Family Law Blog

If I Cash In My Stock Options 10 Years After Separation, Will My Ex Get More Spousal Support


Cashing in stock options

Family Law questions about spousal support are never quick to answer.  Neither are questions about stock options in the family law context.  Your question does raise a number of important issues surrounding spousal support that people often misunderstand.  (Getting spousal support law wrong is a frequent family law mistake.)

 

To determine whether you are entitled to spousal support based on your spouse’s stock options, it is necessary to go over the basics of the law of spousal support.


 


Spousal Support is not like child support.  While there are Spousal Support Advisory Guidelines, they are very different from the Child Support Guidelines in many ways.  A couple of those differences are that:

  1.  Spouses are not automatically entitled to spousal support the way that children, through their parents are automatically entitled to child support.  Entitlement to spousal support, can be complicated issue, which is discussed in this podcast episode.  Even if a person meets the definition of “spouse” under the Divorce Act or Family Law Act, that person may still not be entitled to support.
  2. Spousal support is not just based on income.   The factors that decide whether a spouse is entitled to support also influence how much spousal support to which a spouse may be entitled and for how long.  It is not just a question of looking at table and seeing the amount of support payable for the spouse’s income, which is how child support works.   The Spousal Support Advisory Guidelines produce a range of figures for support and range of time for how long support should be paid.  How much and how long are determined by looking at the factors influencing entitlement.  And, if a spouse does not meet the legal tests for entitlement, the calculated figures mean nothing as the proper amount of support is $0.
  3. Unless required by a court order or separation agreement, spousal support does not automatically change, even when the spouses financial situations’ change.
Ontario Family Law Podcast

13 - Spousal Support in Ontario and Canada

30 - Entitlement to Spousal Support

The factors that determine entitlement to spousal support are set out in section 15.2(6) of the Divorce Act (for married spouses) and section 33(9) of the Family Law Act (for common law spouses).  These are set out in some detail the podcast. But, to summarize, While the wording is quite different, spousal support under either piece of legislation can be based on one or more of three bases for spousal support (sometimes called types of support):


  1. Compensatory Support – support that is designed to compensate a spouse for the  services provided during the marriage/relationship and the income or other wealth that a spouse gave up for the marriage/relationship (e.g. leaving a job to look after the kids and the spouse).
  2.  Non-Compensatory Support – support that is designed to give a “soft-landing” when a spouse will not be able to maintain the same lifestyle after a short marriage/relationship, or try to maintain the lifestyle after a long marriage or relationship.
  3. Contractual Support – where the parties agree that a certain amount of spousal support ought to be paid for a period of time.  This is usually set out in a marriage contract or cohabitation agreement.  However, spouses who do not fully understand entitlement do may obligation themselves to pay spousal support in a separation agreement that they would not otherwise have to pay because their spouse does not meet the test for entitlement.

 

All of this matters because, as noted above, spousal support does not automatically change with a support payer’s income.   In some cases, changes to support will not be permitted by the support order or separation agreement. 

 

Even where a support order or agreement does permit a change in support, the support recipient must establish that he or she is entitled to an increase in spousal support.  Such an increase is based on two sets of factors:

  1. There is link between the increase in the support payer’s income and the marriage or relationship, and
  2. There is an entitlement to increased support based on the three bases set out above.

 

The issue of stock options highlights the first factor. 

 

Stock options are performance incentives that are tied to the performance of the employee’s company.  Instead of being paid entirely by salary, the employee “earns” the right to buy shares in the company at a certain price.  If the company does well, then the employee can later buy the shares at a price that is less than they are worth and sell that at some point for a profit.   The income that an employee earns through stock options appears on that employee’s tax return at the time he or she sells the stocks, not at the time he or she earns the options.  In addition, it usually appears as a taxable capital gain rather than a salary.  (True stock options will always show up as a capital gain).


reporting stock options on tax returns



When calculating support, good family lawyers, know that stock options income should be included in income for calculating support at the time the support payer earns the options and not when the support payer sells the stock and pays the tax.  It is possible that the support payer may never sell the stock and may pass it onto heirs - or at least wait until a support obligation is over before cashing them in.  Calculating what income should be used when stock options are an issue is unbelievably complicated and anyone who has a stock option issue in his or her divorce or separation needs to speak to a lawyer who knows about them.


