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“Equalization” Demystified

What is the “equalization” that family law lawyers keep talking about?

In a nutshell, “equalization” is a process for calculating (married) spouses’ net worth at the valuation date (usually the date of separation) and for making the two spouses’ net worth after separation comparable or the same. By law, the spouse with less net worth is entitled to (usually) half of the difference, although the court has limited power to order unequal sharing between the spouses.

A payment to satisfy this process is called an equalization payment.

The equalization process gives rise to a debtor-creditor relationship in the sense that the one with the higher net worth owes half of the difference to the one with the lower net worth. At the same time, the assets themselves are not divided. Each spouse retains ownership of his or her own property.

However, in many instances where the spouse with the higher net worth doesn’t have enough cash to make the equalization payment, his or her assets may have to be sold to raise enough cash to honour the debt obligation.

In certain instances, the spouses may decide to transfer the properties to satisfy their equalization payments, rather than selling the properties to a third party.

I would recommend that readers obtain independent legal advice before finalizing the equalization process.

This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.

Ottawa Withdraws Its Objection in Same-Sex Divorce Case

Within 24 hours of the publication of a Globe and Mail story revealing that the federal government was opposing the divorce of two non-resident lesbians, the government withdrew its objection and promised co-operation to speed up the court proceeding, the Globe reported today.*

The Justice Minister issued a statement on Friday, January 13, saying that the same-sex marriages solemnized in Canada are legal. The minister went on to blame the confusion on the previous government’s poor legislation drafting.

The couple’s lawyer said she received confirmation from senior members of the cabinet that the law will be amended and clarified.

The details of the proposed legislative changes are scant at the moment. Although the lawyer believed that changes will be made to the one-year residency requirement before a divorce can be granted, how exactly it will be changed has not been confirmed.

*Kirk Makin, “Ottawa affirms legality of same-sex marriage” (13 January 2012) Globe and Mail


Ottawa Raises “Divorce Trap” for Non-Resident Same-Sex Couples

The federal government has reversed its policy on same-sex couples who were married in Canada but do not live here, the Globe and Mail reported today.*

In a nutshell, the federal government now takes the position that non-resident applicants have not met the residency requirement necessary to obtain a divorce from the court.

Plus, those for whom same-sex marriage was not legal in their domicile (i.e., where they usually live) did not have the capacity to enter into a same-sex marriage in Canada.

In my humble opinion, the one year residency rule is no surprise. Canadian lawyers who are familiar with family law should not be appalled. It has been the requirement for obtaining a divorce for decades.

However, by raising the the issue of an applicant’s domicile, in my opinion, the federal government is attempting to undo the progress made in the Canadian legal system in recent years.

Legal domicile has become less relevant in modern times. The idea of domicile is that the law governing a person should be that of where the person usually lives.

However, with the advancement of globalization, the idea that a person is tied to his or her primary residence creates questions in law regarding which law is applicable. For example, a worker may work in one country and nonetheless continue domiciles in another. Or a student may go on exchange in a foreign country but still retain domicile in another. Therefore, many countries (including Canada) have moved toward territorial jurisdictions, that is, the local law is applicable if you are physically present in a court’s jurisdiction for both civil and criminal purposes.

Let’s see how this will play out in court.

* Kirk Makin, “Despite legal about-face, Harper has ‘no intention’ of reopening gay marriage,” The Globe and Mail (12 January 2012) A1

This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.

Look before You Jump: Things to Consider before You Divorce

January is a busy time for family law lawyers. People come to me to end their marriages.

It’s not unusual for couples to put on a happy face for the holidays. The year-end socials and gatherings can serve as a welcome distraction to a wobbly marriage. After the holidays, for many, it’s back to the miserable reality. Thus, separation and divorce cases spike in January.

However, before you rush to your lawyer’s office, there are a few things you should consider before you make up your mind. Below are some of the issues that I encounter regularly as a family law lawyer.

Is it really over?

By law, lawyers in Canada have an obligation to inquire whether the marriage can be salvaged before a divorce can be filed.

I once came across a couple who vowed to end their marriage. However, halfway through the process of setting up a parenting plan, they realized that they wouldn’t be better off without each other. They decided to reconcile.

Think about the expenses they could have spared if they had had a candid discussion before rushing to their respective lawyers’ offices. It could have been a vacation or two.

