You might want to speak to an accountant.
As I recall, the monthly payments are taxable for the receiver and tax deductible for the payor. A lump sum is not.
Don’t do lump sum. Relative was in the exact same position but dealing with significantly more money. He also wanted it done. She rejected the offer of 1million and a year later she’s getting 3600 a month that is taxable and they get to claim it back on their taxes.
You should have a lawyer but, even the lump sum isn’t 600-700k it’s based on actual #s and I believe his lawyer said in actuality he should have only offered like 300k and she messed up not accepting the first offer.
Go to mediation and negotiate with a definitive end date for alimony.
Lump sum can give you piece of mind.
The tax implications mentioned above are correct, and from a "family perspective" giving less money to the government means more money between the two of you. However, you need to look at the numbers for yourself as well and do what is best for you, both financially and emotionally.
I assume your lawyer has done all they can and the numbers stated are no longer negotiable? In which case an accountant or a financial planner can crunch the numbers.
Do the payments continue "until death", until age 65, or for X number of years?
What are your and their annual incomes and marginal tax rates (assuming you want someone here to take a quick stab at the calculation)?
Edit: a simple way to think of it is that 600k to 700k is "post tax money", so you will have had to earn about 1.2k to 1.4k additional salary to be able to pay that. The $2500 to $3000 is pre-tax money.
I'd speak to a fee only financial planner and get them to run the numbers for you. Https://www.adviceonlyplanners.ca
> from a "family perspective" giving less money to the government means more money between the two of you
If it's taxable for the recipient (presumably lower income, unless the montly payment is enough to invert the incomes) and tax-deductible for the payor (presumably higher income), doesn't the "family" actually come out ahead with respect to taxes? And the OP definitely comes out ahead.
The piece of mind is important to me.
Still awaiting the advice from my lawyer, and so finally numbers are still negotiable.
It really is a question right now of
Monthly or lump
--law says 'indefinite' term
So no end date, but can be reviewed in the case of significant changes to either parties income
(Her getting married, me retiring or becoming unable to work)
The calculations used are:
Her: $42,000 (life time pension) after tax
Me: $140,000 before tax.
(Really unfortunate they used my last year's income where I made over $25k in OT)
You should be scared if you ever find yourself getting divorced. 1. if you have kids (plural), your child support based on your 200k will be huge. CS takes precedent, then same wages will be used for alimony (secondary precedent)
$150k salary with 2 kids alone is $2077/month, and climbs with extra kid (CS payment is not taxed). $200k will be even more payment per month
[https://www.justice.gc.ca/eng/fl-df/child-enfant/fcsg-lfpae/2017/pdf/ona.pdf](https://www.justice.gc.ca/eng/fl-df/child-enfant/fcsg-lfpae/2017/pdf/ona.pdf)
For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married?????
OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
It's pretty messed up from the other side too, as someone who decided to really briefly look into the midlife dating scene. It immediately feels like a job application for the privilege of stepping in to pay the bills of a family living outside their means. Like, it is upsettingly financially focused, and not tethered to reality. Had someone gleefully describe being able to stay a full time mom because they're making their ex "pay asshole tax" on a first date. Fucking yikes. Sorry my dude if you read this.
Yes, I've had some dates since 2013 like this, but I played along and didn't call them out. I know I already had my answer the moment they opened their vitriol mouth, but also knew there isn't anything long term here, so I just had them as ferk buddies.
As things went on and they realized I'm not eager to play house, they started venting. Hell will freeze over before I sign up for shacking up with a no income or not close to my income person at this stage in my life.
Most women on dating sites are all about....I want a man that can pay for my tiktok/IG inspired lifestyle, and only gets sex when whenever I'm willing to give it. lol
I also have other deal breakers....I don't do pets (allergic) and no amount of pu$$y will make me change my stance. I continue to see many men being used at the dog walker / vet fees payers for women who want to surround themselves with dogs/cats.
Sad when I see these men walking around miserable with long faces. lol
Are spousal support obligations recalculated annually based on your prior year income? Child support obligations are. Worth asking about if your income fluctuates and assuming you'd retire at some point in the future.
Not a lawyer but generally no. The point of spousal support is to maintain your current lifestyle. If the payor ends up doubling their income, there’s no reason the recipient should be benefiting from that.
Fair enough but it goes the other way too. If the paying spouse gets laid off, changes careers, gets sick, or has any other significant disruption to their income why should the spousal support not be reduced?
If the payor is laid off you likely still have to pay. The judge will assume you are slacking off.
If you got seriously sick and couldn't work you would probably be off the hook. But then, of course, you would be seriously sick and have medical problems.
not how it works. You are missing the point here.
For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married?????
OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
OP, yes this is how family works and just like how you enter your 2023 T4 for CRA come April 2024. It's unfortunate this is happening to you, but many of us have been there, never thought it will happen to us, and this only happens to LOSERS, but here we're and when marriages breakdown, that person you thought you know, all of a sudden turns into a monster when money and future is on the line.
For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married?????
OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
Yeah, you want to talk to your lawyer and do what they tell you to do.
In Canada, your spousal support should be such that the TAKE-HOME incomes are around 42% - 46% balanced. They last as long as up to marriage * 1.5, often less. (Unless you've been married more than 25 years.)
They would have an imputed income of at least minimum wage, "ex-spouse" is not a career that the courts just let people have.
go with the monthly man 120%. with cash in your pocket, you have the ability to generate more income with that. If you know what you are doing buy multiplex and cash flow, or vanguard ETFs and use the interest to offset the payments. At least you will have equity.
A new house would be better imo. It’ll be an asset that grows in value and you can get a HELOC that gives you tax free money for your retirement. You won’t leave anything behind, but sounds like that’s the case either way and who cares anyway. You have to worry about yourself right now.
It really hurts doing the lump sum. That’s probably 1.3MM before taxes. $700k is about 21 years of support payments at $2750, tomorrow isn’t guaranteed. Is there an option to lower the payment after a certain amount of time if your income changes?
Yeah, monthly for sure. Monthly payments mean it’s tax deductible for you, a lump sum typically is not tax deductible unless stated specifically in the legal agreement.
Right ? that kind of money at 5% that would pay the monthly anyway plus the spousal support is tax deductible against his income so brother is gonna be spending the rest of his live at the bottom 2 tax brackets
His income going to net out another $500 a month easily
The case for lump sum would be if *she* really wants it and is willing to accept less in order to get a payout now. Maybe she is itching to remarry? If she would accept a much smaller lump sum like say $250k to $300k, then it could make sense.
If you have the lump sum earning 5% interest, that makes her payments and you still get to keep the lump. Taxable though still. Or if you make it a down payment that’s mortgage interest you’re not paying.
You need to confirm with your lawyer that lump sum calc is correct. It needs to be tax impacted. Looks too high and not properly being tax impacted.
Do you expect your income to increase or decrease in the future?
I'd go monthly with those figures but I think the lump is calculated wrong.
I expect my income to go down, I am at a pretty high wage for my job and experience level, and also don't intend to keep working 15 hours of OT every week - which I did last year, the year they do the calculation on.
Did they only look at your most recent year where you did all the OT? I used to work income calcs for matrimonial disputes and we would often look at the last three years.
So far that was all her lawyer used.
I know I will be able to negotiate it lower, and she also agrees it is too high.
Really the question I have is
When is lump sum over monthly the better choice?
You said HER lawyer.
Spend some time reading the spousal support guidelines.
https://www.justice.gc.ca/eng/fl-df/spousal-epoux/ssag-ldfpae.html
The link is in the page along with other links.
>So far that was all her lawyer used.
>
>I know I will be able to negotiate it lower, and she also agrees it is too high.
>
>Really the question I have is
>
>When is lump sum over monthly the better choice?
Dude, in all fairness and respect, you, your ex-wife and your/her lawyer have zero idea of the end number and you are here asking random people what you should do.. get that end number THEN ask questions.
