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  • SS - So ConfuSSing

    Hello all,

    Firstly, I’ve been perusing this place for a few weeks now and am impressed at the wealth of knowledge. I hope to be able to contribute my own experience at some point.

    Here is my situation.

    Cohabitation for 10 years, married for 6.

    We own a house and share car debt.

    Here’s the situation:

    I plan on paying her off (offering a lump sum) following the sale of our house to avoid SS. She is ok with this. Apparently

    She seems to think I would have to pay her a ton in SS. She may be correct. I dunno.

    The online calculator is fine and I understand that SS is fairly subjective and has a ton of variances.

    All that said, what do you guys think? Should I pay her off?

    Likely deal is that, out of the $115,000 we would make off the house, she would get $80k, I would get $30k AND take over the car debt (+35k).

    Other possibility is that we split assets/car debt down the middle and she tries her luck with SS. Seems like a crapshoot. I don’t want to have to give over $700 for 5 to 10 years.

    I’m thinking buying her off is best, as I can just cut the cord as soon as the house is sold.

    Here are the facts:

    - Cohabitating for 10 years, married for 6
    - Both Government of Canada employees
    - His base salary is $99,000 per year (though add on 15k with overtime)
    - Hers is about $65,000 per year


    Any input would be greatly appreciated.

  • #2
    From the sounds of it, you don't have children. Unless she took time off work to clean your house, she is probably not entitled to any compensation for sacrifices made.

    Furthermore, with her reasonable job, I'd be surprised if she can show need.

    More to the point, your $700/month for 7 years (a ridiculously unlikely scenario) is only about $60,000, which is close to what you are giving up in equity.

    Frankly, I would play the SS lottery in your case.

    Also, you are mentioning that you get a 35k car loan, but I'm guessing you are getting the car as an asset as well? If so, probably doesn't matter as much as you think it does. If that is an issue, offer to sell the car and pay off the loan with the car/home equity, then buy a new one.

    Comment


    • #3
      Appreciate your feedback, Janus. I like how you called it the SS lottery.

      She didn't take time off for the house or anything, nor did she pay my way through school or anything.

      As for the car, like all cars, it's worth far less than the debt, so it's negative equity.

      I'm trying to be good here, as I wanted to separation - not she (though it was inevitable). She worries about financial security, which I understand.

      I'll update as things progress.

      Thanks again!

      Comment


      • #4
        I don't see any entitlement there either. IMHO if you "pay her off", this is the scenario that leads lawyers to believe that SS is an automatic entitlement, it becomes a self-fulfilling prophecy.

        Spend some money on an hour with a top divorce attourney, even if you don't think you'll need one for the full process. If you're going to play the lottery, at least know what the odds are.

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        • #5
          Don't even entertain an amount or duration without entitlement being proven.

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          • #6
            Concerning lump sum spousal support:
            The amount to be paid in lump sum spousal support is not the aggregate of the monthly support.

            Monthly support carries with it a tax liability. By paying a lump sum amount, and thereby avoiding a transfer of tax liability, the payor is incurring a greater loss per dollar. Furthermore, money today is worth more than money tomorrow due to the rate of return on investments and risk reduction.

            It is not uncommon for people to contemplate lump sum support as a reverse mortgage. How much would it cost, today, to provide a pension in the amount of after-tax spousal support for the duration of support? Negotiations around reasonable rates of return and the value of risk mitigation at the parties' discretion.

            Comment


            • #7
              Originally posted by PriceforFreedom View Post
              - Cohabitating for 10 years, married for 6
              - Both Government of Canada employees
              - His base salary is $99,000 per year (though add on 15k with overtime)
              - Hers is about $65,000 per year

              Any input would be greatly appreciated.
              She has a perfectly good salary for someone to live on. She has no need for SS. Doesn't sound like she made any career sacrifices over the course of the marriage. No compensation required. She has no entitlement to spousal support.

