Posts from the ‘Division of Family Property’ Category

Mar 9

Arizona may soon decide what happens to embryos after divorce

Arizona May Soon Decide What Happens To Embryos After Divorce

Senate Bill 1393 would require courts to give frozen embryos to the spouse who “intends to allow the embryos to develop to birth.”

It was reported that “If both adults want to use the embryos to have a baby, the court would have to give them to the one who “provides the best chance” of successfully doing so. … [and that] the spouse who does not receive the embryos would not have parental rights or responsibilities to any resulting children unless they agree to them.”

“Opponents say it would interfere in infertility treatment, could force exes to become parents against their will, and is a back-door way to change the legal definition of personhood in Arizona.”

It was also reported that “The influential Center for Arizona Policy, an anti-abortion advocacy group, is pushing the legislation.”

In Canada, Do Sperm Cells Constitute “Property” Subject to Division After Separation?

We previously reviewed a British Columbia Court decision that reviewed whether the sperm straws were “property”, and whether the best interests of the existing children, plus any future offspring from the same donor, should be considered in determining what should be done with them.

Ultimately – and while noting that “the court is ill-equipped to handle moral and philosophical arguments – it ruled that the 13 sperm straws were indeed “property”, and that they should be divided equally between the former partners. However, the best interests of the children that had already been born from the particular donor’s sperm straws, as well as any future children that might be born, were not part of the consideration. Trying to analyze (and potentially place limits on) the use to which a couple could use the sperms straws would be “borderline discriminatory”. Moreover, identifying the best interests of a child yet unborn would be merely speculation.

What is Ontario doing?

We previously reviewed the the All Families Are Equal Act (Parentage and Related Registrations Statute Law Amendment), 2016 proposes some important government-initiated changes designed to provide “greater clarity to parenting laws in Ontario”. As for November 2, 2016, the Bill has been ordered for Third Reading, which means it’s one step closer to being enacted into a law.

The Bill makes various changes to existing legislation, most notably the Children’s Law Reform Act where it sets out new rules of “parentage” for the purposes of all Ontario laws; it also clarifies the interplay of those new laws with existing ones. In particular, new provisions are aimed specifically at rights relating to children born through assisted reproduction, as follows:

• The mere fact that a person provides reproductive materials (i.e. sperm or an ovum) or an embryo for use in assisted reproduction is not in itself sufficient to make that person a parent (except of course where those items are provided for the person’s own reproductive use).

• A child’s birth parent, meaning the person who gives birth to the child, is considered a parent of the child; the only exception is a surrogate (who under normal circumstances is not considered to be the child’s parent).

• If the child is conceived without assisted reproduction, then the child’s biological father is also considered to be a parent, although this is subject to rebuttable presumptions (expressly set out in the new law) as to how the biological father may be determined. There are special rules for insemination by a sperm donor.

• If a child is conceived through sexual intercourse, then the person who provided sperm is also a parent of the child. Rebuttable presumptions are set out respecting how that person may be determined; the biological parents may agree in advance in writing that the person providing the sperm does not intend to be a parent of the child.

• A birth parent’s spouse at the time a child is conceived – either through assisted reproduction or through insemination by a sperm donor – is presumed to be a parent of the child. This is also subject to a rebuttable presumption, and there are also exceptions.

• A birth parent may enter into a pre-conception parentage agreement, involving one or more persons, in which they agree together to be the parents of a child who has not yet been conceived. To be valid, the agreement must involve no more than four parties.

Obviously this is an evolving area of law for many jurisdictions with different governments and Courts having quite different approaches to the difficult question: What happens to embryos after divorce?

What do you think?