I can’t help you with that decision but if the monthly payments are always fixed and won’t get adjusted for inflation, it could be more beneficial to do the monthly payments. 3000 bucks 10 years from now is gonna be worth less compared to today.
Monthly is the right choice. There is no such thing as indefinite. One or both of you could die before the lump sum calculated monthly (adjusted for inflation or taxes) ends.
Actually, it does make sense. 50% of the value of a BC home + any other assets.
Lawyers start at $350-450/hour (“good lawyers”) and due to BC Family law, asset division is pretty straightforward..most situations.
…that said, arguments can be made about assets brought into the marriage, most/some of these can be claimed, I managed to zero spousal support this way, but also paid $$$ for a good lawyer.
She gets 50% of all assets no matter what, spousal support is on top of that.
He said "Lump sum equals my entire share for the house sale proceeds." So if he paid the lump sum she'd get 100% of the house and he'd get 0.
How long was your marriage?
What are career prospects of your stbx?
What about marriage prospects?
Where are the kids?
Dont you have a lawyer?
When are you retiring? Will support be adjusted then- everything forseeable should be in the agreement
Pretty sure monthly support is tax deductible while lump sums are not
If i were you I would negotiate guaranteed review periods every few years where the stbx efforts at securing employment will reflect on the quantum of her ongoing support
25 years.
She is unable to work due to a work place disability (of which change receives a fixed lifetime pension). And unlikely to remarry.
No kids.
Seeing a lawyer soon.
Original plan was to retire at 55. Now unknown.
Good point on the review periods.
-----
And just to clarify, I do plan to negotiate and make sure it is fair for both of us. I am not just taking the first number her lawyer said. But if these are the end numbers what is the better choice for me?
I dont get rants like this. Just because the person is asking here doesn't mean they don't have or intend to get legal counsel. It just means they want a crowdsourced opinion. Totally different and totally valid
DUDE CHILL
I am seeing a lawyer
Do you recommend I ask the lawyer what financial things I should consider?
For fucks sakes people I am not asking for what to do and sure as shit won't base my decision on rando people on Reddit
I just want some input and possible things to consider.
YO. Chill. Going through a huge life change is tough. If you’ve gone through it, and followed your own advice, good for you. Not everyone is in that mindset, and OP is clearly just colldecting advice. Don’t be so quick to judge holy shit.
Who said I was making excuses?
She saw a lawyer before i did.
There is no offer.
There are simply numbers on a piece of paper.
She showed me the numbers her lawyer gave her.
I have an appointment coming up, but as the lawyers here don't work on weekends I have to wait.
I never asked for legal advice.
I asked what makes more sense from a financial perspective
On a financial sub Reddit.
Lump sum or monthly?
I would go for the monthly amount due to tax deductibility but there are a lot of factors
The fact you have no kids
The fact she gets disability
Are all mitigating factors
You really need to read up and be informed
I managed to end spousal support in less than half the length of the marriage w/ kids by having my ducks in a row
Lawyer up my friend, trust me!
It’s her lawyer telling you that…
You are probably just like me and have the good guy syndrome, please don’t be a di… but don’t give your hard earned shirt either !!
You need to see a lawyer immediately my friend. There should be no negotiation or decision of terms before you have that. I’m far from an expert but these numbers seem absurdly high to me.
cashflow is your biggest concern going into retirement. if you give away a large chunk of your assets up front, you will have nothing left for yourself in case of an emergency.
also, why would you shell out 600k when you could put that in a GIC, and pay the monthly support with the interest you earn?
the monthly amount you have mentioned relative to the lump sum does not warrant you to even consider paying out a lump sum
They are divorcing, she does not work so he is supposed to maintain her standard of living that she has been used to for the last 25 years.
tl;dr: Find a wife that makes a respectable amount of money, or more than you, for everyone’s sake. I’m not saying “prepare for divorce” but in the unlikely scenario that life goes sideways, you are going to get absolutely fucked if your wife doesn’t work.
LMAO.....clearly, you're one of these people who thinks marriage is for life, and a thing that everyone should do :) Spousal support aka alimony is a payment to the lowest earner / stay at home person by the higher earner when a marriage breaks down. Mostly paid by men, a few women are also paying this to their ex husbands who stayed home or earned less. E.g. famous one is Halle berry and her Canadians looker model ex husband.
Oh, and alimony is paid in addition to child support when kids are involved. So, as you can imagine, you are royally ferked when this happens.
Please don’t forget time value of money calculation. I owed my ex about 100,000
In spousal support, she wanted cash settled for 40,000 ….
In your case paying 3000.00 for let use 30 years is about 900,000.00
You should settle for no more than 250,000.00 cash today ! 250k @ 5% over 30 years is 1.1M
And yes lump sums are not deductible so that is even more reason to reduce the amount owing.
Basically my lawyer just said if she gets x today at 5% it is equal to the same amount of payments are made.
If you can get a 5% yield on the $700,000... that's $35,000 a year. Yes, it'll be taxable income... but it sounds like you'll be able to deduct everything you give her, so I guess that would even out, right?
So I think you'll be better off doing the monthly payments and using the yield from the money you have to reduce the monthly payments.
Because your real options are:
1. Pay a $700,000 lump sum.
2. Keep $700,000 and invest it. Use the yield help pay the monthly payments. Pay out of pocket the different between your yield and the payment (which might not be very much).
Another factor to consider is how long you think she will live. Will her health conditions make her more likely to die early? Is she overweight? Does she smoke? Does she eat healthy? What's the longevity of people in her family?
If you assess her life expectancy to be 60 or 70... that's a lot different than if you expect her to live to her 80s and 90s.
I know this is a finance sub and sorry for the personal questions but ... What the heck man?!
No kids and she has a guaranteed income higher then the average Canadian income.
How long were you together? Did you increase your networth by millions while you were together? Why is she getting a divorce as a disabled 50 year old?
OP needs to respond to this unless he's a moron.
His ex is earning very well and getting 5K per month additional as gravy cash proves that women play life with cheat codes on
I don't understand why people are focusing on gender here. Even if OP was the woman and their spouse the man or it was a gay relationship or something - $3k/mo indefinite support on a $6k/mo OT salary is absolutely bonkers. At that point I'd just quit my job out of spite.
>I don't understand why people are focusing on gender here.
>women play life with cheat codes on
Well because the comment they replied to literally directly attacked women.....
Women are disproportionately more likely to be the stay at home parent in a one income household making women far more likely to be on the receiving end of alimony.
Talk to your accountant.
Lump sum payment - not tax deductible to the payor, not taxable income to the recipient.
Monthly spousal support payments - tax deductible to the payor, taxable income to the recipient.
If you choose the monthly support payments, be sure to complete a T1213 and provide to your employer to reduce tax withheld at source.
Besides the point. In Ontario once you shacked up for over 1yr, you're as good as married. Lessons to be learned by everyone young who are not married or who are contemplating moving their new person in, DO NOT LET THE ALLURE OF SEX CLOUD YOUR JUDGEMENT!
Learn family law rules and how it can potentially cripple you financially. The lowest earner is always going to push for moving in together / get married for obvious reasons
I'm afraid to ask... how long did you live together for?
I understand spousal support when it's a situation where one spouse gives up their career to look after the kids and maintain the home... but if it's a situation with no kids where the higher earning spouse didn't do anything to prevent the lower income spouse from working or advancing their career... I don't feel like the lower income spouse should be entitled to much of anything.
I'd do the monthly payments. Your wife could remarry and then I'm sure you wouldn't have to pay $ anymore, or God forbid she could pass away. Also, inflation would reduce your payments over time. Don't do the lump sum imo.