If the stock option income was included in the calculation of your spousal support, then the cashing in of the stock options should not affect your spousal support because it was already factored in to the amount you receive.


If the stock option income was not included in the calculation of your spousal support payments, then when you  earned those options is very important:  

  • If you earned the options during your relationship, then they will be linked to your relationship and that gives your ex a basis to ask to share in the increased income. 
  • If you earned the options after your relationship for work you did after your relationship that was not linked to your relationship, then your ex probably has no claim to additional spousal support.
  • If you earned the options after your relationship for work you did after your relationship, but that work is related to the relationship (e.g. you were promoted to the job while you were still together, you were able to do the work leading to the options because your ex looked after you during the relationship) then your ex may be able to claim additional support.

But, even if the options are linked to your relationship, to get increased support, your ex will still have to establish that there are compensatory grounds (show that your ex has not been fully compensated for your ex's sacrifices during the marriage), non-compensatory grounds (you ex is struggling financially) or contractual grounds (you and your ex agreed to the additional support).


In addition, if you had the stock options at the time of separation, and included their value in the calculation of the equalization of net family properties, then it is not appropriate to divide up the options again for spousal support.  They capital gains from stock options will still be income for child support.  In addition, income from stock options earned after separation, which were not included in the property equalization process, but which can be linked to the marriage, can be used for spousal support calculations, if the support order or separation agreement permit. 


Clearly, the situation of stock options and support is complicated and even more complicated when discussing post-separation increased in income.  It is similar for most deferred compensation employee incentive plans.   So, it really is important that you get legal advice specific to your situation to make sure your support arrangements are right.

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The best way to protect yourself, your children, and your financial security, is to find out how the law applies specifically to your situation and what steps you should take to get things to work out for you. Certified Specialist in Family Law (and author of the book to the left), John Schuman, has extensive experience assisting high net worth clients on complicated legal matters, including stock options.  Contact him right now by using the contact form below, by emailing him, calling 416-446-5869, or using the contact form below.  We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate).

  

You can get a lot more information about Ontario Family Law issues, including a comprehensive explanation of child support, spousal support, property division, and most other common family law issues by downloading this $9.99 Kindle eBook, Kobo eBook, or iBook for your iPad or iPhone or ordering it from Amazon as a paperback.  


Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts.


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How Do I Get My Pet Bunny Back From My Ex In Our Divorce?

Pet Bunnies

Under Ontario's current Family Law Legislation, pets, of any sort, are not treated like children.  They are, for all purposes of law, “property," like furniture or cars or bank accounts.  So, judges do not decide things on the basis of the "best interests of the pet," the way judges decide parenting issues on the basis of the best interest of the child.


Since the “best interests” do not factor into the decision about who gets your bunny, the issue about who gets to have the bunny is determined by who owns the bunny or who can prove to have “title” to the bunny.




Ontario Family Law Podcast

9 - Property Division in Ontario After Marriage

14 - Family Court Step by Step - Part 1 - Starting and Responding to Family Court Proceedings

29 - Common Law Separation and Property Division

35 - Resolving Children's Issues Outside of Court

To answer whether you can get your bunny back, you have to understand how property division works on separation and divorce, which is explained in this video and this podcast.  It is important to note that being married in Ontario does not give spouses any ownership interest in each other’s stuff.  So, the bunny belongs to whomever paid for it, or if there happen to be pedigree papers, the owner listed on that or other paperwork that proves ownership. Ownership does not change just because spouses are married or divorced.  Under Part I of the Family Law Act, married spouses share in the value of each other’s property but do not own each other’s stuff in anyway – unless they bought something in joint names.


Ontario’s Family Law does not give common law couples any right to property division or any ownership in each other’s stuff. It is possible that if both spouses contributed to value of the bunny that they will both become owners pursuant to the principals of Equity, which are explained more in the link above about property division and common law relationships.


So, if you own the bunny, and your spouse does not, then and your spouse will not turn the bunny over, you may have to start court proceedings.  Rule 44 of the Rules of Civil Procedure give the Court the power to Order the Sheriff’s office go to wherever you ex is living and recover items that you have proven to the Court belong to you.   The procedure is quite complex, and you will definitely need a lawyer to assist both with getting the Order and with arranging the necessary security for damages that the Court Rule requires.


