Spousal Support Advisory Guidelines:
A Draft
Proposal
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Spousal support guidelines can be structured in many different ways.
For those who are interested, the Background Paper reviews in detail other
models of spousal support guidelines. This chapter presents a structural
overview of the scheme of advisory guidelines that we are proposing. Some
of what you will find here has already been touched on, in a less
systematic way, in Chapters 2
and 3.
As well, many of the individual components of the advisory guidelines will
be discussed more extensively in subsequent chapters. However, we thought
it would be helpful for readers to have a sense of the big picture at the
beginning.
We begin with a discussion of the basic concept of income sharing on
which the advisory guidelines are constructed and then move into an
organized, step by step review of the specific components of the advisory
guidelines. We have divided this review into three main sections. First,
we deal with the preliminary issues that arise prior to any consideration
of the formulas—what might be called issues of application. Then we deal
with the basic structure of the income-sharing formulas for determination
of amount and duration of support that are at the heart of the proposed
approach. The outcomes generated by the formulas are not necessarily
determinative, however. The final section deals with the possibilities for
restructuring the formula outcomes (by trading off amount against
duration), and for departing from the amounts and durations generated by
the formulas, through exceptions.
The core concept on which these spousal support advisory guidelines are
built is income sharing. Budgets will no longer play a primary role
in determining spousal support outcomes. Instead the advisory guidelines
will look to the incomes of the parties and rely on a mathematical formula
to determine the portion of spousal incomes to be shared. Contrary to
common perception, income sharing does not mean equal sharing.
There are many ways of sharing income; it all depends on the formula that
is adopted.
You will see below that other factors are also relevant in determining
support outcomes under the proposed advisory guidelines, such as the
presence of dependent children or the length of the marriage. But the
income levels of the parties and, and more specifically the income
disparity between them, become the primary determinants of support
outcomes. Under the spousal support advisory guidelines, as under the
child support guidelines, the precise determination of income, including
the imputing of income, will undoubtedly become a much more significant
issue than it has in the past.
Income sharing is not a new theory of spousal support. As we have noted
earlier, the advisory guidelines project is not driven by a desire to
theoretically reorder the law of spousal support. Rather it is driven by
the practical needs of family law practitioners and judges who deal with
the daily dilemmas of advising, negotiating, litigating and deciding
spousal support.
It is therefore important to emphasize that the use of income sharing
as a method for determining the amount of spousal support does not
necessarily imply adoption of the income-sharing theories of spousal
support identified in the Background Paper. Some of these theories, which
are admittedly contentious, rest upon a view of marriage as a relationship
of trust and community, which justifies treating marital incomes as joint
incomes.
However, the method of income sharing can be used as a practical
and efficient way of implementing many support objectives such as
compensation for the economic advantages and disadvantages of the marriage
or the recognition of need and economic dependency. Such use of proxy
measures already exists in spousal support law—think of the prevalent
use of standard of living and a needs and means analysis to quantify
compensatory support.
These proposed guidelines do not commit to any particular theory of
spousal support. As will become clear in the discussion of the different
formulas under these advisory guidelines, they aim to accommodate the
multiple theories that now inform our law and, to generate results that
are in broad conformity with existing patterns in the law.
We now move on to an overview of the basic framework of the specific
scheme of income sharing found in the proposed advisory guidelines.
4.2.1 Form and force
Unlike the Federal Child Support Guidelines, the proposed
spousal support advisory guidelines will not be legislated.
Following the practice in some American jurisdictions, these are
informal guidelines. They are not legally binding. Their
use is completely voluntary. They will be adopted on a voluntary basis
by lawyers and judges to the extent they find them useful, and will
operate as a practical tool within the existing legal framework. As
non-legislated, informal guidelines, these guidelines are advisory
only. They are intended as a starting point for negotiation and
adjudication.
Courts and lawyers will certainly be free to order or negotiate spousal
support outcomes that differ from those generated by the advisory
guidelines. However, we hope that the advisory guidelines will have
significant voluntary buy-in because of their usefulness—because of the
structure and consistency they provide and because they are perceived to
generate appropriate outcomes. If so, the advisory guidelines might
develop some presumptive force, in the loose sense of the word, such that
parties would have to make arguments for departing from the starting point
provided by the formulas. The advisory guidelines also explicitly set out
a series of exceptions, albeit not exhaustive, providing a structured
framework for departures from the formulas.