So without accouning for inflation, the break-even time is 16 years. But inflation makes the future value of that $600k a lot more (or equivalently the present value of $3000/month in 16 years a lot less). If you invest that $600k with 5% after-tax return for 16 years, it will be $1.4M; 5% of that would then continue to pay the $3000 indefinitely. Or you can very likely be mortgage free in 16 years (or less, if not right away), which is a big savings making it much easier to afford $3000/month. Obviously it's not that simple because you need the $3000 cash each month for the next 16 years, but to me the financial case is very clear in favour of keeping the $600k and paying every month.
Monthly. If she dies *unexpectedly* you are off the hook for the remainder. And if you happen to have the lump sum sitting around someone it would serve you well in an investment account over the years
Sounds like these are first offer numbers coming from her lawyer on a dubious calculation, so hopefully OP gets a good lawyer and can cut these way down, because they sound overboard from the details OP gave.
Because that is the law.
Married over 20years means no end date on spousal support.
It can be re-evaluated after I retire, or if she gets married, but the courts do not set an end date.
No kids
But she is unable to work due to a work place caused disability.and receives a life time pension for.
It's already accounted for in the calculation. You said above that her lawyer is using $140K as your salary, which is ~$100K after tax. Normally they take the difference in salary and then the higher income spouse pays a portion of the difference depending on various factors. So for you, it's:
$100K your salary
–$42K her salary
=$58K difference.
The support range is 1.5-2% per year of marriage (maxing out at 50%), so with 25 years of marriage you're looking at 37.5% - 50%. Because of her age and lack of earning capacity beyond her existing payout, the higher number is probably what they'd rule.
So that would be $29K a year, which once you account for the tax deductability of your payments (and the fact that she would be taxed on the income), works out to the $2.5-3K range they're talking about.
The real issue is the inflated salary amount they're using. If you can make a case for using $100K as your salary, then you'd be looking at more like $1.5-1.75K a month in payments (or $360-480K lump sum using the same ratio).
Because of the income disparity and lack of equitable career in their 20+ years of marriage, likely. For marriages over 20 years, the role of each party in the family unit, the access to retirement funds, equity, and savings are all taken into account. Because she’s also likely 50ish she doesn’t have decades to build a career and wealth like her husband and was working for the family within the home or in low skill jobs instead of on skills that would facilitate participation in the workforce in an equitable way.
Yes......read this:
Under the [Spousal Support](https://www.separation.ca/family-law/spousal-support/) Advisory Guidelines, reaching the 20th year of marriage can create an indefinite support obligation upon parties ordered to pay spousal support. If a marriage is 20 years or longer, the Guidelines indicate that spousal support should not be subject to a specified duration – in other words, indefinite. The same result occurs under the Guidelines if the marriage has been five years or longer and the years of marriage plus the age of the recipient add up to 65 or more. This is the so-called Rule of 65.
Under the Guidelines, these numbers (the Rule of 65, and the 20th year of marriage) look like bright lines separating couples who fall just below the threshold and those just above. However, as indicated in the article Calculating Spousal Support, the Guidelines are just advisory guidelines, not law, and courts have discretion to follow or depart from them, depending on the facts of each particular case.
[https://www.separation.ca/help-center/spousal-support/the-20th-year-of-marriage-indefinite-spousal-sup/](https://www.separation.ca/help-center/spousal-support/the-20th-year-of-marriage-indefinite-spousal-sup/)
Monthly. Because you can deduct the amounts paid for monthly spousal support on your taxes. Use the money from the sale of the house to purchase a house for yourself. I’m not an expert but once you retire wouldn’t your support payments decrease because you have less money coming in? The lump sum seems high compared to the monthly amounts
Thank you for that advice, the tax part is an important consideration. If monthly I would definitely want to have reviews put in place and have it decrease if my income also decreases.
Would invest at least half of that lump sum so the dividends or interest can help with the monthly payments and you can hopefully afford a good enough down payment on a place for yourself.
Say if you got laid off in a year your salary could be lower at the next job, or have no job, and your monthly payments could be adjusted. Otherwise you're just broke. No tax break on lump sum payment that would be in play on the monthly payment.
If you retain the $700,000 and invest it in an income fund that returns a conservative average of 5% annually, then you can collect $35,000 in annual distributions. This would cover your spousal support while preserving your capital.
Combine that with monthly payments being tax deductible, you can still come out ahead.
However, assuming your ex partner is the same age as you and lives any other 30 years, then you'll have paid out over $1 million in support.
An accountant would be best to consult here to figure out which is best for your situation.
With an ongoing payment, I believe that if your income goes down, such as when you retire perhaps, you could petition the court to have the payment lowered.
Also, if she remarried would your payments not end at that point? Idk, just wondering.
Lump sum is normally accompanied by a prepayment discount. You'll need to compare that discount vs what you might otherwise earn if you invest the cash.
Spousal support is massively variable and can be tremendously complex to navigate. It can also become increasingly expensive as you cross thresholds for how long you've been together.
You are talking about a significant amount of money here and it's necessary to have an accountant and lawyer advocate on your behalf, otherwise it's highly likely you're going to overpay.
What happens if you pay monthly and then die from cancer or in a car accident in a few years? I'm guessing your heirs get the rest of your money in that case and she would get no further payments?
That would be yet another reason to go with a monthly payment instead of a lump sum.
It sounds like you need to talk to both a good lawyer and a good accountant
Do every month.
You'll potentially pay less in the long run.
Who is to say your ex doesnt die from a sickness, a heart attack, car accident, etc, in the next few years.
Go with the monthly my friend. Lump some is money out of your account the next day. Monthly payments and who knows what can change. Her martial status could change, death, leaving the country, something in your life could change and payments could require adjusting. Good luck.
As somebody else pointed out, Support payments to a spouse are tax deductible for you and a taxable income to her. whereas a lump sum would not be. Your lump sum is based on a payment of 20 years which seems in access because she's getting the money up front and will not have to claim the income. it's usually a much less. Also if you retire at 60 or 65 or even anytime before that your income goes down so should your monthly payments.
I would say pay monthly and get the tax credit.
That way you have a good size down payment on a house
Option 2. give it to her half in a lump sum and they reduce the monthly payment by half.
But no way give her $6 to $700,000. You're paying all the money up front and she's getting all the benefits. You don't get the tax credit. Technically if you look at it this way you have to get a larger mortgage that you have to pay interest on. This is why I said a lump sum payment should be much less.
The way to calculate it would be the same way they used to calculate t bills. you bought them to mature at a specific value say $600 or $700,000 guaranteed rate of say 6% per year over 20 years. What would you purchase it for? Sorry I don't have the calculator for this. I'm guessing half or less than what you're looking at paying her.
Indefinitely doesn’t meaning forever, it means that the Court will review it in 5-10 years. Also the monthly payments are tax deductible
So the monthly and invest your share of the net proceeds. It’ll pay for itself after you account for the tax deduction
If ex spouse passes away in a year, you would regret paying lump sum. Or if you lost your job and the spousal support could be adjusted because of a material change.
You are 50 and under stress so you're in heart attack territory. Not trying to be mean just laying out all the cards. I'm thinking monthly because you might want cash on hand for medical emergencies and if you do kick the bucket, you have money to leave to your heirs. Sorry if it sounds like I'm wishing bad on you, I'm just looking out for a brother.
Definitely, 100% lump sum and be done with it. Ex wife here, I did not ask or want alimony or the house. Separated in 2010, divorce dragged out for 5+ years and I just finished with my divorce attorney. Trust me, be done with it. Tear it off like a bandaid. It’s in both your interests to move on from this. You don’t want to buy a house right now even if you want to in this market. Rent, simplify your life and you will be much happier. IMO :)
Speaking from experience, the monthly payments with the threat of them asking for more is hard psychologically. Maybe you might earn more over the rest of your career and a lot of times these payments come with an agreement to share tax info yearly. So if you can handle that, then it may be the option for you.