At Russell Alexander, Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

Jan 11

Saving the Golden Goose: Part II – Including Specialized Professions as An Alternative Option to the Traditional Court System

Saving the Golden Goose: Part II – Including Specialized Professions as An Alternative Option to the Traditional Court System

As mentioned in our previous blog Saving the Golden Goose: Part I, a court process allows for only a rights based determination of the issues at hand. However, there are many intricacies involved in the enmeshment of family business and the process of separation and divorce. As an alternative to a purely rights based approach, other options can be considered in the collaborative approach, including:

Family trusts or holding companies as a method of sharing income from the family business
Tax planning, avoiding the possibility of triggering a Canada Revenue Agency audit
Considering the formation of a new family trust
Employment of children in the family business
Estate, succession, and capacity planning
Ensuring insurance is in place to cushion the effects of any risks
Gifting shares or portions of the family business to children or other family members
Maintaining the privacy of the family business
Managing the continuation of income streams
Splitting income amongst family members
Delaying equalization or sharing business payments (Ie: if and when the family business sells)
Preserving the family legacy for generations
Recognizing and predicting the ebb and flow of the market and business patterns

Unlike the court system, the collaborative process is unique in that it offers the additional benefit of involving neutral professionals who specialize in associated areas, listed above. These neutrals are able to address relevant areas of the family law matter, often with more experience in their particular field than lawyers. Neutrals are also able to complete work at their hourly rate, rather than at the lawyer’s fee. They are also able to take on some of the information gathering that would alternatively be completed by the spouses, which can be stressful. This makes including neutrals an efficient way to deal with issues in a cost effective manner.

Financial Professionals

Collaborative Financial Specialists may be accountants, financial planners, and business valuators who have expertise in helping separating families address issues relating to the family business. They play a vital role in the collaborative process by ensuring that clients provide full and frank financial disclosure. Financial disclosure includes aspects such as income, liabilities, and assets of both the spouses and the business. A business valuator may value the business and, as in the case of many self employed individuals, complete an income analysis to determine yearly income for support purposes. In the collaborative process, family business owners can work alongside the financial professional and/or business valuator to assist them in understanding the intricacies of the business based on its unique field.

Financial Specialists thoroughly vet the documents and prepare detailed reports which help to streamline settlement discussions. Financial Specialists further add value to the collaborative process by educating clients about their finances and helping to manage their expectations from a neutral perspective. This impartial stance helps to keep client expectations realistic, making negotiated settlement more likely.

Another key benefit of financial professionals is their ability to “even the playing field”. In some family matters, one spouse may have been much more involved in the finances of the family business. The other spouse may feel they are ill equipped to negotiate the finances associated with the business, and may worry about being taken advantage of by their spouse. A financial neutral can spend time separately with both parties to ensure that all the cards are on the table, and that each spouse understands the basis upon which they are negotiating.

Family Professionals

While it may not immediately seem to be a common sense approach to include a family professional within the context of a family business matter, family professionals can often deal with may of the underlying issues associated with restructuring a family and a family business. Emotions can run additionally high when dealing with the very real and salient issues associated with the individuals which make up a family business team.

Much of the concept of “Interest Based Negotiation” centers on interests that are not purely financial. A family professional can assist in identifying and bringing these interests to the table. Anger, loss and grief are a natural part of divorce or separation, especially when a family’s livelihood is on the line. A family neutral gives families access to support and guidance for managing these emotions which can intensify the conflict and derail settlement attempts in traditional divorce.

Collaborative Family Professionals are counselors, social workers, psychologists or mediators who have specialized skills in handling the emotional aspects of the issues pertaining to separation and divorce. They further discuss parenting, and help ensure that feelings, needs, and concerns are understood and respected where children concerned. This is especially pertinent when there are children working within a family business, who have their own independent concerns about how the divorce will affect their future within the business context.

Part I

Part III

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Jul 24

Personal Injury Structured Settlements: Are They “Property” or “Income” Upon Divorce?

Personal Injury Structured Settlements: Are They “Property” or “Income” Upon Divorce?

In a recent family case called Hunks v. Hunks, the court considered whether structured settlements – such as the type that are reached as part of a personal injury claim – are considered “property” or else “income” for the purposes of the property-division and equalization regime under the Ontario Family Law Act (the “FLA”).

