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Financial Issues This forum is for discussing any of the financial issues involved in your divorce.

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Old 08-12-2007, 08:03 PM
workingthruit workingthruit is offline
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Default Annual Reconciliations and RRSPs

I have a long but interesting and unique situation. I appreciate the effort anyone takes to read the whole thing and who may respond/comment.

I have several questions from anyone who is familiar with the law, and/or anyone else who has an ANNUAL RECONCILIATION clause in their agreement or order.

I have one, and my ex is trying to include my RRSP withdrawl in my income for the purposes of recalculating.

I filed a motion and am in court tommorrow morning - so any quick feedback would be appreciated.

My base salary was only 3/4 of the number that my ex and her lawyer wanted to use to calculate CS and SS.

Let's say my base income was $75 and my payments are based on income of $100

My salary had been heavily boosted by bonuses the previous years. The company I worked for had lost the clients that paid those bonuses, and was having a rough time. I indicated to them these bonuses were NOT coming.
Ex refused to take payments on my base, and have me top her off in a lump at a year end reconciliation.
Fine I said, I'll pay on your number, but I want a year end reconciliation, where if I've underpaid I owe her, and if I overpaid she owes me.
If she doesn't pay, it will be deemed a credit that I can draw off of for future payments.
Also at the reconciliation the amounts going forward would be revised to match my previous year's income.

As evidence that the company I worked for was in bad shape they let me and about 7 other senior level people go in december 06 (no worries was reemployed very quickly somewhere else - at a significantly lower salary, but that comes into play later....)

What did it work out to?
I am current on both SS and CS. (incl Aug 07) - all still on the inflated #
They worked out to 80% of my 'income' in 2006.
(with the termination in Dec. I didn't even make my old base income for 06)
Let's say I made $70 instead of my base of $75

Currently works out to 100% of my 'income' in 2007. (I keep $2 every month)
Let's say I make $50 now

The RRSP Withdrawl
Well I got hounded and threatened by FRO all along in 2006 because I simply let them take 50% of my pay every month and it didn't make their number.
So I liquidated my RRSPs and paid in full not only for 2006, but as I mentioned I am current in 2007 as if I made $100 still.

If I had paid in full and not liquidated my RRSPs I wouldn't have been able to support myself and my kids who I have 3 out of every 7 days (Sat/Sun/Mon), and 5 out of the 9 summer weeks.

Where did the RRSPs leave me?
Coincidentally - by liquidating my RRSPs it left me basically at the number I was paying on.
I made $70 and liquidated $28 - leaving me at $98.

So what happened at reconciliation time (May 07 for 2006)?
Well as you'd suspect ex is trying to say I made $98 because line 150 on my tax assessment says $98. But as I noted $28 of that is liquated RRSPs that I wouldn't have liquidated if my support amounts were based on $75 and not $100.
So not only won't she agree to payback the $ she would owe if we calculate based on the $70 I actually made, but she won't readjust the numbers to be commensurate with my current income of $50.

Her lawyer actually tried to say I was massively in arrears (say 25% of the total CS) on CS based on $98 in income.
She had incorrectly used the tables and come up with some crazy number I have no idea where.
They've tried to pull the old "it was an oversight your honour" on other things where they didn't fully disclose items on a financial statement (she had 5x the $ she claimed she had on her financial statement in the case conference)
I'm assuming it was their attempt to scare me off of filing a motion?

So now what?
Well, I am attaching the actual clause from the agreement if anyone wants to see the actual language.
SS clearly states it will be based on income from employment, so I think I'm covered there. It's not as clear on CS.
I am arguing that the spirit of the agreement is on employment, and under sec. 17 "Pattern of Income" RRSPs never contributed to my income before and can't again (they're gone) to have them excluded from the calculation.
I also included in my affidavit that if RRSP withdrawls are considered topline income, then should RRSP contributions be deducted from topline income? I submit neither would be fair.

I also think the court will not keep the levels at the existing amount regardless - I just can't live on $2 a month LOL.

Any thoughts on my exposure risk here is?
Will the judge order the reconciliation for SS on earned income of $70?
Will the judge order the reconciliation for CS on earned income of $70?
I'm not even asking that the amounts be changed in 2007 to my 2007 income of $50, but rather $70 as the reconciliation clause dictates.
I'm happy to live by the rules, the credits I'd be owed will have me pay nothing for the balance of the year anyway, and I can manage to overpay at $70 on my $50 anyway.

Credits - How can I use them?
She won't pay, so assuming I win, the amounts will become credits.
On the new amounts (assuming they are changed to be more realistic) these credits would amount to say 12 months of SS (which is reviewable in Sept 08 btw) and 3 months of CS.
Based on the language in the clause I shouldn't have to pay ANYTHING until the credits are exhausted. - please read attachment
However I've read some case law and often credits are amortized over time.
ie: I can use $1000 a month as a credit.

Does anyone know/think how a judge might rule on that?

They filed NO responding material. Tommorrow is the motion.
I am suspicious of this - can anyone think of a reason?
I suspect they may try to put something in tommorrow, so that I won't have time to respond, or prepare for it. If I say that they may claim the motion should be adjourned - which I can't afford to have happen - I can't pay at $100 income level another month.
Maybe it's so clear cut they don't think they can win and just wanted me to have to jump through the hoop.
I will object to any materials they try to submit past the deadline - they were served with my materials 2 months ago (June 16).
Will the judge allow their material if they bring it?

I'm self represented, and have asked for costs - obviously this took alot of my time, but more importantly I want there to be a downside for them dragging this out. A Costs award might discourage them from fighting something they already agreed to.
Can self represented folks get costs?

If you made it this far - thank you
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File Type: jpg Recalc clause.jpg (36.9 KB, 4 views)
Old 08-14-2007, 09:32 PM
logicalvelocity logicalvelocity is offline
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This is somewhat belated, but to me the whole idea of the reconciliation clause to your agreement is to account for default way to settle a material change of circumstance to either party at any given year on income levels. To me, you do have a significant material change in circumstance on your hands with respect to the change of employment due to no fault of your own.

How did your proceeding go by the way?

Old 08-17-2007, 11:58 AM
workingthruit workingthruit is offline
Join Date: Apr 2006
Posts: 83
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Default just learning

it was only a first appearance apparantly

they served me their response that morning - I'll write more when I have a few moments, but regardless - it was a month past the deadline for serving me, and 2 months after I served them.

They asked for consent, and I declined
They will now file a 14b

Anyone know how often those get granted - I get the sense they will get the abridged service time
why have the rules then lol

thoughts? experiences?
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