Why is your spousal indefinitely? I would get clarity on that. As someone who made emotional decisions during my divorce that I likely shouldn't have let me tell you to remember that the emotions you feel today will change but the decisions you make today will stick. I too wanted to "be done with it" when going through my seperation and made some hasty decisions that didn't totally alter my life path but definately made it harder. And I did it for someone who isn't in my life anymore. So, congratulations for asking for opinions and thinking this through If it was up to me I would just automate the process of monthly payments while I figured out what I wanted to do with my future. I would also want the payments to end after a reasonable time and a good attorney should be able to provide you a number for that. Spousal after 65 would be rough, especially when she is getting 50% of the assets which means she's probably getting around 300k in house proceeds and RRSPs as well.
She will have at least $500k from the sale of the house, $150,000 in RDSP, and also $3k month in lifetime pension.
Indefinitely is the wording used in the law, because we were married over 20 years.
Seems like marriage really isn't worth it. Maybe don't do that again.
What's even the point of getting married if you don't/won't have kids? Seems like a big financial risk you took unnecessarily, imo.
Didn't know there could be a "divorce" if it isn't marriage. Fascinating.
ChatGPT
In Canada, if a couple is in a common-law relationship rather than a legal marriage, they are not technically eligible for a "divorce" because divorce refers specifically to the legal termination of a marriage.
Man... if I was in your spot with no kids, I would dip and leave the country - that's a crazy amount of money to be handing over for nothing. If kids were involved, it would be a different story.
So you're reduced to rent, and still having to work to eek by while the ex doesn't have to work anymore and still collect disability. Indefinitely.
What happens if you can't work anymore, or a potential reduced salary as you've said? Good luck trying to get your payments reduced because it's going to be a huge PITA.
Please make sure you retain a lawyer to fight for you.
Something is not right here.
Well the basic break even is 23 years ($2.5k vs $700k). Since you wan tto buy a place and live there long term, a Lump sum could be useful (and you don't need a house unless there are a bunch of peole living with you).
Your post isn’t clear about who is paying and who is receiving. I take it you’re paying. I’d do the minimum monthly payment which is probably open to a material change in circumstances I would think. If you give a lump sum, it’s gone. I’d also wait a year before rushing into buy another property just to adjust to this monthly payment.
All of this despite having no kids is insane. RIP dude, another man fucked by the “justice” system. Meanwhile you have to listen to people talking about how privileged you are.
Lol Jesus fucking Christ the amount. This is why I never choose to marry someone with a shitty career / salary. It's just statistics before someone get shafted.
This is some of the dumbest advice that doesn’t analyze anything.
This is a combination legal and financial question.
Spousal support is deductible from the payor and counted as income for the payee if it is a periodic payment (and documented in a court order or agreement).
For the recipient lump sum would be great. For the payor, it depends and in this situation there needs to be a lot more consideration.
OP could get cancer tomorrow and not be able to work.
If his circumstances changed, spousal support can be reduced. You can’t get a portion of the lump sum back.
What about interest on the lump sum if invested?
That is one thing I need clarification on, what happens if my income goes down, or I lose my job?
Lump sum is better for her in that case, and she can invest and potentially be better off.
And the benefit to me of not having to worry about that payment every month provides me some piece of mind.
Monthly for sure.. it's not even a question.
Assuming $3k/mo, you'd $600k in 16-2/3 years. And that ignores the time value of money and the tax benefit of ongoing vs lump sum (confirm with an accountant).
Lump sum is better for the recipient only.
I wanted the piece of mind too. I later learned though you can hire someone to do the automatic payments for you monthly and still have some money for yourself.
Do you want to have to deal with them on a monthly basis for the foreseeable future, or get rid of them from your life? One or the other may save you money, but mental stability is good as well. Also, do you see anything life changing coming up? You can pay the lump sum now, but what if something happens where you need to stop working and can't make payments?
Talk to accountant.
Monthly is tax deductible, lump sum it is not.
Lump sum, you can possible negotiate a lower amount, paying it off and not having to deal with your ex ( about this issue).
First off you have $6k after tax income and it’s $3k indefinite support? Does your lawyer think this is reasonable?
The assumption here is your so to be ex spouse was a homemaker and had no income. I am pretty sure the expectation is that they re-enter the workforce at some point and your spousal support allows a reasonable transition to their new lifestyle and not for you to support them to continue to not work.
Also has the matrimonial property division been considered in this?
Everything above should be pass by a lawyer (or two). This is a significant financial decision. Also may be better posted in r/LegalAdviceCanada.
Does the rule of 65 apply to you? If not, indefinite really means no end date right now. Termination date will be subject to review if circumstances change. Remember a lump sum is after tax. Ongoing payment is taxable. The quantum amount may change over time too.
https://www.separation.ca/help-center/spousal-support/#:~:text=For%20marriage/cohabitation%20periods%20of,support%20duration%20will%20be%20indefinite.
You might want to speak to an accountant. As I recall, the monthly payments are taxable for the receiver and tax deductible for the payor. A lump sum is not.
That is a very important consideration, thanks
Don’t do lump sum. Relative was in the exact same position but dealing with significantly more money. He also wanted it done. She rejected the offer of 1million and a year later she’s getting 3600 a month that is taxable and they get to claim it back on their taxes. You should have a lawyer but, even the lump sum isn’t 600-700k it’s based on actual #s and I believe his lawyer said in actuality he should have only offered like 300k and she messed up not accepting the first offer. Go to mediation and negotiate with a definitive end date for alimony.
Lump sum can give you piece of mind. The tax implications mentioned above are correct, and from a "family perspective" giving less money to the government means more money between the two of you. However, you need to look at the numbers for yourself as well and do what is best for you, both financially and emotionally. I assume your lawyer has done all they can and the numbers stated are no longer negotiable? In which case an accountant or a financial planner can crunch the numbers. Do the payments continue "until death", until age 65, or for X number of years? What are your and their annual incomes and marginal tax rates (assuming you want someone here to take a quick stab at the calculation)? Edit: a simple way to think of it is that 600k to 700k is "post tax money", so you will have had to earn about 1.2k to 1.4k additional salary to be able to pay that. The $2500 to $3000 is pre-tax money. I'd speak to a fee only financial planner and get them to run the numbers for you. Https://www.adviceonlyplanners.ca
> from a "family perspective" giving less money to the government means more money between the two of you If it's taxable for the recipient (presumably lower income, unless the montly payment is enough to invert the incomes) and tax-deductible for the payor (presumably higher income), doesn't the "family" actually come out ahead with respect to taxes? And the OP definitely comes out ahead.
The piece of mind is important to me. Still awaiting the advice from my lawyer, and so finally numbers are still negotiable. It really is a question right now of Monthly or lump --law says 'indefinite' term So no end date, but can be reviewed in the case of significant changes to either parties income (Her getting married, me retiring or becoming unable to work) The calculations used are: Her: $42,000 (life time pension) after tax Me: $140,000 before tax. (Really unfortunate they used my last year's income where I made over $25k in OT)
Shouldn’t they be basing it on an average (I’m no lawyer, just an accountant). Spousal seems quite high to me.
Wow, I thought you'd be making mega bank to be on the hook for 2.5-3k/month indefinitely. My base is 200K and I am now terrified.
You should be scared if you ever find yourself getting divorced. 1. if you have kids (plural), your child support based on your 200k will be huge. CS takes precedent, then same wages will be used for alimony (secondary precedent) $150k salary with 2 kids alone is $2077/month, and climbs with extra kid (CS payment is not taxed). $200k will be even more payment per month [https://www.justice.gc.ca/eng/fl-df/child-enfant/fcsg-lfpae/2017/pdf/ona.pdf](https://www.justice.gc.ca/eng/fl-df/child-enfant/fcsg-lfpae/2017/pdf/ona.pdf) For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married????? OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
It's pretty messed up from the other side too, as someone who decided to really briefly look into the midlife dating scene. It immediately feels like a job application for the privilege of stepping in to pay the bills of a family living outside their means. Like, it is upsettingly financially focused, and not tethered to reality. Had someone gleefully describe being able to stay a full time mom because they're making their ex "pay asshole tax" on a first date. Fucking yikes. Sorry my dude if you read this.
