When high net worth couples separate and divorce in Calgary, many of the financial issues involved are complex, especially in longer relationships.
Matters like spousal support and property division take on extra complexity due to the number and value of assets, the types of assets (e.g., offshore, trusts, and business assets), the commingling of these assets during the relationship, and other factors.
Spousal support calculations can be challenging and may be contested. Here’s what you need to know about high net worth spousal support after divorce in Calgary, including the main legal principles and what judges consider before making decisions.
What legislation governs high net worth divorce and spousal support in Alberta?
Two main pieces of legislation govern spousal support in Alberta, regardless of the combined value of the family property.
- The Divorce Act, a federal statute applicable across the country, helps courts make decisions about spousal support, with the guiding principles of promoting self-sufficiency and compensating for economic disadvantage.
- Alberta’s Family Law Act provides additional context and procedural guidance for spousal support claims.
These dual legislative frameworks are the foundation for deciding:
- Spousal support entitlement.
- Amounts of spousal support.
- The duration of support.
Key factors in high net worth spousal support calculations in Alberta
Supplementing the legislation, the national Spousal Support Advisory Guidelines also guide judges when making spousal support calculations in Alberta.
Your family lawyer will likely refer to these guidelines if you seek legal advice about your spousal support rights, as they provide a useful starting point for calculations.
The main factors that contribute to calculations are:
- The length of the marriage: Longer marriages typically lead to longer durations of spousal support due to increased economic integration and financial interdependence.
- Ages of the spouses: Each spouse’s age at separation impacts their ability to achieve economic self-sufficiency by working or acquiring new skills.
- Contributions of the spouses during the marriage: The respective income-earning and homemaking or childcare responsibilities of the spouses are considered, with both roles recognized for the value they bring to a marriage.
- Incomes of the spouses: The disparity in income between the spouses affects spousal support. In high net worth divorces, this is often considerable, leading to high awards intended to bridge the financial gap and promote economic equalization.
- Standard of living during the marriage: The Alberta courts prioritize a similar lifestyle for spouses after divorce to during the marriage, wherever possible and justifiable.
What are the main challenges in high net worth spousal support cases in Calgary?
The main challenges in high net worth spousal support cases in Calgary revolve around the number, type, and value of the assets involved, and the challenge of maintaining the lifestyle of the spouses after the divorce.
Complex valuations
With businesses, real estate portfolios, investment holdings, pensions, and art or jewelry collections, specialized expertise will likely be required to accurately value the assets.
Much hangs on these calculations, so specialist valuators and appraisers may be needed for reliable and objective valuations.
Multiple income streams with large fluctuations
In high net worth cases, income is not only derived from salaries. Investment income, business income, trust income, and capital gains may all contribute to a spouse’s income.
Valuations are further complicated by fluctuating income levels, especially if the income is derived from investments, bonuses, stock options, or business ventures. Calculations must often average income over several years to arrive at workable estimates.
“Hidden” assets and trusts
High-net-worth individuals often use trusts and offshore financial tools, adding significant complexity to spousal support calculations and potentially “hiding” income from those not looking for it.
Courts may request the help of forensic accountants or other financial experts to trace assets.
Tax implications
With high net worth spousal support, the tax implications can be significant, as periodic spousal support payments are generally taxable for the recipient while they are tax-deductible for the payor.
Lump-sum spousal support (which is quite common in high net worth cases) is generally neither taxable nor deductible under the Income Tax Act.
Calculations should consider these implications as they can greatly affect the relative net financial positions of the spouses.
Marriage agreements
The presence of prenuptial or post-nuptial agreements can also complicate spousal support.
If spousal support is addressed in the agreement but contested, the courts may need to assess whether the agreement is legally enforceable, i.e., that it was negotiated freely and transparently and is not unconscionable.
High-income lifestyles
High net worth couples often enjoy a more lavish lifestyle than in standard marriages. This can be challenging to continue after the marriage ends.
Expenses related to private schooling, high-end travel, charitable contributions, club memberships, and other lifestyle-related expenditures may need to be factored into calculations.
Does property division affect high net worth spousal support in Calgary?
n the past, property division and spousal support were treated as separate matters by the Alberta courts.
The courts may, however, consider the division of matrimonial property and debt as a relevant factor in spousal support because it is one factor in determining the “condition, means, needs and other circumstances of each spouse” (s.15.2(4)(b) of the Divorce Act).
Ultimately, the courts aim for equitable distribution, which can be achieved by:
- Spousal and child support,
- The division of property and assets, or
- A combination of property and support entitlements.
How long is spousal support awarded for high net worth divorces in Calgary?
Spousal support duration depends mainly on the length of the marriage, the age of the spouses, and their respective circumstances after the marriage.
In very long marriages (over 20 years), spousal support may be indefinite. For shorter marriages, the general rule under the Spousal Support Advisory Guidelines is that support is paid for between half a year and one year for every year of marriage.
In high-net-worth cases, duration can be extended or made indefinite where there is a significant and permanent income disparity, or where one spouse sacrificed their career for the benefit of the other and the marriage.
How can a family lawyer help in a high net worth spousal support case?
A family lawyer experienced in helping high net worth couples navigate the complexities of spousal support and other key divorce matters is, in itself, a valuable asset for divorcing couples.
Your family lawyer will protect your rights, help with support and property division calculations, file the necessary documentation, represent you at hearings, and more.
Although family lawyers may not have the forensic financial skills to unravel highly complex cases, their network of professionals usually does. Business valuators, forensic accountants, and tax specialists can be brought in to provide clarity for spousal support and property division.
If you live in the Calgary area and need assistance with a family law matter, the experienced lawyers at Jennings Family Law can help you. Call (403) 316-0138 to request a confidential consultation, contact us directly online, or email Warren Jennings directly at warren@jenningsfamilylaw.com.