Can you afford a divorce at the moment?

Let’s say you’re in a miserable but tolerable marriage. Before you decide to leave, you should consider whether you can afford to move into your own separate household. (That is to say, expenses ranging from costs of housing to utilities will no longer be shared.) Chances are that the living standard for both you and your spouse will decrease, perhaps quite drastically.

Once you move out of the matrimonial home, there’s no going back. (Unless you decide to reconcile halfway through, which means you completely missed my first point.) Don’t expect that your estranged spouse will merrily fork over support payments. You will need enough money to carry on your life before the negotiation or litigation process begins and reaches its fruition.

How are you going to tell the kids?

A judge once said in a conference, “No kids want to see their parents divorce.” Depending on the age and the maturity of the children, divorce can be traumatic to children’s well-being.

Even if divorce is inevitable, you should consider how the two spouses can (or cannot) be parents together. This will involve setting up a parenting time schedule and discussing the decision-making process between the two spouses.

Don’t let the children stand in the crossfire; seeing their parents split is hard enough for them. Do all you can to shield them from adult conflicts.

Is court the only way to go?

Many people think that litigation is the only way to resolve a broken marriage. But litigation is no longer the norm. More and more people are choosing alternative dispute resolution (ADR) methods to deal with their separation and divorce. For example, mediation and collaborative process have been gaining popularity in recent years.

In fact, the Ontario courts have recently implemented a mandatory information program aiming to educate the litigants about other ways to deal with their matrimonial woes. Speak to your lawyer and ask what options are appropriate for your case.


If you’re thinking about separating from your spouse, give us a call at 416-433-5531. You get to spend up to 90 minutes with the lawyer for $339, tax included.

This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.

2012 Brings Legislative Changes in Family Law in Ontario

As we welcome 2012, a few legislative changes in family law in Ontario have come into force. Most notably, the new Child Support Guidelines became effective on December 31, 2011, and the pension provisions added under the Family Law Act came into force on January 1, 2012.*

The changes in the Child Support Guidelines reflect taxation changes in recent years. Individual amounts payable may have gone up, down, or remained the same.

If you were ordered to pay child support under the previous table amount, you do not have to change the amount unless the court further orders you to do so or you agree to do so. By the same token, if you are a recipient and would like to have the amount changed, you must either apply to the court to change the order or convince the payor to pay a different amount.

If the Family Responsibility Office (FRO) is involved, you must advise the FRO of any voluntary or court-ordered changes to child support payable.

Keep in mind that spousal support is linked to child support payable. Therefore, changes in child support payable may have an impact on spousal support payable.

The new pension provisions under the Family Law Act were aimed to provide clarity and expediency in dealing with pensions for family law purposes. The Pension Benefits Act was also amended to reflect the changes.+ The preliminary value of the pension, for family law purposes, is determined by the administrator according to the regulations at the valuation date.

If you don’t know the imputed value of your pension, you may apply to your administrator for a Statement of Value. (Application fees may apply.)

Of course, there are several restrictions and provisions as to how the pension may be transferred and paid out. For details, please consult your family law lawyer.

*R.S.O. 1990 C.F3, s.10.1

+R.S.O. 1990 C.P8, s. 67.1-67.6

This blog is provided for your reference only and is not a substitute for the law. The law may have changed since the publication of this article. This article is not legal advice and should not be regarded as such.

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From Our Family to Yours, May Your Holiday Shine with the Light of the Season

I came across the White House’s holiday card today on the internet. It features the First Dog, Bo, napping in front of a fireplace in the White House.

Inside, it says, “From our family to yours, may your holiday shine with the light of the season.” It is signed by the Obamas, including Bo.

The card is lovely. From our family to yours, may your holiday shine with the light of the season.

P.S.W.

(c) Mark Matuszak/ White House; used for news reporting purposes.

PSWLaw 2011 Year End Holiday Hours

We will be having reduced hours during the year end holidays.

Thursday, December 22: regular hours

Friday, December 23: 10am – 4pm

Monday, December 26: closed

Tuesday, December 27: 10am – 4pm

Wednesday, December 28: 10am – 6pm

Thursday, December 29: 10am -4pm

Friday, December 30: 10am – 4pm

Monday, January 3: closed

Tuesday, January 4: regular hours

Best wishes from everyone at PSWLaw!

