On Thursday, January 27th, 2005, Professors Carol Rogerson and Rollie Thompson released their Spousal Support Project report titled: “Spousal Support Advisory Guidelines: A Draft Proposal”.  They’re asking for feedback and if you have any comment (plaudits or gripes) they’re reachable at Spousal Support Project, P.O. Box 2310, Station D, Ottawa, Ontario, K1P 5W5.   

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There’s a great Executive Summary and an Introduction which are well worth reading.  But if you don’t do anything else, take a look at the Table of Contents so you’ll know what specific questions they’ve dealt with.  

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This Commentary will deal with matters under these headings:  

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They’re 2 formulas (without child support and with child support) designed to produce a figure for spousal support in normal situations for support payors in situations where there is and where there isn’t child support.  The report goes into detail about the without child support formula in Chapter 5 and the with child support in Chapter 6.

They’re “advisory” – not legislated or mandatory.  This means the SSAG are set out for people to look at and decide to adopt or not as they may jointly wish.  Obviously the thinking is that once there’s a formula which is accepted as being reasonable unless there’s some reason for an exception, more and more people will just look at the formula.

The authors take pains to point out that they’re not suggesting something new of different from what we’re already doing in Canada, and they’re not replacing the existing legislation and case law, but that they’re trying to come up with a set of formulas that assist lawyers, judges, and clients in arriving at a fairly uniform result for spousal support without having to go through expensive litigation.  They recognize that this won’t work for everyone, but believe that it will work for lots of divorcing couples. 

Because this is a Federal initiative the suggestions really only apply to married people who are divorcing.  But it’s pretty obvious that once these advisory guidelines begin to be applied for married couples the same lawyer and judges will be looking to them for unmarried couples separating in the same situation.

Go through he report and look at the proposals carefully.  Then ask yourself how they’d apply to various closed cases in your office.  How different would the results be under the appropriate formula from the result negotiated between two lawyers or as determined by the court in any particular file?  And if there would be a difference, ask yourself which of the 2 results is more aligned with your sense of what’s right – as opposed to what was the best deal for your client?  There’s no suggestion in the report that parties can’t continue to proceed as we now do without the SSAG.  But there is the clear suggestion that using the SSAG will bring about greater uniformity of spousal support results, with the ability to reasonably predict the general end-result subject to certain limited adjustments.

We’re done with budgets if we use the SSAG.  At least they won’t play a primary role any more because the key consideration will be how to share the income of the parties.  If you don’t like that as a basis approach you won’t like the SSAG.  But it simplifies matters.

Firstly it’s fundamental to realize that “income sharing” doesn’t mean “equal sharing”.  And secondly, it’s important to recognize, as does the report, that the formulas set out are intended to be starting points and that there will be scope for variations, exceptions, and adjustments so that the formula doesn’t become a straightjacket.

This formula embraces the “merger over time” principle which is that the longer the marriage lasts the economic and non-economic lives of the parties become more deeply merged with each spouse acting and making a variety of decisions based upon, or taking into consideration, the situation of the other spouse.  The authors state that the  “merger over time” concept captures both the compensatory and non-compensatory spousal support objectives set out in the Moge and Bracklow cases.

The Without Child Support Formula therefore is built around 2 key factors:
The difference in gross income of the parties, and
The length of the marriage.

The box set out below is how the report summarizes the formula which is intended as the starting point after which one looks at such things as where in the range any particular case fits, what restructuring should be considered (higher payments for a shorter period of time, lump sum adjustments, etc.) and what exceptions apply.  The formula is advisory only and should be the first step in dealing with the issue of spousal support if there isn’t child support being paid.   

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When you’re in a situation where the spousal support is being calculated where there aren’t any children, then you use the gross income of the parties and work with the gross income difference.  (1.5% - 2% of the gross income difference for each year of cohabitation up to 25 years.  The range of support remains fixed for marriages 25 years or longer at 37.5% - 50% of the income difference.  There are examples below.) 