In that case, Donna and Gary got married in 1995. A few months later, Donna suffered an injury at a supermarket that left her disabled. She successfully sued the supermarket, and was awarded more than $500,000 in compensation. After using spending about $200,000 for family-related needs, she used the rest to purchase a structured settlement (which is a mechanism by which a personal injury victim such as Donna could receive her settlement funds on a fixed schedule, rather than all up-front).

That structured settlement was arranged so that she would receive $1,290 per month for the rest of her life, as well as a lump-sum payment of $15,000 every five years (to a maximum of four such payments). All of this was subject to a small annual increase.

Unfortunately, the marriage between Donna and Gary did not flourish, and they separated about 15 years after Donna’s accident. In the course of settling out their financial affairs through the customary equalization process mandated by the FLA, the issue arose as to how the structured settlement should be properly characterized.

A lower court found that conceptually, a structured settlement was similar to a “pension” and rather than be excluded it formed part of Donna’s matrimonial property that was subject to equalization.

However, the Court of Appeal later overturned that ruling. That court found that the structured settlement was essentially a special type of annuity, and it was more analogous to disability benefits. Under Ontario law, such benefits are considered “income” for FLA purposes, and while not subject to the equalization process per se, they are considered in determining spousal support levels.

For the full text of the decision, see:

Hunks v. Hunks, 2017 ONCA 247 (CanLII)

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Jul 17

Do Partnership Principles Apply to Deciding Who Gets the Dog in a Split?

Do Partnership Principles Apply to Deciding Who Gets the Dog in a Split?

The legal issue of who owns the beloved family pet after separation or divorce has been covered many times by the courts across the country. As I reported previously on a case called Henderson v. Henderson, the Canadian position is clear: “a dog is a dog. At law it is property, a domesticated animal that is owned. At law it enjoys no familial rights.”

This established principle was applied recently in a B.C. case called Brown v. Larochelle – but with a unique spin: the court held that partnership principles could apply to guessing what the parties might have intended if they turned their mind to what would happen to Luna in the event they broke up.

The young couple lived together for a few years. After their relationship ended the woman brought a court proceeding to determine which of them should get to keep a 3-year-old Korean Jindo rescue dog named “Luna”. Alternatively, she asked that Luna be shared on/week off basis, or else that the man repay her $475 representing her half of the $950 they had together paid to adopt her. The man, in contrast, wanted to keep Luna himself.

The court described the lead-up to the dispute this way:

In September of 2015 the parties stopped living together with the [woman] moving to a new apartment that did not permit pets. In June of 2016 the [woman] obtained permission from her landlady to have pets and contacted the [man] about sharing possession of Luna.

That has led to this litigation. The [woman] says there was an agreement to share Luna when it became possible.

The [man] says he paid $2,500 to the [woman] when she moved out to adjust certain matters between them and he believed ownership of Luna was one of those matters.

Since September of 2015 the [man] has had virtually exclusive possession of Luna. The [woman] did take her for some visits/walks some 5 or 6 times after moving out but has had no contact since some time before June of 2016.

After reviewing the Canadian law on the topic, the court confirmed that dogs are treated as property, and distilled the following additional principles from the jurisprudence:

What I extract from the collective wisdom of these cases and some others is as follows:

(a) pets will not be treated in a manner such as children;

(b) courts are unlikely to consider interim applications for pet possession;

(c) Canadian Courts are unlikely to find that joint sharing or some form of constructive trust remedy is apt;

(d) that pets are a variant of personal property;

The above being acknowledged it is also clear that in Canada there is a legal requirement that animals (and in particular dogs and cats) be treated “humanely” unlike any inanimate personal possession.

The court then considered the fact that the couple had acquired Luna together, in what was essentially a “partnership”:

In this case, Luna was acquired by the parties not individually by either one but rather as what legally might be characterized as a partnership or joint venture.