              Don't offer her anything.

              Divide up the assets and debts and pensions fairly, and go your separate ways. If she wants to take you to court in the hopes of getting something better, it's going to cost her a lot in legal fees. Be sure she understands she'd be paying your own legal fees if she loses.

              Comment


              • #8
                Total years together - 16 please clarify
                Age at time of separation

                your salary estimates sound vague but you state you get around 115 and she gets around 65 (doesn't matter if it's overtime - check your tax returns). 40K difference in salaries. Best case scenario for her (which go for long term marriage which I don't believe comes into play here) would be 50% of difference between your salaries = 20K/annum. Other qualifying things come into play so I don't think you have to worry about that but do check with an attorney - I'm sure she already has.

                Comment


                • #9
                  Another factor is that a decent property equalization will reduce her entitlement for SS even more...and it sounds like she had none to begin with. Property allows a person a nest egg to restart life. Any economic hardship as a result of the breakdown of the marriage? Doesn't really sound like it.

                  Any lump sum SS would have to discount for tax as OrleansLawyer poster said.

                  Comment


                  • #10
                    This is such a simple case that it is a joke that SS or unequal asset division is even worth discussing.

                    Two people live together and get married. No kids. Both work full time during relationship.

                    They split and one is entitled to money and more than half of the assets??

                    How about looking at it this way.

                    Lets assume you made more money than her during the entire relationship. The living arrangement of sharing your money equally was a benefit to her and a detriment to you financially.

                    Now that your relationship is over, she wants more from you, despite benefiting financially during your relationship from you??

                    Total insanity and she is an embarrassment to self respecting independent adults everywhere, and possibly to women (though I'll let them decide that).

                    Split the assets and debts evenly - it should be simple math, and offer no SS.

                    Comment


                    • #11
                      I agree with the consensus here. I would not be in agreement to any spousal support and would be looking at an equal split of both assets and debt accumulated during the relationship. I don't think you would be made to pay ss but if so, it is tax deductable and would be for only a short period of time and you would be further ahead financially in any event.

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                      • #12
                        Making a lump sum payment definitely has the benefit of closing the book on the relationship and starting a new chapter without there being an ongoing connection with the ex. Negotiate per comments/advice above on calculation and tax implications.

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                        • #13
                          Sharing your money equally is just that - equal. No one benefits more than the other as when you marry your finances are considered to be merged - no detriment to you.

                          Assets - debts = amount to be equally divided.

                          You should then proceed to weigh SS entitlement (not before division of assets).

                          If she is entitled to SS then I would offer her a lump sum amount. If she does not accept your offer then be sure to get a definite end-date of SS. Keep in mind that if she goes this route she will likely request that annual disclosure of financial information be performed. If you receive large increment pay raises then the SS would likely increase accordingly. If you start a business on the side and generate income, like it or not she would be entitled to increase in SS.

                          Consider your own personal situation and go from there. Lump sum can be painful at first but in the long run you might save a bundle.

                          Comment


                          • #14
                            I, too, go with the consensus here. 50/50 of all the assets and liabilities and make sure you don't assume debts from before marriage time and also don't split assets before marriage time. Matrimonial home is always 50/50.

                            No SS, monthly or lump sum. 65K is pretty good income for a single person in Canada and I don't see why she can't live a pretty high standard lifestyle with that income. SS is not for someone who just wants to go cruising around the world or rack it up in the savings accounts, it is for those who really need to survive.

                            Don't give into to bluffs game.

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                            • #15
                              Be very, very sure whether she is entitled to SS or not. What you "feel" may not hold any weight. Always examine the pros and cons: Refusing to negotiate on any level can easily cost you more in legal fees in the end. Paying her off a lump sum not only gets her out of your life sooner, it closes the door on future claims if executed properly. Read up on recent cases and compare your situation but keep in mind that most family law matters are settled before trial.

                              Comment

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