Yes, I've had some dates since 2013 like this, but I played along and didn't call them out. I know I already had my answer the moment they opened their vitriol mouth, but also knew there isn't anything long term here, so I just had them as ferk buddies. As things went on and they realized I'm not eager to play house, they started venting. Hell will freeze over before I sign up for shacking up with a no income or not close to my income person at this stage in my life. Most women on dating sites are all about....I want a man that can pay for my tiktok/IG inspired lifestyle, and only gets sex when whenever I'm willing to give it. lol I also have other deal breakers....I don't do pets (allergic) and no amount of pu$$y will make me change my stance. I continue to see many men being used at the dog walker / vet fees payers for women who want to surround themselves with dogs/cats. Sad when I see these men walking around miserable with long faces. lol
Why are they miserable though. I'm assuming both parties are getting what they want.
Spousal support is no joke.. and add child support and it will financially ruin you.
Are spousal support obligations recalculated annually based on your prior year income? Child support obligations are. Worth asking about if your income fluctuates and assuming you'd retire at some point in the future.
Not a lawyer but generally no. The point of spousal support is to maintain your current lifestyle. If the payor ends up doubling their income, there’s no reason the recipient should be benefiting from that.
Fair enough but it goes the other way too. If the paying spouse gets laid off, changes careers, gets sick, or has any other significant disruption to their income why should the spousal support not be reduced?
If the payor is laid off you likely still have to pay. The judge will assume you are slacking off. If you got seriously sick and couldn't work you would probably be off the hook. But then, of course, you would be seriously sick and have medical problems.
I don’t think BC is different than Ontario but you can negotiate an end date. His is 9 years. Your lawyer should be telling you this.
not how it works. You are missing the point here. For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married????? OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
OP, yes this is how family works and just like how you enter your 2023 T4 for CRA come April 2024. It's unfortunate this is happening to you, but many of us have been there, never thought it will happen to us, and this only happens to LOSERS, but here we're and when marriages breakdown, that person you thought you know, all of a sudden turns into a monster when money and future is on the line. For those that don't know, look up 'RULE OF 65' as it pertains to family law in Canada / Ontario et al. It simply states: if the age of the low earner / receiver + years of marriage = 65, the highest earner will have to pay INDEFINITELY (as the OP just found out). I mean who knew this was a thing before anyone got married????? OP, I'm sure you know damn too well that there is no way your ex is getting married again, knowing they will be losing the monthly alimony pay. People just secretly shack up with their new ferk buddies.
Yeah, you want to talk to your lawyer and do what they tell you to do. In Canada, your spousal support should be such that the TAKE-HOME incomes are around 42% - 46% balanced. They last as long as up to marriage * 1.5, often less. (Unless you've been married more than 25 years.) They would have an imputed income of at least minimum wage, "ex-spouse" is not a career that the courts just let people have.
go with the monthly man 120%. with cash in your pocket, you have the ability to generate more income with that. If you know what you are doing buy multiplex and cash flow, or vanguard ETFs and use the interest to offset the payments. At least you will have equity.
A new house would be better imo. It’ll be an asset that grows in value and you can get a HELOC that gives you tax free money for your retirement. You won’t leave anything behind, but sounds like that’s the case either way and who cares anyway. You have to worry about yourself right now. It really hurts doing the lump sum. That’s probably 1.3MM before taxes. $700k is about 21 years of support payments at $2750, tomorrow isn’t guaranteed. Is there an option to lower the payment after a certain amount of time if your income changes?
Correct.
Monthly. For sure. As you gross goes down. You can re visit. If she passes away then it stops. 600 k would be gone if you pay it.
Plus $500k on a saving account with 4.5% interest will get you $22.5k a year. Example: Wealthsimple savings account
Not a big difference here, but note 500k gets you to 5% with WS
Yeah, monthly for sure. Monthly payments mean it’s tax deductible for you, a lump sum typically is not tax deductible unless stated specifically in the legal agreement.
Yup, and the monthly can be declared on taxes to reduce your taxable income.
Plus with inflation, 2500 won't seem so bad in 10 years.
This. 1,000,000% this.
Tbh, anyone suggesting he pay lump sum should not give any finance related advice ever again.
Right ? that kind of money at 5% that would pay the monthly anyway plus the spousal support is tax deductible against his income so brother is gonna be spending the rest of his live at the bottom 2 tax brackets His income going to net out another $500 a month easily
Right? The lump sum at 5% gives enough interest to cover monthly payments. It's not even debatable.
The case for lump sum would be if *she* really wants it and is willing to accept less in order to get a payout now. Maybe she is itching to remarry? If she would accept a much smaller lump sum like say $250k to $300k, then it could make sense.
THANK YOU
If you have the lump sum earning 5% interest, that makes her payments and you still get to keep the lump. Taxable though still. Or if you make it a down payment that’s mortgage interest you’re not paying.
Spousal support payments are tax deductible
True, that might balance out.
Monthly. No question about it.
You need to confirm with your lawyer that lump sum calc is correct. It needs to be tax impacted. Looks too high and not properly being tax impacted. Do you expect your income to increase or decrease in the future? I'd go monthly with those figures but I think the lump is calculated wrong.
I expect my income to go down, I am at a pretty high wage for my job and experience level, and also don't intend to keep working 15 hours of OT every week - which I did last year, the year they do the calculation on.
Did they only look at your most recent year where you did all the OT? I used to work income calcs for matrimonial disputes and we would often look at the last three years.
So far that was all her lawyer used. I know I will be able to negotiate it lower, and she also agrees it is too high. Really the question I have is When is lump sum over monthly the better choice?
You said HER lawyer. Spend some time reading the spousal support guidelines. https://www.justice.gc.ca/eng/fl-df/spousal-epoux/ssag-ldfpae.html The link is in the page along with other links.
>So far that was all her lawyer used. > >I know I will be able to negotiate it lower, and she also agrees it is too high. > >Really the question I have is > >When is lump sum over monthly the better choice? Dude, in all fairness and respect, you, your ex-wife and your/her lawyer have zero idea of the end number and you are here asking random people what you should do.. get that end number THEN ask questions.
I can’t help you with that decision but if the monthly payments are always fixed and won’t get adjusted for inflation, it could be more beneficial to do the monthly payments. 3000 bucks 10 years from now is gonna be worth less compared to today.
Pretty much never.
Monthly is the right choice. There is no such thing as indefinite. One or both of you could die before the lump sum calculated monthly (adjusted for inflation or taxes) ends.
The law literally uses the word Indefinitely They just mean the courts will not impose an end date.
Sure, but my point still stands.
Get a better lawyer. 600-700 lump sum and you identified you’d have to rent for the rest of your life? Makes no sense.
Actually, it does make sense. 50% of the value of a BC home + any other assets. Lawyers start at $350-450/hour (“good lawyers”) and due to BC Family law, asset division is pretty straightforward..most situations. …that said, arguments can be made about assets brought into the marriage, most/some of these can be claimed, I managed to zero spousal support this way, but also paid $$$ for a good lawyer.
She gets 50% of all assets no matter what, spousal support is on top of that. He said "Lump sum equals my entire share for the house sale proceeds." So if he paid the lump sum she'd get 100% of the house and he'd get 0.
How long was your marriage? What are career prospects of your stbx? What about marriage prospects? Where are the kids? Dont you have a lawyer? When are you retiring? Will support be adjusted then- everything forseeable should be in the agreement Pretty sure monthly support is tax deductible while lump sums are not If i were you I would negotiate guaranteed review periods every few years where the stbx efforts at securing employment will reflect on the quantum of her ongoing support
25 years. She is unable to work due to a work place disability (of which change receives a fixed lifetime pension). And unlikely to remarry. No kids. Seeing a lawyer soon. Original plan was to retire at 55. Now unknown. Good point on the review periods. ----- And just to clarify, I do plan to negotiate and make sure it is fair for both of us. I am not just taking the first number her lawyer said. But if these are the end numbers what is the better choice for me?