Basic partnership law provides for an equal division of assets on dissolution of the partnership. Many partners make agreements as to how they will deal with assets if the partnership winds up. Many, such as here, do not. …

Applying established partnership principles to the question of the responsibility for Luna post-split, the court added:

… Partnership law requires that partners deal with each other fairly and equitably. One of the maxims of the law of equity is: “Equity presumes that to be done which ought to have been done”. In the context of this case, and having seen and heard the parties, I can assume that if they had directed their minds at the time they acquired Luna or during their joint care of her to what would happen if they split-up they would have agreed that this decision would take into account the best interests of Luna and her humane treatment.

After noting some of the tendered evidence that the Jindo breed of dog requires “strong training, patience, and plenty of walks”, the court concluded that joint use of Luna would not be best for her, based on either her breed, or her individual characteristics. Since it was evident that Luna had “cemented her bond” with the man since the couple’s split, the better decision was to leave her with him.

In the end – and having found no persuasive evidence that the $2,500 the man paid to the woman when they split up was intended to cover Luna in a sort of “property settlement” – the court found that the man was entitled to keep the dog but was required to pay the woman $475 plus minimal court costs.

For the full text of the decision, see:

Henderson v Henderson, 2016 SKQB 282 (CanLII)

At Russell Alexander Family Lawyers our focus is exclusively family law, offering pre-separation legal advice and assisting clients with family related issues including: custody and access, separation agreements, child and spousal support, division of family property, paternity disputes, and enforcement of court orders. For more information, visit us at RussellAlexander.com

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Jun 15

To All the Amateur Lawyers: How Do You Equalize When the House Cost More to Build, Than it’s Currently Worth?

To All the Amateur Lawyers: How Do You Equalize When the House Cost More to Build, Than it’s Currently Worth?

Anyone who has built their own “dream home” knows that building costs can spiral out of control, and the project can turn into a financial nightmare. This is even more so, when it comes time to divide the value of the home during a divorce. Some very interesting – and legally perplexing — questions can arise, such as this one:

What happens if the value of the home turns out to be less than the money invested in building or renovating it?

That was the question in a case called Strobele v. Strobele. The court summarized the backstory this way:

Really Dr. and Mrs. Strobele have one issue that bedevils a fair resolution of the proceeding. In the final two years of their relationship, they embarked on a project to construct the house of their dreams. They have, between the two of them, spent all of their life savings and more in the construction of this house and, in the process, considerably exceeding the budget for the project. That budget started in the range of six hundred to $700,000 and, by the end of the project, they had put at least twice and perhaps as much as three times that much money into the project which was more money than the two of them had the time. In the process, of course, they have accumulated debt and a great deal of it.

The legal problem that arises from this uncommon dilemma, is that the rules for equalizing net family property on separation do not apply easily to these kinds of scenarios. The court explained:

[A]lthough the as-built cost of the house is roughly in the neighbourhood of $1.8 million, its market value is roughly $1.2 million. If this situation was brought about by adverse market forces or poor business choices, the consequences would likely be visited upon the parties equally unless one of them engaged in deliberate or wrongful disposition of assets or there were other unusual circumstances, none of which are present here. As a general practice the phrase “for better or worse, for richer or poorer” comes to mind and is applied. But that is not what happened here.

To complicate matters further, the husband wanted to stay in the home, and apparently had access to the financial resources to do so.

For all the “armchair lawyers” among my readership, how would you divide the home’s value? And if one of the parties wanted to “buy out” out the other, how would that calculation go?

We’ll leave the question as a cliff-hanger, and I’ll share the legal answer and outcome (at least as the judge determined it in this particular case), in my Blog next week.

For the full text of the decision, see:

Strobele v. Strobele, [2005] O.J. No. 6312, 34 R.F.L. (6th) 111

Jun 12

Even Judges Get it Wrong Sometimes

Even Judges Get it Wrong Sometimes

A few weeks ago, I wrote about a case called Butty v. Butty. This was a decision by Justice Pazaratz in which he considered how the parties’ separation agreement, which was intended to exempt the husband’s farm property from the normal property-equalization regime, should be interpreted after it came to light that the husband owned two separate parcels of land, rather than one as originally thought.

