Spousal Support Buy Out

[Serene]

My husband owes another 30K in spousal support. His SA was written that he would pay his spousal for XX years (almost up) and it was regardless of how much she made or whom she lived with or married. He has no regrets with this arrangement at all as they both got a good deal in the end with this particular deal.

Curious if anyone has offered a lower amount to be paid out in full ahead of time to their ex spouse. So for instance, we'd offer her 25K paid out in full instead of paying the 30K over the next 18 months. Has anyone tried this? We know that mom has very high legal bills since she had two lawyers during all their court stuff so this could actually benefit her as well. In any event, she could just say no if it were offered and she didn't want it?

If this was kosher do you present it in a letter of offer?

[arabian]

Sounds like a very good offer. I wish my ex would make such an offer, however, the amount owing is much larger.

Yes I'd put it in writing and send to her and her lawyer.

[stripes]

As you say, she could just say no if she doesn't want the lump sum and then stick with the original agreement, so I see no harm in offering. I would get a lawyer's advice in writing up the offer, though, to be sure that if she does accept it, every possibility of her appealing later on and getting the remaining $5K (or whatever) has been extinguished. I wouldn't make this a do-it-yourself job.

[Rioe]

On the one hand, it could be very attractive to her, as she'd have the money now, and perhaps save herself some interest payments.

On the other hand, her ex being able to suddenly come up with a big lump of $25k all at once instead of in monthly payment chunks might get her thinking he's got a lot of disposable money and she could be tempted to try to increase the spousal!

[Serene]

I don't think she could ever increase the spousal. She has been living common-law with another man since date of separation with no claw back in SS. She has also worked and again, no claw back. Since date of separation full SS has been paid. To open up a renegotiation of SS would not be in her favour. And further, the SA was written with 8 years SS for a ten year marriage (she only was at home for 7 years. And again, no clawback at any time. Dad also never pursued occupational rent and her and new partner lived in matrimonial home for 3 years before SA was even made.
Wondering what a fair number would be to toss out there...80 percent of balance owing?

[annapurna66]

Just be sure to keep in mind the tax implications when you are constructing your number. Spousal paid in year given must be claimed in year given unless you are designating as "lump sum" . Lump sum assumes that all tax condiderations have already been accounted for. In other words its straight cash in or out of your pocket. 30 lump sum, for example, does not equal 30 when paid out over several years. Periodic spousal support? (which is what I think they call monthly payment?) needs to be claimed through your income tax return.

[stripes]

^^^ Good point. A lump sum payment of $25K right now could cost you more than a payment of $30K over time, because you'd lose the tax deduction.

[Serene]

I didn't realize lump sum isn't tax deductible. Does anyone have source for this?

[Serene]

Very good advice received! A lump sum (and the situation I proposed is actually described on crazy website) is not tax deductible for payor. More interesting is that cra states support payments must be paid directly to the recipient. So payments to fro don't technically qualify.

[OrleansLawyer]

I didn't realize lump sum isn't tax deductible. Does anyone have source for this?

If you discuss it with CRA they will confirm it. In any event, take this to be correct ; periodic spousal support is deductible, lump sum is not.

[MS Mom]

Very good advice received! A lump sum (and the situation I proposed is actually described on crazy website) is not tax deductible for payor. More interesting is that cra states support payments must be paid directly to the recipient. So payments to fro don't technically qualify.

Child support payments made to FRO are considered to have been made to the recipient, I can't see how spousal would be different.

I would say that the CRA statement about it being made to the recipient is to avoid any sideways tax shelters by paying to someone with a lower income (thereby reducing the tax) over the actual person. ie. Can't be payable to a child, new spouse, parent, sister, etc, etc.

FRO is nothing more than a "facilitator" of the payment, like the bank is when they accept your utility bill at the counter.

[Berner_Faith]

Child support payments made to FRO are considered to have been made to the recipient, I can't see how spousal would be different.

I would say that the CRA statement about it being made to the recipient is to avoid any sideways tax shelters by paying to someone with a lower income (thereby reducing the tax) over the actual person. ie. Can't be payable to a child, new spouse, parent, sister, etc, etc.

FRO is nothing more than a "facilitator" of the payment, like the bank is when they accept your utility bill at the counter.

I agree... I would add that the "being made to recipient" means the recipient decides what to do with the money. You can't pay a mortgage or bill and say that it is SS, as it is not being paid directly to the recipient.

[Links17]

The LUMP SUM is Not tax deductible.

From the explanation you've given your spouse seems to have gotten screwed and is happy with it - unless the monthly amount of spousal is low as per the SSAG.

Offering the 25k is stupid - straight up (I said it)
1. There is a tax implication - spousal support payments are deductible because they are "periodic" versus lump sum
http://www.cra-arc.gc.ca/tx/ndvdls/t...ymnts-eng.html

2. If your husband would pay the 25k right now and lose his job TOMORROW then what? In your explanation of the agreement you didn't explain that SS payments can be revised if his salary goes down.

This seems to be another example of getting lambs to slaughter and smiling while you're at it - I bet his EX is happy she is getting supported by her ex, splitting her expenses with her new boyfriend (who may be also supporting her) getting child support and maybe all the family benefits.....

7 years is a short-medium marriage and the fact she was able to work right away and was living with a common-law spouse would have had a significant impact on SS reduction....

[Serene]

She should be content with the arrangement but is not. Not my/our issue either. It is a very good deal for her indeed. And she is prospering.

Spousal support is firm and fixed. Regardless if he loses his job. Spousal is not to be revised per their SA regardless of situation.

We are not going to propose lump sum. It was a fleeting thought that might have benefited both homes. It would not benefit us so it is a no go.

If my husband lost his job I'd support him and his financial obligations for his children and former spouse.

His deal was made in good faith - he would have spent time and money fighting her in court to reduce spousal. She was also living in the matrimonial home in his name. He threw a bone and a good one indeed. He still has no regrets.

[Links17]

His deal was made in good faith - he would have spent time and money fighting her in court to reduce spousal. She was also living in the matrimonial home in his name. He threw a bone and a good one indeed. He still has no regrets.

Good Faith in what?

You know what's worse than going to court and getting unfair judgement - capitulating to the system and accepting unfair judgements.

You know how Moge, Bracklow and Migline and all these other advancements for women were made? By not accepting what the women perceived as unfair decisions. The 2 first decisions are the reason SIGNIFICANTLY more in spousal support.

The first battle in divorce fairness happens in court, in front of a judge and then in front of an appeal.

Self-Represent for God sakes...

Most people who are reasonably happy might leave relationship if you offered them 7 years of guaranteed income on top of what they could earn.

For the others reading this thread - do not CONSENT to unfair measures you hurt yourself and the people coming after you.