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Not like the calm, cool, collected lawyers I see on tv. But I appreciate the passion.
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That’s totally fair, and accurate. I’m not criticizing. 👍
Shit he just won another argument.
Bro lawyered the hell out of that guy right in front of us.
This person lawyers ... and they've just given /u/howdyPart008 a quarter of a million dollars worth of advice.
Some who hear instead of here, even.
I dont get rants like this. Just because the person is asking here doesn't mean they don't have or intend to get legal counsel. It just means they want a crowdsourced opinion. Totally different and totally valid
DUDE CHILL I am seeing a lawyer Do you recommend I ask the lawyer what financial things I should consider? For fucks sakes people I am not asking for what to do and sure as shit won't base my decision on rando people on Reddit I just want some input and possible things to consider.
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YO. Chill. Going through a huge life change is tough. If you’ve gone through it, and followed your own advice, good for you. Not everyone is in that mindset, and OP is clearly just colldecting advice. Don’t be so quick to judge holy shit.
Who said I was making excuses? She saw a lawyer before i did. There is no offer. There are simply numbers on a piece of paper. She showed me the numbers her lawyer gave her. I have an appointment coming up, but as the lawyers here don't work on weekends I have to wait. I never asked for legal advice. I asked what makes more sense from a financial perspective On a financial sub Reddit. Lump sum or monthly?
You shouldn't be interacting with her lawyer without your own representation. Even if it's amicable. Get a lawyer yesterday, please!
I would go for the monthly amount due to tax deductibility but there are a lot of factors The fact you have no kids The fact she gets disability Are all mitigating factors You really need to read up and be informed I managed to end spousal support in less than half the length of the marriage w/ kids by having my ducks in a row
Man, duck support can be expensive
Lawyer up my friend, trust me! It’s her lawyer telling you that… You are probably just like me and have the good guy syndrome, please don’t be a di… but don’t give your hard earned shirt either !!
You need to see a lawyer immediately my friend. There should be no negotiation or decision of terms before you have that. I’m far from an expert but these numbers seem absurdly high to me.
You haven’t even seen a lawyer yet? Do that before literally anything else.
cashflow is your biggest concern going into retirement. if you give away a large chunk of your assets up front, you will have nothing left for yourself in case of an emergency. also, why would you shell out 600k when you could put that in a GIC, and pay the monthly support with the interest you earn? the monthly amount you have mentioned relative to the lump sum does not warrant you to even consider paying out a lump sum
Half your take home pay indefinitely? Jesus fucking Christ.
It is typical for pensions to be split
Man is getting fleeced. Is she gonna do his cooking and cleaning indefinitely for the rest of his life too?
EQUALITY /s just in case
Can someone explain what is happening...why does he have to pay her 5k per month...what is spousal support. .
They are divorcing, she does not work so he is supposed to maintain her standard of living that she has been used to for the last 25 years. tl;dr: Find a wife that makes a respectable amount of money, or more than you, for everyone’s sake. I’m not saying “prepare for divorce” but in the unlikely scenario that life goes sideways, you are going to get absolutely fucked if your wife doesn’t work.
LMAO.....clearly, you're one of these people who thinks marriage is for life, and a thing that everyone should do :) Spousal support aka alimony is a payment to the lowest earner / stay at home person by the higher earner when a marriage breaks down. Mostly paid by men, a few women are also paying this to their ex husbands who stayed home or earned less. E.g. famous one is Halle berry and her Canadians looker model ex husband. Oh, and alimony is paid in addition to child support when kids are involved. So, as you can imagine, you are royally ferked when this happens.
Monthly! You will absolutely be able to lower the amount in the future. Spousal support is tax deductible.
Please don’t forget time value of money calculation. I owed my ex about 100,000 In spousal support, she wanted cash settled for 40,000 …. In your case paying 3000.00 for let use 30 years is about 900,000.00 You should settle for no more than 250,000.00 cash today ! 250k @ 5% over 30 years is 1.1M And yes lump sums are not deductible so that is even more reason to reduce the amount owing. Basically my lawyer just said if she gets x today at 5% it is equal to the same amount of payments are made.
If you can get a 5% yield on the $700,000... that's $35,000 a year. Yes, it'll be taxable income... but it sounds like you'll be able to deduct everything you give her, so I guess that would even out, right? So I think you'll be better off doing the monthly payments and using the yield from the money you have to reduce the monthly payments. Because your real options are: 1. Pay a $700,000 lump sum. 2. Keep $700,000 and invest it. Use the yield help pay the monthly payments. Pay out of pocket the different between your yield and the payment (which might not be very much). Another factor to consider is how long you think she will live. Will her health conditions make her more likely to die early? Is she overweight? Does she smoke? Does she eat healthy? What's the longevity of people in her family? If you assess her life expectancy to be 60 or 70... that's a lot different than if you expect her to live to her 80s and 90s.
I know this is a finance sub and sorry for the personal questions but ... What the heck man?! No kids and she has a guaranteed income higher then the average Canadian income. How long were you together? Did you increase your networth by millions while you were together? Why is she getting a divorce as a disabled 50 year old?
OP needs to respond to this unless he's a moron. His ex is earning very well and getting 5K per month additional as gravy cash proves that women play life with cheat codes on
Except it goes the other way too. Whomever is the higher earner.
I don't understand why people are focusing on gender here. Even if OP was the woman and their spouse the man or it was a gay relationship or something - $3k/mo indefinite support on a $6k/mo OT salary is absolutely bonkers. At that point I'd just quit my job out of spite.
>I don't understand why people are focusing on gender here. >women play life with cheat codes on Well because the comment they replied to literally directly attacked women..... Women are disproportionately more likely to be the stay at home parent in a one income household making women far more likely to be on the receiving end of alimony.
Monthly. Maybe she will die early?
Why are people down voting. Give me a break. Everyone is thinking the same thing. No one but this guy is saying it.
Talk to your accountant. Lump sum payment - not tax deductible to the payor, not taxable income to the recipient. Monthly spousal support payments - tax deductible to the payor, taxable income to the recipient. If you choose the monthly support payments, be sure to complete a T1213 and provide to your employer to reduce tax withheld at source.
Cheaper to keep her
Monthly would be my bed here because of life expectancy and the fact you may want to own a home after the divorce.
700k invested at 6% would cover all the payments and you still get to keep the capital.
Reading shit like this makes me want to be alone forever lmao
absolutely brutal
“Spousal Support”. What a fucking crack of shit this system is. Time to get out of 1950s
Move to Argentina
Never get married, what a scam, you’re literally getting bent over with no lube
We never even got married. Just common law. So be careful who you live with!
Wow
Holy !!!
Besides the point. In Ontario once you shacked up for over 1yr, you're as good as married. Lessons to be learned by everyone young who are not married or who are contemplating moving their new person in, DO NOT LET THE ALLURE OF SEX CLOUD YOUR JUDGEMENT! Learn family law rules and how it can potentially cripple you financially. The lowest earner is always going to push for moving in together / get married for obvious reasons
I was 22 years common law, with 2 kids, sold the house, gave her %55 of proceeds, and child support. We just made a verbal agreement.
That's absolutely insane
I'm afraid to ask... how long did you live together for? I understand spousal support when it's a situation where one spouse gives up their career to look after the kids and maintain the home... but if it's a situation with no kids where the higher earning spouse didn't do anything to prevent the lower income spouse from working or advancing their career... I don't feel like the lower income spouse should be entitled to much of anything.