The informal and voluntary nature of these advisory guidelines has been
dealt with more extensively in chapters 2
and 3.
4.2.2 Entitlement
The proposed advisory guidelines do not deal with entitlement.
The informal status of the proposed guidelines means that they must remain
subject to the entitlement provisions of the Divorce Act, notably
ss. 15.2(4) and (6) as interpreted by the courts. Entitlement
therefore remains a threshold issue to be determined before the guidelines
will be applicable. On its own, a mere disparity of income that would
generate an amount under the advisory guidelines, does not automatically
lead to entitlement.
The advisory guidelines were drafted on the assumption that the current
law of spousal support, post-Bracklow, offers a very expansive
basis for entitlement to spousal support. Effectively any significant
income disparity generates an entitlement to some support, leaving amount
and duration as the main issues to be determined in spousal support cases.
However, our proposed guidelines leave the issue of when an income
disparity is significant, in the sense of signaling entitlement, to the
courts. It is open to a court to find no entitlement on a particular set
of facts, despite income disparity, and these advisory guidelines do not
speak to that issue.
We recognize that the advisory guidelines may, over time, shape
understandings of entitlement. But this would be part of the normal
evolution of the law in this area, controlled by the courts. It is also
possible that the law of entitlement may change over time in other
directions, if the Supreme Court of Canada or an appellate court were to
decide to narrow or refine Bracklow.
4.2.3 Application to
agreements
The advisory guidelines do not deal with the effect of a prior
agreement on spousal support. This issue, like entitlement, is outside
the scope of the advisory guidelines and will continue to be dealt with
under the evolving law guided by the Supreme Court of Canada’s recent
decision in Miglin.[13]
When the Federal Child Support Guidelines were brought into
force, changes were made to the Divorce Act providing, in essence,
that the Guidelines would prevail over child support agreements
inconsistent with the Guidelines. No such change is proposed here, given
the informal nature of these guidelines.
We do expect, however, that the advisory guidelines will play an
important role in the negotiation of agreements by providing a more
structured framework for negotiation and some benchmarks of fairness. One
possible effect of the advisory guidelines might thus be a reduction in
the number of agreements that are subsequently perceived to be unfair by
one of the parties. Another might be that courts will be better able to
identify unfair agreements when an agreement is subsequently
challenged.
Further discussion of the application of the advisory guidelines in the
cases where there are spousal support agreements can be found in Chapter 10.
4.2.4 Interim orders
The advisory guidelines are intended to apply to interim orders as well
as final orders. We anticipate, in fact, that they will be particularly
valuable at the interim stage, which is now dominated by a needs-and-means
analysis—budgets, expenses and deficits that require individualized
decision making. In many American jurisdictions, guidelines were developed
only for the interim stage.
Any periods of interim support clearly have to be included within the
durational limits set by the advisory guidelines. Otherwise, if duration
were only to be fixed in final orders, there would be incentives in both
directions—for some to drag out proceedings and for others to speed them
up—and general inequity.
The advisory guidelines do recognize that the amount may need to be set
differently during the interim period while parties are sorting out their
financial situation immediately after separation. To accommodate these
short-term concerns, the advisory guidelines recognize an exception for
compelling financial circumstances in the interim period.
Interim support is dealt with more extensively in Chapter 8.
4.2.5 Review and
variation
The primary application of these advisory guidelines is to initial
determinations of spousal support at the point of separation or
divorce, whether through negotiated agreements or court orders. Ideally a
truly comprehensive set of advisory guidelines would apply not only to the
initial determination of support but also to subsequent reviews and
variations over time. However, these issues have proven the most difficult
to reduce to a formula given the uncertainty in the current law concerning
the effect of post-separation income changes.
In the end, we chose a more modest course, identifying certain
situations where the advisory guidelines will apply on reviews and
variations, including increases in the recipient’s income and decreases in
the payor’s income. We have left others, such as post-separation increases
in the payor’s income, re-partnering, remarriage and second families, to
discretionary determinations under the evolving framework of current law.