If you and your spouse own the bunny jointly, then the situation becomes much more complex.  You must bringing a Family Court Application under section 10 of the Family Law Act for a determination that you are the rightful sole owner of the bunny based on the “Principals of Equity” rather than title (because you have contributed more to the value of the bunny than your spouse).  Alternatively, you can claim, under that section, that you should be the owner who has possession of the bunny because you will “preserve the asset” better.  


Judge Deciding Pet Issues in Family Court

However, where there is joint ownership, and one owner does not want to buy out the other, Judges do not try to determine the value of assets, including bunnies, or force one party to buy out the others’ interest in the bunny.  The judge will just order that the bunny be sold on the open market and the proceeds of sale divided between the owners (again Ontario Law treats pets and “property” and not as children).   The judge may order that either party can put in offers/bids to buy the bunny with the bunny being sold at the highest price.  Alternatively, the judge may order that neither party can try to buy the bunny if that would be best for all concerned.


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If you and your ex can agree to it, you could go to Family Arbitration and instruct your arbitrator to decide the issue of where the bunny should live best on the bunnies best interest.  However, section 2.2(1) of the Arbitration Act, 1991 technically requires that assets from assets from a marriage be divided according to the Family Law Act and not the parties’ instructions.  So, your best options might be to try to work something out through negotiation, mediation or Collaborative Practice, where the needs of the bunny can come first.


You can get a lot more information about Ontario Family Law issues, including property division, support, family court, the alternatives to family court and most other common family law issues by downloading this $9.99 Kindle eBook, Kobo eBook, or iBook for your iPad or iPhone or ordering it from Amazon as a paperback. But, it is always best to speak to a good family law lawyer


Paperback Available on:

Paperback available on Amazon

The best way to protect yourself, your children, your pets and your financial security, is to find out how the law applies specifically to your situation and what steps you should take to get things to work out for you. Contact Certified Specialist in Family Law (and author of the book to the left), John Schuman, by using the contact for below, by emailing him, calling 416-446-4036, or using the contact form below.  We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate). 


Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts on the best ways to resolve matters after a separation.


Contact Us:

 

My Ex Is Going to Cut Off Child Support When Our Disabled Child Turns 18 - What Can I Do?

boy_in_wheelchair_2

Child support does not end at age 18 for children who are unable to become financially independent because they are disabled or are in full time school.  While it may be appropriate for child support to change in those circumstances, it is not up to the support payer to decide whether continued child support is appropriate or in what amount.  If the parties cannot decide what child support is appropriate, after exchanging financial disclosure and information about why the child cannot be come financially independent, the decision will be up to a judge in Family Court. 


Ontario Family Law Podcast

10 - Child Support - Who Pays and How Much?

32 - How to Change a Support Order

34 - Financial Disclosure in Family Law Cases

If you have a court order for child support, unless it specifies and end date, then child support will just continue. If you have opted out of FRO enforcement, then you can go to www.theFRO.ca to find the forms to start up FRO enforcement again.  If you have a separation agreement,  then you can file that separation agreement with the Family Court  using a Form 26B.  If you do not have a separation agreement or a court order, then you will have to start a court application for support.  If the order or agreement has a fixed end date, then you will need to start a “Moton to Change” based on your child's  anticipated need for support. 



 

Child support can get complicated for children over the age of 18 because the Child Support Guidelines Tables do not always apply, and there can be more ways to pay child support.  The best way to protect yourself, your children your financial security, is to find out how the law applies specifically to your situation and what steps you should take to get things to work out for you. Contact CertifiedSpecialist in Family Law (and author of the book to the left), John Schuman, by using the contact for below, by emailing him, calling 416-446-4036, or using the contact form below.  We answer all inquiries promptly and we can arrange for you to come in quickly for a consultation (charged at a reduced hourly rate). 

Guide to the Basics of Ontario Family Law - 4th edition cover

 

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You can get a lot more information about Ontario Family Law issues, including a comprehensive explanation of child support, spousal support, property division, and most other common family law issues by downloading this $9.99 Kindle eBook, Kobo eBook, or iBook for your iPad or iPhone or ordering it from Amazon as a paperback.

 

Many thousands of people get family law assistance from this website everyday.  If you have found this page useful, please share it on your social network using the Facebook, Twitter, LinkedIn and Pinterest buttons at the bottom of the page.  Please comment on this page using the comments section at the bottom to share your thoughts on the best ways to resolve matters after a separation.


Contact Us:


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