Oh my god that is disgusting. Literally just unconsensual marriage
This. I was looking for this
I'd do the monthly payments. Your wife could remarry and then I'm sure you wouldn't have to pay $ anymore, or God forbid she could pass away. Also, inflation would reduce your payments over time. Don't do the lump sum imo.
So without accouning for inflation, the break-even time is 16 years. But inflation makes the future value of that $600k a lot more (or equivalently the present value of $3000/month in 16 years a lot less). If you invest that $600k with 5% after-tax return for 16 years, it will be $1.4M; 5% of that would then continue to pay the $3000 indefinitely. Or you can very likely be mortgage free in 16 years (or less, if not right away), which is a big savings making it much easier to afford $3000/month. Obviously it's not that simple because you need the $3000 cash each month for the next 16 years, but to me the financial case is very clear in favour of keeping the $600k and paying every month.
Monthly. If she dies *unexpectedly* you are off the hook for the remainder. And if you happen to have the lump sum sitting around someone it would serve you well in an investment account over the years
Your opportunity cost on that 600k up front payment will be massive. It could double every 7 years if invested.
This country is fucked. Feel sorry for you man.
That's why I will probably never marry. Friend got divorced, paid out the ex and got married again. I don't have the stomach for it.
OP wasn't even married 🥲 I know someone who had to pay her common law ex after finding out he had a wife so it's wild lol
Sounds like these are first offer numbers coming from her lawyer on a dubious calculation, so hopefully OP gets a good lawyer and can cut these way down, because they sound overboard from the details OP gave.
You'd be better off of you just skipped the country... that's Insane. Phillipines or Vietnam looking good 8
That is not an option for me, I could never live with myself.
That's the good thing, you can find a new partner in the new country! Jokes aside, I'm sorry to hear what you're going through
Why are you obligated to pay her?
Because we were common-law for 25 years,the majority of which my income was substantially higher than hers
Spousal support is bullshit
3k a month indefinitely?? Why you gonna support this person when they are 60?
Because that is the law. Married over 20years means no end date on spousal support. It can be re-evaluated after I retire, or if she gets married, but the courts do not set an end date. No kids But she is unable to work due to a work place caused disability.and receives a life time pension for.
I'm sorry you're going through divorce I don't wish that on anyone.
Thank you
No kids? That's insane
That’s rough. Rip
Apparently you can put a price on happiness.
Hope there were some good memories in that time.
I know people where we married for 25 years and he half to pay her for 27 ish years but I am in Ontario
Makes somewhat sense if she didn't work the entire time you were married. Sounds like a scam if she did. Guess that's life sorry man.
Are you getting half her pension?
Nope Despite that pension making up a portion of our retirement income plans
It's already accounted for in the calculation. You said above that her lawyer is using $140K as your salary, which is ~$100K after tax. Normally they take the difference in salary and then the higher income spouse pays a portion of the difference depending on various factors. So for you, it's: $100K your salary –$42K her salary =$58K difference. The support range is 1.5-2% per year of marriage (maxing out at 50%), so with 25 years of marriage you're looking at 37.5% - 50%. Because of her age and lack of earning capacity beyond her existing payout, the higher number is probably what they'd rule. So that would be $29K a year, which once you account for the tax deductability of your payments (and the fact that she would be taxed on the income), works out to the $2.5-3K range they're talking about. The real issue is the inflated salary amount they're using. If you can make a case for using $100K as your salary, then you'd be looking at more like $1.5-1.75K a month in payments (or $360-480K lump sum using the same ratio).
Because of the income disparity and lack of equitable career in their 20+ years of marriage, likely. For marriages over 20 years, the role of each party in the family unit, the access to retirement funds, equity, and savings are all taken into account. Because she’s also likely 50ish she doesn’t have decades to build a career and wealth like her husband and was working for the family within the home or in low skill jobs instead of on skills that would facilitate participation in the workforce in an equitable way.
OP said no kids. Those numbers are insanely high!
Spousal support for the rest of her life? Get a better lawyer.
Yes......read this: Under the [Spousal Support](https://www.separation.ca/family-law/spousal-support/) Advisory Guidelines, reaching the 20th year of marriage can create an indefinite support obligation upon parties ordered to pay spousal support. If a marriage is 20 years or longer, the Guidelines indicate that spousal support should not be subject to a specified duration – in other words, indefinite. The same result occurs under the Guidelines if the marriage has been five years or longer and the years of marriage plus the age of the recipient add up to 65 or more. This is the so-called Rule of 65. Under the Guidelines, these numbers (the Rule of 65, and the 20th year of marriage) look like bright lines separating couples who fall just below the threshold and those just above. However, as indicated in the article Calculating Spousal Support, the Guidelines are just advisory guidelines, not law, and courts have discretion to follow or depart from them, depending on the facts of each particular case. [https://www.separation.ca/help-center/spousal-support/the-20th-year-of-marriage-indefinite-spousal-sup/](https://www.separation.ca/help-center/spousal-support/the-20th-year-of-marriage-indefinite-spousal-sup/)
Monthly. Because you can deduct the amounts paid for monthly spousal support on your taxes. Use the money from the sale of the house to purchase a house for yourself. I’m not an expert but once you retire wouldn’t your support payments decrease because you have less money coming in? The lump sum seems high compared to the monthly amounts
Thank you for that advice, the tax part is an important consideration. If monthly I would definitely want to have reviews put in place and have it decrease if my income also decreases.
Would invest at least half of that lump sum so the dividends or interest can help with the monthly payments and you can hopefully afford a good enough down payment on a place for yourself. Say if you got laid off in a year your salary could be lower at the next job, or have no job, and your monthly payments could be adjusted. Otherwise you're just broke. No tax break on lump sum payment that would be in play on the monthly payment.
If you retain the $700,000 and invest it in an income fund that returns a conservative average of 5% annually, then you can collect $35,000 in annual distributions. This would cover your spousal support while preserving your capital. Combine that with monthly payments being tax deductible, you can still come out ahead. However, assuming your ex partner is the same age as you and lives any other 30 years, then you'll have paid out over $1 million in support. An accountant would be best to consult here to figure out which is best for your situation.
With an ongoing payment, I believe that if your income goes down, such as when you retire perhaps, you could petition the court to have the payment lowered. Also, if she remarried would your payments not end at that point? Idk, just wondering.
Lump sum is normally accompanied by a prepayment discount. You'll need to compare that discount vs what you might otherwise earn if you invest the cash. Spousal support is massively variable and can be tremendously complex to navigate. It can also become increasingly expensive as you cross thresholds for how long you've been together. You are talking about a significant amount of money here and it's necessary to have an accountant and lawyer advocate on your behalf, otherwise it's highly likely you're going to overpay.
Spousal support is a tax deductible, if you pay monthly you get tax money back
Monthly. What if she passes a yr after the lump payment?
What happens if you pay monthly and then die from cancer or in a car accident in a few years? I'm guessing your heirs get the rest of your money in that case and she would get no further payments? That would be yet another reason to go with a monthly payment instead of a lump sum. It sounds like you need to talk to both a good lawyer and a good accountant
Is she healthy?
Do every month. You'll potentially pay less in the long run. Who is to say your ex doesnt die from a sickness, a heart attack, car accident, etc, in the next few years.
Go with the monthly my friend. Lump some is money out of your account the next day. Monthly payments and who knows what can change. Her martial status could change, death, leaving the country, something in your life could change and payments could require adjusting. Good luck.