Developing advisory guidelines to deal with some of these difficult issues
may take place at a later stage of the project, after there has been some
experience with these proposed advisory guidelines.
The application of the advisory guidelines in the context of review and
variation is dealt with more extensively in Chapter 10.
4.2.6 Application to
provincial/territorial law
The proposed advisory guidelines have specifically been developed under
the federal Divorce Act and are intended for use under that
legislation. Provincial/territorial support law is governed by distinct
statutory regimes. However, in practice there is much overlap between
federal and provincial/territorial support laws.
The broad conceptual framework for spousal support articulated by the
Supreme Court of Canada in Moge and Bracklow has been relied
upon under both provincial and federal legislation. Indeed
Bracklow, which combined claims under the Divorce Act and
provincial legislation, made no real distinction between the two. Given
this overlap, it is possible that the advisory guidelines might be used
under provincial/territorial support legislation.
The proposed advisory guidelines are informal and not binding. They
will be used only to the extent that lawyers, judges and mediators find
them to be a helpful tool in spousal support determinations. Because they
establish ranges for amount and duration, the spousal support advisory
guidelines offer a fair amount of flexibility to accommodate any
distinctive patterns under provincial/territorial law, just as they are
able to respond to local variation under the Divorce Act. As well,
departures from the advisory guidelines are always possible if the results
generated by the formulas are inappropriate in the context of
provincial/territorial support regimes.
We recognize that there are some clear differences between
provincial/territorial support laws and the Divorce Act. Many
provincial/territorial laws have specific provisions governing entitlement
that would constrain the operation of the advisory guidelines. However the
proposed advisory guidelines only deal with amount and duration, and not
entitlement. Also, provincial/territorial statutes often include specific
provisions governing the effect of agreements. However, because the
advisory guidelines do not deal with the effect of agreements there will
be no conflict.
Provincial laws also differ from the Divorce Act in their
application to unmarried couples but this will not cause any difficulties
with respect to the operation of the advisory guidelines. Although we
conveniently referred to length of marriage as a relevant factor in the
operation of the formulas, they actually rely upon the period of spousal
cohabitation (including periods of pre-marital cohabitation), thus
providing for easy meshing with provincial/territorial legislation.
It is important to keep in mind when reading this document that the
draft advisory guidelines were not specifically developed for the
provincial/territorial context; they were developed for use under the
Divorce Act.
4.2.7 Application to same-sex
marriages
At the time of writing of this Draft Proposal, the Divorce Act
had not been amended to extend to married same-sex couples the rights to
seek divorce and corollary relief. If those amendments are made, the
advisory guidelines would have the same application to same-sex couples
whose marriages have broken down and who are seeking spousal support under
the Divorce Act, as they do to opposite-sex married couples.
Provincial/territorial support laws, which cover unmarried couples, do
apply to same-sex relationships that satisfy the statutory conditions for
entitlement.
The advisory guidelines are constructed around two basic
income-sharing formulas, rather than just one formula.
4.3.1 Categories of marriages: with and
without children
The advisory guidelines are structured around a fundamental distinction
between marriages where there are no dependent children and those where
there are; or more specifically around the distinction between cases where
there is no concurrent child support obligation, and those where there is.
The result is two different formulas.
In cases where there are no dependent children, what we have called the
without child support formula applies. This formula relies
heavily upon length of marriage—or more precisely, the length of
relationship, including periods of pre-marital cohabitation—to determine
both the amount and duration of support. Both amount and duration increase
with the length of the relationship. This formula is constructed around
the concept of merger over time which offers a useful tool for
implementing both compensatory and non-compensatory support objectives in
cases where there are no dependent children in a way that reflects general
patterns in the current law.
Under the basic without child
support formula:
- The amount of spousal support is1.5 to 2 percent of the
difference between the spouses’ gross incomes for each year of marriage.
- Duration is .5 to 1 year of support for each year of
marriage, with duration becoming indefinite after 20 years.
The without child support formula is discussed in detail in Chapter 5.
In cases where there are dependent children, an alternative formula—the
with child support formula—applies. The distinctive
treatment of marriages with dependent children and concurrent child
support obligations is justified by both theoretical and practical
considerations and is reflected in current case law.