Positive Feedback on the Mandatory Information Program (MIP) in Family Law

Earlier this year the Attorney General of Ontario announced the implementation of a mandatory information program for litigants in family law. Many family law lawyers (myself included) were skeptical about the effectiveness of the program. Many litigants, upon learning that attendance of the information program would be mandatory, thought it would be a waste of time.

However, several months later, pieces of positive feedback from individuals (both represented and unrepresented) who attended the program are circulating among family law lawyers.

The program apparently isn’t as dry as most of us thought it would be. Rather, the presenters of the program are well-trained and helpful to the audience. In making their presentation, they use plain language and not legalese. They help the litigants to understand that litigation is only one of the many solutions available to address their family law problems. The presentation, I’ve heard, is actually very informative and (surprisingly) substantial.

For the most part, individuals who have attended the program have found the non-partisan nature of the MIP particularly helpful. Rather than a piece of potentially biased advice from their lawyer, they get to see the bigger picture, such as how the proceeding may affect their children and others around them.

If you’re scheduled to attend one, bring a pencil and a piece of paper with you. You may actually want to write something down.

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‘Tis the Season for Holiday Scams

Yesterday we had our first snowfall in Toronto for the season. Undoubtedly, the holidays are coming.

People are either preoccupied with the coming holidays (Christmas, Kwanza, Hanukkah, Ashura, Boxing Day, New Year’s Day … take your pick) or are looking forward to taking time off work. No doubt, major financial institutions will also be closed for a few days, thereby delaying the clearing of cheques.

While people are otherwise occupied, scammers and fraudsters are taking  advantage of the combination of bank closures and holiday distractions to defraud their victims.

Dan Pennington of LawPRO has said that bad cheque scams are on the rise and warned lawyers taking large sums of trust funds to be vigilant.* He said the scams are becoming more and more sophisticated. Some of the bad cheques could even fool bank tellers.

According to Pennington, a lawyer from St. Catharines was recently suspended for misappropriating trust funds after he was defrauded with fake cheques. The funds from the fake cheques did not clear and resulted in a shortfall in his trust account. The lawyer tried to cover the loss with other clients’ money held in trust. But the shortfall soon became too large, and the lawyer became the subject of an investigation.

In addition to bad cheque scams, “Oklahoma frauds” are resurfacing, according to Jeffrey W. Lem, a partner in the real estate group at Miller Thomson LLP.^ A recent lawsuit was brought alleging $6.5 million in damages as a result of mortgage frauds.

Lem explained in a nutshell how an Oklahoma fraud operates. A fraudster buys a piece of land for a small amount, say $10,000, in an otherwise legitimate transaction. The fraudster then flips the property to an accomplice for a grossly inflated price, say $500,000. The accomplice then goes to the lender for a mortgage against the inflated property value. Typically, the fraudsters rapidly target a single mortgage lender several times before they take off with the proceeds. The lender then is left with collateral properties worth a fraction of the mortgaged value.

*Michael McKiernan, “St. Catharines case shows pitfalls of fake cheques” Law Times (28 November 2011) 13

^Jeffrey W. Lem, “Oklahoma frauds return as scam of choice” Law Times (28 November 2011) 7

This blog is provided for your reference only and is not a substitute for the law. This article is not legal advice and should not be regarded as such.

Lakehead University Update: Seeking Founding Dean for Its New Law School

A while ago I reported that a new law school is coming to Lakehead University at its Thunder Bay campus in Ontario. Step by step, the new law school is becoming a reality.

The new school has now received full approval from the governing authorities, including those of the Federation of Law Societies of Canada and the Lakehead University Senate, to establish a J.D. program.

The school will be the first new law degree program in Ontario in 42 years to offer eligibility for bar admission. The new school will focus on issues relevant to the resource-based Northern Ontario economy, including aboriginal, northern, and rural issues.

Lakehead is now looking for the founding dean for its new school, to be on the job as soon as possible and no later than summer 2012. The first class of 55 students will enrol in 2013 and (hopefully) graduate in 2016.

Ironically, for a new institution that is supposedly going to be focused on northern and rural issues, the university’s search consultant is a firm located at 1 Yonge Street in Toronto, some 1,398 km or 18 hours away by car.

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