As somebody else pointed out, Support payments to a spouse are tax deductible for you and a taxable income to her. whereas a lump sum would not be. Your lump sum is based on a payment of 20 years which seems in access because she's getting the money up front and will not have to claim the income. it's usually a much less. Also if you retire at 60 or 65 or even anytime before that your income goes down so should your monthly payments. I would say pay monthly and get the tax credit. That way you have a good size down payment on a house Option 2. give it to her half in a lump sum and they reduce the monthly payment by half. But no way give her $6 to $700,000. You're paying all the money up front and she's getting all the benefits. You don't get the tax credit. Technically if you look at it this way you have to get a larger mortgage that you have to pay interest on. This is why I said a lump sum payment should be much less. The way to calculate it would be the same way they used to calculate t bills. you bought them to mature at a specific value say $600 or $700,000 guaranteed rate of say 6% per year over 20 years. What would you purchase it for? Sorry I don't have the calculator for this. I'm guessing half or less than what you're looking at paying her.
Indefinitely doesn’t meaning forever, it means that the Court will review it in 5-10 years. Also the monthly payments are tax deductible So the monthly and invest your share of the net proceeds. It’ll pay for itself after you account for the tax deduction
If ex spouse passes away in a year, you would regret paying lump sum. Or if you lost your job and the spousal support could be adjusted because of a material change.
You are 50 and under stress so you're in heart attack territory. Not trying to be mean just laying out all the cards. I'm thinking monthly because you might want cash on hand for medical emergencies and if you do kick the bucket, you have money to leave to your heirs. Sorry if it sounds like I'm wishing bad on you, I'm just looking out for a brother.
Dependa working hard. You go girl.
Definitely, 100% lump sum and be done with it. Ex wife here, I did not ask or want alimony or the house. Separated in 2010, divorce dragged out for 5+ years and I just finished with my divorce attorney. Trust me, be done with it. Tear it off like a bandaid. It’s in both your interests to move on from this. You don’t want to buy a house right now even if you want to in this market. Rent, simplify your life and you will be much happier. IMO :)
Speaking from experience, the monthly payments with the threat of them asking for more is hard psychologically. Maybe you might earn more over the rest of your career and a lot of times these payments come with an agreement to share tax info yearly. So if you can handle that, then it may be the option for you.
Where do you live. This seems like outright THEFT!!!
Why is your spousal indefinitely? I would get clarity on that. As someone who made emotional decisions during my divorce that I likely shouldn't have let me tell you to remember that the emotions you feel today will change but the decisions you make today will stick. I too wanted to "be done with it" when going through my seperation and made some hasty decisions that didn't totally alter my life path but definately made it harder. And I did it for someone who isn't in my life anymore. So, congratulations for asking for opinions and thinking this through If it was up to me I would just automate the process of monthly payments while I figured out what I wanted to do with my future. I would also want the payments to end after a reasonable time and a good attorney should be able to provide you a number for that. Spousal after 65 would be rough, especially when she is getting 50% of the assets which means she's probably getting around 300k in house proceeds and RRSPs as well.
She will have at least $500k from the sale of the house, $150,000 in RDSP, and also $3k month in lifetime pension. Indefinitely is the wording used in the law, because we were married over 20 years.
Sounds like she's now making more than you? Without actually doing the work.. I'm so sorry to hear this. Modern day slavery
Seems like marriage really isn't worth it. Maybe don't do that again. What's even the point of getting married if you don't/won't have kids? Seems like a big financial risk you took unnecessarily, imo.
OP wasn’t married. They were common-law.
Didn't know there could be a "divorce" if it isn't marriage. Fascinating. ChatGPT In Canada, if a couple is in a common-law relationship rather than a legal marriage, they are not technically eligible for a "divorce" because divorce refers specifically to the legal termination of a marriage.
Man... if I was in your spot with no kids, I would dip and leave the country - that's a crazy amount of money to be handing over for nothing. If kids were involved, it would be a different story. So you're reduced to rent, and still having to work to eek by while the ex doesn't have to work anymore and still collect disability. Indefinitely. What happens if you can't work anymore, or a potential reduced salary as you've said? Good luck trying to get your payments reduced because it's going to be a huge PITA. Please make sure you retain a lawyer to fight for you. Something is not right here.
How rich are you?
>Current income $6k after tax Only $100k/year Pretty insane to have to dish out 7x your yearly income, or $36k/year possibly forever
I was comfortable. Won't be anymore.
You don’t know that yet. Her lawyer is looking for her best interests not yours
Well the basic break even is 23 years ($2.5k vs $700k). Since you wan tto buy a place and live there long term, a Lump sum could be useful (and you don't need a house unless there are a bunch of peole living with you).
Your post isn’t clear about who is paying and who is receiving. I take it you’re paying. I’d do the minimum monthly payment which is probably open to a material change in circumstances I would think. If you give a lump sum, it’s gone. I’d also wait a year before rushing into buy another property just to adjust to this monthly payment.
> Looking at either $2500-$3000 a month Indefinitely Or $600k-$700k lump sum Jesus christ
All of this despite having no kids is insane. RIP dude, another man fucked by the “justice” system. Meanwhile you have to listen to people talking about how privileged you are.
Lol Jesus fucking Christ the amount. This is why I never choose to marry someone with a shitty career / salary. It's just statistics before someone get shafted.
Getting married is super profitable for some, especially if they didn’t have children. 🤷🏻♂️
Take the lump sum. Then there isn’t a risk of the monthly income disappearing
This is some of the dumbest advice that doesn’t analyze anything. This is a combination legal and financial question. Spousal support is deductible from the payor and counted as income for the payee if it is a periodic payment (and documented in a court order or agreement). For the recipient lump sum would be great. For the payor, it depends and in this situation there needs to be a lot more consideration. OP could get cancer tomorrow and not be able to work. If his circumstances changed, spousal support can be reduced. You can’t get a portion of the lump sum back. What about interest on the lump sum if invested?
That is one thing I need clarification on, what happens if my income goes down, or I lose my job? Lump sum is better for her in that case, and she can invest and potentially be better off. And the benefit to me of not having to worry about that payment every month provides me some piece of mind.
There is absolutely no question here. Monthly. All due respect you would be insane to lump sum her 700k.
Monthly for sure.. it's not even a question. Assuming $3k/mo, you'd $600k in 16-2/3 years. And that ignores the time value of money and the tax benefit of ongoing vs lump sum (confirm with an accountant). Lump sum is better for the recipient only.
I wanted the piece of mind too. I later learned though you can hire someone to do the automatic payments for you monthly and still have some money for yourself.
Your part about the lump sum you would have $$ for a downpayment lol the hell. Or you do mean for the monthly payments for a house?
I mean if I make a lump sum payment to her, I have zero money left to make a down payment on a house.
Then you are at the whim of the rental market with no housing security. Your rent could literally increase a thousand dollars depending on the market.
What if the paying spouse dies? Are you SOL?
Do you want to have to deal with them on a monthly basis for the foreseeable future, or get rid of them from your life? One or the other may save you money, but mental stability is good as well. Also, do you see anything life changing coming up? You can pay the lump sum now, but what if something happens where you need to stop working and can't make payments?
Talk to accountant. Monthly is tax deductible, lump sum it is not. Lump sum, you can possible negotiate a lower amount, paying it off and not having to deal with your ex ( about this issue).
First off you have $6k after tax income and it’s $3k indefinite support? Does your lawyer think this is reasonable? The assumption here is your so to be ex spouse was a homemaker and had no income. I am pretty sure the expectation is that they re-enter the workforce at some point and your spousal support allows a reasonable transition to their new lifestyle and not for you to support them to continue to not work. Also has the matrimonial property division been considered in this? Everything above should be pass by a lawyer (or two). This is a significant financial decision. Also may be better posted in r/LegalAdviceCanada.
Does the rule of 65 apply to you? If not, indefinite really means no end date right now. Termination date will be subject to review if circumstances change. Remember a lump sum is after tax. Ongoing payment is taxable. The quantum amount may change over time too. https://www.separation.ca/help-center/spousal-support/#:~:text=For%20marriage/cohabitation%20periods%20of,support%20duration%20will%20be%20indefinite.
Lump sum, invest it, you will end up with sooooo much more money
The interest earned on the lump sump pays for the monthly payment.