On the theoretical front, marriages with dependent children raise
strong compensatory claims based on the economic disadvantages flowing
from assumption of primary responsibility for child care, not only during
the marriage, but also after separation. We have identified this
aspect of the compensatory principle as it operates in cases involving
dependent children as the parental partnership principle, and have
drawn on this concept in structuring the with child support
formula.
The parental partnership principle is reflected in s. 15.2(6)(c)
of the Divorce Act, which specifically directs that a spousal
support order should apportion between the spouses any financial
consequences arising from the care of any child of the marriage over and
above any obligation for the support of any child of the marriage. The
Federal Child Support Guidelines do not fully take into account the
indirect costs of child-rearing, leaving such costs to be
compensated for by spousal support. For marriages with dependent children,
length of marriage is not the most important determinant of support
outcomes as compared to post-separation child-care responsibilities.
On the practical front, child support must be calculated first and
given priority over spousal support. As well, the differential tax
treatment of child and spousal support must be taken into account,
complicating the calculations. Our with child support formula thus
works with computer software calculations of net disposable incomes, of
the kind often used now by lawyers and judges.
Under the basic with child support
formula:
- Spousal support isan amount that will leave the recipient
spouse with between 40 and 46 percent of the spouses’ net incomes
after child support has been taken out. (We refer to the spouses’
net income after child support has been taken out as Individual Net
Disposable Income or INDI).
- The approach to duration under this formula is more
complex and flexible than under the without child support formula
and relies upon both length of marriage and duration of the
post-separation child-rearing period.
The with child support formula is discussed in detail in Chapter 6.
4.3.2 Length of marriage
Under the advisory guidelines length of marriage is a primary
determinant of support outcomes in cases without dependent
children. Under the without child support formula the percentage of
income sharing is sensitive to and increases with length of the marriage;
the same is true of duration of support.
Length of marriage is much less relevant under the with child
support formula although it still plays some role in determining
duration under that formula.
Given the relevance of length of marriage under the advisory
guidelines, it is important to clarify its meaning. While we use the
convenient term length of marriage, the more accurate description is the
length of the relationship, which includes periods of pre-marital
cohabitation, and ends with separation.
In discussing the development and operation of the advisory guidelines
we have sometimes classified marriages according to 3 categories based on
length—short (under 5 years); medium (5-19 years); and long
(20 years plus). The main value of these categories comes in
determining the duration of support, or in thinking about the kinds of
circumstances that will call for exceptions to the without child
support formula.
These categories correspond to those implicitly underlying the current
law and outcomes. Current law shows a fair amount of consistency in
approach with respect to long and short marriages without dependent
children; medium duration marriages without children generate much more
uncertainty. Not surprisingly, the development of advisory guidelines for
that category of cases proved the most difficult.
4.3.3 Duration
The proposed advisory guidelines attempt to offer a formula for the
determination of the duration as well as the amount of awards. Although
judges and lawyers often see amount and duration as distinct issues, they
are related; the two elements combined determine the total or global
amount of a support award.
The proposed advisory guidelines set out the presumptive conditions for
indefinite support. In other cases they establish time limits on the
duration of awards. In particular, time limits are a significant feature
of the without child support formula. They play a less significant,
or softer, role under the with child support formula.
Time limits are admittedly a problem under the current law in Canada.
After Moge, time-limited orders became less and less common.
After Bracklow, some judges have brought back time limits, at least
for non-compensatory support orders. While time limits are still
frequently negotiated by parties in agreements and consent orders, many
courts still frown upon time limits for all but short marriages.
Duration remains highly uncertain under the current law, particularly
in medium duration marriages. The issue of duration is often put off to
the future, to be dealt with through ongoing reviews and variations. Under
current practice, uncertainty about duration can generate low monthly
awards, as judges or lawyers fear that any monthly amount ordered or
agreed upon could continue for a long time, even indefinitely.
In our view, reasonable time limits are an essential element of spousal
support advisory guidelines intended to promote greater certainty,
especially if the guidelines generate reasonable monthly amounts. The time
limits generated by our formulas are potentially very generous; in
marriages of medium duration they can extend for periods of up to
19 years. These time limits are thus very different from the short
and arbitrary time limits, typically of between three to five years,
that became standard under the clean-break model of spousal support. Once
marriages are of any significant length, our time limits operate in
conjunction with generous monthly amounts.