At trial, Justice Pazaratz had declared the separation agreement invalid, and set it aside for what he concluded was the husband’s failure – and the failure of his lawyer – to disclose the existence of the two properties. The husband’s property was then divided in keeping with the usual Family Law Act rules, notwithstanding what the parties’ separation agreement may have intended.

The husband appealed, successfully. The Court of Appeal disagreed with Justice Pazaratz’s assessment of the facts as to the alleged lack of disclosure, and reversed his ruling. For one thing, it found that the judge had been highly critical of the husband’s trial lawyer, Mr. Jaskot, accusing him of suppressing facts and deliberately misleading the court and opposing counsel. The Appeal Court found these accusations unwarranted, writing:

As we have mentioned, the trial judge believed that Mr. Jaskot tried to hide the fact that there were two separate properties. In his reasons for decision, he describes Mr. Jaskot as having purposely suppressed information in an attempt to mislead opposing counsel and the court into believing that the farm property was a single parcel of land.

In light of the foregoing evidence, this characterization of Mr. Jaskot is completely unfounded. Opposing counsel and the court had documents clearly showing that the farm property consisted of two separate properties.

As a result of the reasons for judgment, Mr. Jaskot has suffered unwarranted personal and professional embarrassment.

And rather than lay blame on the husband’s lawyer for hiding the information, the Appeal Court found that the parties actually shared in the mistaken initial belief that the there was only one piece of property at stake. After noting that Justice Pazaratz could have easily remedied the procedural fallout from the parties’ mutual misapprehension at the trial itself, the Appeal Court said:

This court cannot truly repair the damage that Mr. Jaskot has suffered. Having said that, its comments are intended to serve as an unequivocal statement that there was nothing improper in his conduct in this matter. We regret what appears, on this record, to be unwarranted judicial criticism levied against him.

Next, the Appeal Court found that the parties’ mutual misapprehension did not detract from a key fact: The wife was aware that the separation agreement was designed to circumvent the normal property-division scheme under the Family Law Act, and that she was giving up all her claims to the entire tract of property, whether consisting of one lot or two. The Appeal Court also observed that the wife had not been under duress when she signed the agreement, and had received independent legal advice (which she did not heed) before doing so.

Based on this and other errors by Justice Pazaratz, the Appeal Court restored the parties’ separation agreement, and proceeded to divide their property in accord with its express terms.

For the full text of the decision, see:

Butty v. Butty, 2009 ONCA 852 (CanLII)

Jun 12

For Amateur Lawyers, Part 2: Equalizing a House that Cost More to Build than it’s Worth

For Amateur Lawyers, Part 2: Equalizing a House that Cost More to Build than it’s Worth

As I reported last week, the case of Strobele v. Strobele involved a couple who in the two years leading up to their final split had invested all their life savings (and more) to build their “dream home”. Unfortunately, it turned out that not only was the construction project the “death-knell” to their relationship, but the home also ended up being worth far less than it cost them to build/renovate.

At the end of the day, the home cost about $1.8 million to build, but ended up being worth $1.2 million, with title solely in the husband’s name. The wife had contributed $240,000 of her own money to the construction project over the years they were together.

So how does a Family Court split a home that’s worth less than what the spouses invested in it? The answer: With some complex calculations, and after looking at all the circumstances.

An already-tricky scenario was made somewhat more complicated by the fact that the husband wanted to buy the wife out, so that he could stay in the home. This meant that one of the many issues for the court was how much the husband should have to pay her.

The court first ruled out doing a straightforward Net Family Property calculation using the home’s current low market value. That would result in allowing the husband to stay in the home, obtain the benefit of the surroundings, and have the wife make further payments towards the home’s cost. This, the court stated, would be unfair.

Instead, the court had to look at the economic consequences of the relationship and its breakdown. The couple had moved into the home before they got married, and the wife spent $240,000 of her own money on construction projects both prior to and after marriage. They had enjoyed a relatively equal economic partnership throughout their relationship.