This formula also sets out a calculation to fix the duration of the support.  (.5 – 1 times the number of years of marriage but indefinite for marriages of 20 years or longer, or if the marriage and age of the recipient at separation totals 65 of more.  There are examples below.)

However there report suggests that there would be factors affecting the precise amount or duration of the ranges of support produced by the formula.  These include such things as a strong compensatory claim, the recipient’s needs, property division, the needs and limited ability to pay on the part of the payor spouse, and self-sufficiency incentives.

And the report also sets out various methods of “restructuring” so that you can move around the amounts and duration of support to increase one and decrease the other.  Most lawyers do this one way or the other in drafting separation agreements but the report provides some actual examples to assist those who might not otherwise have thought of it.

And it also deals with various “exceptions” or “categories of departures” from the ranges for amounts and duration.  If looking within the suggested ranges doesn’t satisfy the particular case you’re dealing with and restructuring doesn’t lead to the “right” solution, then as a final step you’d want to see how the exceptions can assist in shaping a resolution.  The report sets out several “exceptions” but comments that they anticipate the ones they didn’t set out will create more discussion than those they did.   

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This formula recognizes the obvious fact that spousal support in a situation where there is child support being paid is different from where there isn’t any child support obligation.  Child support needs to be paid as a first priority, it isn’t tax deductible or includable, it isn’t a function of the length of the marriage, it needs to take into consideration that both parents – not just the support paying parent – are contributing to the cost of raising the children, it must recognize that most often there are forgone economic advantages resulting from the child raising activity within the marriage.  As well, this formula needs to deal in the after-tax disposable income of the family – not gross incomes.

The box set out below is how the report summarizes the formula which is intended as the starting point after which one looks at such things as where in the range any particular case fits, what restructuring and exceptions might apply.  When there are child support obligations the amount and nature of restructuring will be less relevant but because this report deals with the spousal support piece of the overall support obligations it might well be adjusted once the child support piece has been set because of the particular circumstances of the family.   

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But we all know that dealing with a formula for spousal support when there’s also chid support involved isn’t very simple.  What about when the parents are sharing the children or there’s split custody or when the parent paying the spousal support is the one receiving the child support? 

The report deals with these questions in sections titled “Custodial Variations: Shared and Split Custody” and “A Hybrid Formula for Spousal Support Paid by the Custodial Parent”.  These sections should be looked at carefully if you’re in one of these situations so that you’ll be able to develop a starting point for spousal support discussions which take your particular situation into account.   

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The report states quite clearly that there’s a range above and below which formulas just don’t work.  So they suggest that if the support payor’s income is over $350,000 the payment move away from the formula to judicial discretion and that if the payor’s income is below $20,000 no spousal support should be paid.  Remember that the floor for child support is set at $7,500 so that if a support payor has children then child support will be paid based upon the payor’s income between $7,500 - $20,000 and once the income exceeds $20,000 both child and spousal support would be paid under the formulas if there weren’t to be any adjustments because of restructuring or exceptions considerations.   

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This is clearly going to be an area of intense examination for people concerned with the effect of the SSASG.  When can the formula be adjusted in light of changed circumstances.  What about the remarriage or re-partnering of the parties (no change if it’s the payor re-partnering) or if either of the parties have a second family?  Theses aren’t new questions but they are certainly vexing.  The report recognizes that they are troublesome and attempts to address each of these situations.  In some cases they acknowledge that there isn’t any consensus and they don’t have a suggestion.  But if you have one of these situations you need to take a close look at Chapter 10.   

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This report is fun to read.  It’s full of interesting and provocative thoughts and discussions, as well as setting out various conclusions and the reasoning behind those conclusions. part from discussing the various things mentioned above it goes into other relevant topics such as dealing with Interim Support, and it has an interesting Appendix A setting out cases in Canada where the courts have already applied some sort of  income sharing in determining spousal support.

Appendix C sets out “Detailed Calculations Under The Basic With Child Support Formula” and there are lots of examples throughout the report to show how what’s being discussed would apply in this or that situation.