If current law cannot allow what we view to be the reasonable and
potentially quite generous time limits proposed by the advisory
guidelines, then the advisory guidelines will have to be re-designed and
the amounts generated by the formulas lowered. Amount and duration are
interrelated parts of the formulas—they are a package deal. Using one part
of the formula without the other would undermine the integrity and
coherence of our proposed approach. The advisory guidelines do provide for
restructuring, which allows duration to be extended by lowering the amount
of support.
4.3.4 Ranges
The advisory guidelines do not generate a fixed figure for either
amount or duration, but instead produce a range of outcomes that
provide a starting point for negotiation or adjudication. The ranges we
have been able to develop for duration under the without child
support formula are particularly broad, reflecting the variation and
uncertainty in current practice. After some period of experience with the
advisory guidelines, some tightening of these may be possible.
Ranges create scope for more individualized decision making, allowing
for argument about where a particular case should fall within the range in
light of the Divorce Act’s multiple support objectives and factors.
Ranges can also accommodate some of the variations in current practice,
including local variations in spousal support cultures.
4.3.5 Determining income
Income-sharing schemes work directly off income, as income levels
essentially determine the amount of support to be paid. Under these
advisory guidelines, the accurate determination of income will become a
much more significant issue in spousal support cases than it has in the
past, and there will be more incentives to dispute income. However,
because these advisory guidelines generate ranges and not specific
amounts, absolute precision in the determination of income may not be as
crucial as under the Federal Child Support Guidelines. Many cases
will involve combined claims for child and spousal support, where a
precise determination of income is already required for child support
purposes.
The starting point for the determination of income under both our
proposed formulas is the definition of income under the Federal Child
Support Guidelines, including the Schedule III adjustments. This
is consistent with current practice. In cases involving combined claims
for child and spousal support, the payor’s income, as determined under the
Federal Child Support Guidelines, is also the basis for assessing
spousal support.
These advisory guidelines do not solve the complex issues of income
determination that arise in cases involving self-employment income and
other forms of non-employment income. These are difficult cases under the
Federal Child Support Guidelines and will remain so under these
spousal support advisory guidelines. In determining income it may be
necessary, as under the Federal Child Support Guidelines, to
impute income in situations where a spouse’s actual income
does not appropriately reflect his or her earning capacity. In some cases
the issue will be imputing income to the payor spouse; on variations and
reviews the issue may be imputing income to the recipient spouse if it is
established that the he or she has failed to make appropriate efforts
towards self-sufficiency.
Imputing income is the appropriate tool under the advisory guidelines
to deal with concerns about any disincentives to self-sufficiency created
by generous amounts of spousal support, especially at higher income
levels. In current practice, self-sufficiency concerns often result in
downward adjustments of amount in initial orders. Under these advisory
guidelines, the amount of support is determined by spousal incomes and
such loose adjustments are not possible. If a spouse is failing to realize
his or her earning capacity, income at the appropriate level can be
imputed subsequently at the stage of review or variation.
4.3.6 Net vs. gross
income
Existing guideline models vary, using both gross (before tax) and net
(after tax) incomes in their income-sharing formulas. Good arguments can
be made in favour of each method of calculating income.
Gross income is more readily calculated, without software, and more
easily understood by most spouses. Gross income is also consistent with
the Federal Child Support Guidelines.
Net income figures are more accurate and deal more effectively with the
differential tax treatment of child and spousal support and the various
tax benefits that accrue when there are children. Computer software, upon
which many judges and lawyers have come to rely, also works with net
income in calculations of monthly cash flow.
In the end, we have chosen to use different methods of calculating
income under the two formulas:
- The without child support formula, which applies in
cases where there are no dependent children of the marriage and hence no
concurrent child support obligations, utilizes gross income in
the interests of ease of calculation.
- The with child support formula relies upon net income
calculations.
Both formulas generate a gross amount of spousal support that will
be subject to the current deduction/inclusion rules for tax purposes.