The fair approach was thus to calculate – and to divide equally – the overall losses that the couple sustained in building their dream home, and to give the wife a 50 percent equitable interest in the home – whatever that might turn out to be – by way of resulting trust.

Using an as-built value of $1.8 million, and a market value of $1.2 million, the court focused on “consumption value”, which would lead to a determination of what the parties’ loss on investment was. In these circumstances, the parties had each lost one-third of their overall investment in the home.

When that discount ratio was applied to the $240,000 that the woman put in over the course of their relationship, this meant she had lost one-third of that, too. In other words, rather than have the wife emerge with nothing from her $240,000 investment, the fair solution was to gross-down that figure by one-third, to represent her losses.

So after the normal equalization calculation the husband was at liberty to purchase the wife’s interest in the home for $160,000 and also personally assume all the debt associated with the house. Or, if that transaction did not take place and he chose not to buy her out, then the house could be sold and the loss that results could be divided equally between the parties through the usual equalization process.

Was this the outcome you would have predicted? What are your thoughts?
For the full text of the decision, see:

Strobele v. Strobele, [2005]

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Jun 5

Wife Didn’t Get “Wish List”, But Pre-Nup Still Upheld

Wife Didn’t Get “Wish List”, But Pre-Nup Still Upheld

The husband, who was a wealthy 50-year-old man, met the 42-year-old wife online at MillionaireMatch.com. Their first face-to-face meeting was in Las Vegas, and after a short long-distance courtship decided to marry. It was his third marriage; it was her first.

The husband asked the wife to sign a pre-nuptial agreement, which she did 10 days before the wedding date. It had been drafted by the husband’s lawyer but because the wife had been unhappy with its terms, she had it reviewed by her lawyer, who managed to negotiate some changes in her favour. As the court described the outcome of those negotiations:

I accept that the Wife hoped the draft contract would be more generous to her; however, given the Husband’s stated position that he wanted to protect his assets, I do not accept that she genuinely expected the contract to fulfill this wish list.

The final version entitled the wife to $6,000 in monthly spousal support, a 10% interest in the husband’s home after a period of time, and the immediate designation of the wife as beneficiary of the husband’s $1 million RSRP’s in the event that he died prior to any separation.

The relationship was tumultuous, and within a month of the wedding had already begun to unravel. After a series of separations and reconciliations, together with several incidents in which the police were called, the couple finally separated for good after about three years.

In the aftermath of the ill-fated union, the husband claimed that the pre-nuptial agreement should be set aside. He claimed that because the marriage was very short, the various terms including the provision giving the wife graduated spousal support was far too generous to the wife in the circumstances.

The wife, on the other hand, wanted the support and other terms increased in her favour, because she learned that the husband had not been fully forthcoming about his finances, and that she had entered into the agreement under duress and without being aware of the full facts, just days before having 200 wedding guests who were flying in “from all over the world.”

After reviewing the facts and circumstances in detail, the court upheld the pre-nuptial agreement. There was neither non-disclosure, misrepresentation nor duress operating to call its validity into question.

Admittedly, the agreement had been reached without the wife having knowledge of the full extent of the man’s wealth, since he had never provided complete documentation in that respect. However, the wife had never actually asked for it. Moreover, formal disclosure by way of sworn financial statements is not the only way for the husband to fulfill his disclosure obligations; by law it was enough that the wife was generally aware of his assets.

Despite her attempts at trial to portray herself otherwise, the wife was an intelligent woman who had experience with contracts and had operated two businesses of her own, one of which conducted business internationally. She understood the nature and consequences of the pre-nuptial agreement, which had been the result of lawyer-assisted negotiations. There was nothing unfair in enforcing the agreement as it was written.

The court confirmed that the agreement was valid and binding, and ordered that in keeping with its terms, the husband’s support obligations to the wife had ended, with no further spousal support to be paid.

For the full text of the decision, see:

Balsmeier v. Balsmeier, [2016] O.J. No. 667, 2016 ONSC 950