the standard of living the children should expect and the recipient (in this case the mother) who has them more than 60% of the time is entitled to these payments for the benefit of the children.
I of course have no control over how this additional money will be spent and must, based on the good judgment of the Canadian legal system, expect that she will do what will be right for the children. That is to say she would never consider taking an out of country winter vacation (without the kids), replenish the never ending flow of wine from the box in her fridge, continue to have my daughter pay for her own clothes and shampoo, have my daughter pay for her driving lessons. It would be unimaginable that she would buy a round of shooters for her friends at the local bar in celebration of yet another success story in fleecing her evil ex husband. But I digress.......
So, although I am not a lawyer I do think there are others that can benefit from my experience. First, for government workers, if you are listing severance as a shared asset on your Net Family Property Statement, you should also include the accumulated portion of severance as an asset at time of marriage. By listing it as an asset, it is harder for the other party to argue it as income. Second, in consideration of severance as an asset, there should be a clause written into your agreement effectively agreeing that severance is an asset, and as such should not be considered as income in the future, and like many assets, it is likely to increase in value over time. My ex has in essence agreed to some of this, but she is still willing to mix asset and income for the non-listed portions as interchangeable commodities (which are interchanged to her advantage of course). Third, for other assets that have future liquidity that may land on line 150 of your tax return, a separate clause for exclusion from income should be written into the agreement, as, in consideration of this being an asset, it should not be considered as an asset and income at the same time.
After losing my yard, my deck, my pool, my garage, my car, my furniture, my house, my severance, my pension and the proper access I deserve to my children I am simply unable to fight this in court. It is a flaw that needs attention and maybe someone who can afford a good lawyer can move this forward to set a precedent. I cannot.
I will keep the emotional part out of this message and describe my situation. I am a government employee. When I became a government employee (before I met her) I apparently became entitled to one week of severance pay for each year I worked. This is a very generous amount and the government has recently started the process of ending severance as an entitlement as part of recently negotiated contracts. Yes, I am fortunate to have this benefit and yes it is out of whack with other contracts outside of government and yes it is time for it to be over. I now have the option of pulling a portion or all of this amount out now (before the end of January) or waiting until I retire or end my service with the government (eleven years from now).
When we entered into the process of disclosing and settling on assets I was quite surprised to have to disclose the amount of severance pay that had accumulated during our time of marriage. I really had no expectation to see this money until I retired and thought it was simply an extension of my employment period. I thought that when I retired I would just continue to get 28 weeks of salary, every two weeks, and then go on pension. This is not the case. Government severance, at the time of our settlement, was paid as a lump sum on retirement.
I considered severance as a theoretic asset as I could not access the money or transfer it out as I could with my pension. Living in a government town, all local family law experts are well versed in the Pension Benefits Division Act (PBDA), and how to access accumulated pension and how to divide it on divorce. Severance pay is not considered as part of pension and was not accessible to me; in other words, my ex was about to receive a cash advance on money which, at the time, I would not be able to touch or see for well over a decade. Based on the advice given to me by my lawyer I really had no argument to hold onto her portion of my severance until I actually received it and therefore listed it on the Net Family Property Statement. Her portion of the after tax value was determined to be valued at more than $10,000 and she got it, as a cash advance in my view, and it hurt me financially and I carry current personal debt as a result.
The asset has now turned into potential income.
Our agreement bases child support payments on my annual income. If I pull all of the severance pay out before the end of this year I am obligated to pay close to an additional $10,000 in after tax child support next year. Read this again if you like – additional. I presented, as my position to her, that since we had agreed to my severance as an asset, rather than income, she should not have access to any portion of it as the issue is settled. There was accrual of this asset prior to marriage, there was accrual of this asset after marriage, and there was an increase in value since the settlement. Our final agreement states that each of us may dispose of property (assets) as if “he or she were unmarried”. She very graciously will allow me to not include the portion we settled on (in 2008) for purposes of child support next year, however she will not consider the pre or post marriage portions as an asset and will not consider the increase in value since the time of separation. She wants any amount over what is listed on the property statement to be considered as income and wants this amount to be used in the calculation of child support.
Based on what she is allowing me, I will only have to pay an additional $5,000 in after tax child support next year. Read this again if you like – additional.
OK, so yes, based on the current views of the courts severance is income and income is relative to the standard of living the children should expect and the recipient (in this case the mother) who has them more than 60% of the time is entitled to these payments for the benefit of the children.
I of course have no control over how this additional money will be spent and must, based on the good judgment of the Canadian legal system, expect that she will do what will be right for the children. That is to say she would never consider taking an out of country winter vacation (without the kids), replenish the never ending flow of wine from the box in her fridge, continue to have my daughter pay for her own clothes and shampoo, have my daughter pay for her driving lessons. It would be unimaginable that she would buy a round of shooters for her friends at the local bar in celebration of yet another success story in fleecing her evil ex husband. But I digress.......
So, although I am not a lawyer I do think there are others that can benefit from my experience. First, for government workers, if you are listing severance as a shared asset on your Net Family Property Statement, you should also include the accumulated portion of severance as an asset at time of marriage. By listing it as an asset, it is harder for the other party to argue it as income. Second, in consideration of severance as an asset, there should be a clause written into your agreement effectively agreeing that severance is an asset, and as such should not be considered as income in the future, and like many assets, it is likely to increase in value over time. My ex has in essence agreed to some of this, but she is still willing to mix asset and income for the non-listed portions as interchangeable commodities (which are interchanged to her advantage of course). Third, for other assets that have future liquidity that may land on line 150 of your tax return, a separate clause for exclusion from income should be written into the agreement, as, in consideration of this being an asset, it should not be considered as an asset and income at the same time.
After losing my yard, my deck, my pool, my garage, my car, my furniture, my house, my severance, my pension and the proper access I deserve to my children I am simply unable to fight this in court. It is a flaw that needs attention and maybe someone who can afford a good lawyer can move this forward to set a precedent. I cannot.
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