These advisory guidelines, given their informal status, do nothing to
change the current tax treatment of spousal support.
The definitions of income used under each of the formulas are discussed
in more detail in Chapters 5
and 6.
4.3.7 Ceilings and floors
As with the Federal Child Support Guidelines, the spousal
support advisory guidelines establish ceilings and floors in terms of the
income levels to which they are applicable. These advisory guidelines
allow more flexibility in amounts over a certain ceiling (as with incomes
over $150,000 under the Federal Child Support Guidelines) and fix a
floor below which spousal support is not payable (like the $7,000 floor
under the Federal Child Support Guidelines).
As under the Federal Child Support Guidelines, we have set both
the ceiling and the floor by reference to the annual gross income of the
payor. The ceiling has been set at a gross annual income for the payor of
$350,000 and the floor at a gross annual income of $20,000.
Ceiling and floors are dealt with more extensively in Chapter 7.
Under the advisory guidelines there is still much room for the exercise
of discretion to respond to the facts of particular cases. As discussed
above, there is considerable room for discretion in the fixing of precise
amounts and durations within the ranges generated by the formulas. Here we
discuss two further opportunities for the exercise of discretion under our
proposed approach: one is the ability to restructure the formula outcomes
by trading off amount against duration; the other is the possibility of
departing from the formula outcomes by relying upon exceptions.
4.4.1 Restructuring
Although the formulas generate separate figures for amount and
duration, the advisory guidelines explicitly recognize that these awards
can be restructured by trading off amount against duration. Such tradeoffs
are commonly made in separation agreements and consent orders. The
advisory guidelines also recognize that judges may adjust amount and
duration in a similar way.
In Bracklowthe Supreme Court of Canada explicitly recognized
that the amount and duration of awards can be configured in different ways
to yield awards of similar value (what the Court called quantum). Thus the
Court noted that an order for a smaller amount paid out over a long period
of time can be equivalent to an order for a higher amount paid out over a
shorter period of time.
Restructuring can be used in three ways:
- to front-end load awards by increasing the amount beyond the
formulas’ ranges and shortening duration;
- to extend duration beyond the formulas’ ranges by lowering
the monthly amount; and
- to formulate a lump sum payment by combining amount and
duration.
We anticipate that in many cases where the outcomes generated by the
formulas initially appear to be inappropriate, the issue will be resolved
through restructuring. This was our experience in developing the formulas.
When restructuring is relied upon to resolve issues of inappropriate
formula outcomes, awards remain consistent with the overall or global
amounts generated by the advisory guidelines. Restructuring thus does not
involve an exception or departure from the formulas.
Restructuring is dealt with in more detail in both Chapters 5
and 6
in the context of the discussions of the two formulas. Because
restructuring will have more application in cases being dealt with under
the without child support formula the more extensive discussion
will be found in Chapter 5.
4.4.2 Exceptions
The formulas are intended to generate appropriate outcomes in the
majority of cases. We recognize, however, that there will be cases where
the formula outcomes, even after consideration of restructuring, will not
generate results consistent with the support objectives and factors under
the Divorce Act. The formulas are intended to generate appropriate
results in a wide range of typical cases; exceptions are required
for unusual cases.
The informal, advisory nature of these guidelines means that the
formula outcomes are never binding and departures are always possible on a
case by case basis where the formula outcomes are found to be
inappropriate. The advisory guidelines do, however, itemize a series of
exceptions which, although clearly not exhaustive, are intended to assist
lawyers and judges in framing and assessing departures from the formulas.
The exceptions create room both for the operation of competing theories of
spousal support and for consideration of the particular factual
circumstances in individual cases where these may not be sufficiently
accommodated by restructuring.
The exceptions include, for example, a compensatory exception that
allows for awards of greater value than those generated by the formula in
shorter marriages where there have been economic losses as a result of the
marriage or contributions to the other spouse’s career that are
disproportionate to the length of the marriage. The inability to be
self-supporting because of illness or disability may also constitute an
exception, as may disproportionate responsibility for marital debts or
support obligations to children and spouses from prior relationships.
As with restructuring, exceptions are dealt with in more detail in
Chapters 5
and 6
in the context of the discussions of the two formulas.
