13 January 2017

13 Tips for Cheaper Divorce (National Post)

Credit to my colleague Jonathan Lazar for sending me this article which I think is a great read for anyone either entering into or in the midst of a separation.


13 Tips for a Cheaper Divorce


Karen Redmond, Family Law

04 January 2017

In the event of a "Not So Happy New Year" Here's How to Prepare for your first meeting with a family law lawyer


With the coming of the New Year brings the dreaded New Years flood of new clients who have survived the holiday season and made the decision to separate. I thought it appropriate to share the advice I give to clients on how to prepare for a first meeting with a family law lawyer. 

If you have decided or are in the process of deciding to separate from your spouse, the wise thing to do is to consult with a family law lawyer before taking any steps, so you know what to do and more importantly sometimes, what not to do in the early stages of your separation.  The initial steps you take, particularly in choosing the process (litigation, mediation, or Collaborative Law) will significantly impact the reaction you may get from your spouse. 

 
  1. Do some online reading   Find out about Mediation, on the  Mediate BC website and  about Collaborative Divorce, on the Collaborative Divorce BC website.  Talk to a lawyer to see if either of these processes are appropriate for you and your spouse. 
  2. Call a family law lawyer and speak to them on the phone before you set up a face to face meeting.  See if you connect with the lawyer.  A good fit with a lawyer is really important.  As a client, you need to feel that your lawyer hears your concerns and is acting on your behalf and in your best interests and understands the specifics of your particular situation. 
  3. Speak to the legal assistant and have them send you a list of documents that you should bring to the first meeting.  Most lawyers I know have a family law document check list that they will send you before the meeting.  The more you prepare for your meeting, the more effectively the lawyer can understand your issues and provide you with the advice you need.   The general rule I tell my clients is to bring anything that is connected to the financial issues in their case, for example, tax returns, property assessments, bank account statements, investment account statements.  Anything that will be divided or accounted for, needs to be provided to the lawyer.  If you don't have access to documents, or you are worried about taking documents that will be missed, don't worry, in many cases, one spouse controls all of the finances and documents, and you can talk to your lawyer about how to go about getting copies of documents that you don't have. 
  4. Make a list of questions before the meeting.  Don't be afraid to ask, there is no such thing as a silly question.   Separation is a process that no one prepares for.  Your lawyer and their team are there to help you, and to make sure you understand the process every step of the way, so be prepared to ask lots of questions. 
  5. Don't make any changes to your Will or your insurance policy or anything else for that matter, without talking to a lawyer first. 
  6. If you have safety concerns and you are worried about your spouse finding out that you are seeing a lawyer, make sure you tell the lawyer immediately so all appropriate steps are taken to ensure your privacy and protection. 
Lastly, use your resources wisely.  Lawyers are great at giving legal advice.  If you need emotional help, there are tremendous resources for counselors and  Mental Health Professionals in Vancouver.  And if you need advice about your finances, you can ask your lawyer to refer you to a Financial Specialist . 

29 November 2016

Inheritances used to purchase property placed in joint tenancy - November 2016 update


(Not a very catchy title to this blog article I realize but the issue of excluded property and inheritances keeps coming up so I wanted to add my notes on this new case, and be perfectly clear about what it says, or what I think it says)  by Karen F. Redmond
On November 17, 2016 the BCSC decision in Lahdekorpi v. Lahdekorpi, 2016 BCSC 2143 was released, which gives us yet another little nugget on division of excluded property, in particular when inheritance funds are used to purchase property placed in joint tenancy with a spouse. 

At trial, the husband had conceded that the wife’s $30,000 inheritance was excluded property.  Mid-way through the trial, and after the Court of Appeal decision in  V.J.F. v. S.K.W., 2016 BCCA 186 was released, the husband changed his position and argued that the wife was not entitled to keep her inheritance because the money had been used to purchase the family home, therefore he argued that she lost her claim to exclusion by putting the property in joint tenancy, which gave him right of survivorship.  Mr. Justice Harris in Lahdekorpi distinguished the V.J.F. case and found that the wife’s $30,000 inheritance was still considered excluded property, saying, at paragraph 94: 

“In the instant case, the Shirley Road property was purchased, in part, with the respondent’s $30,000 inheritance and the property was registered jointly in both their names. In my view, the joint tenancy effectively preserved her contribution to the property, which was purchased for approximately $130,000. In these circumstances, I am not persuaded that the respondent could reasonably be said to have intended to gift her inheritance to the claimant. I note that, although the parties purchased subsequent properties using, in part, income derived from the Shirley Road property, the properties were either held jointly or in the sole name of the respondent. In my view, the $30,000 used in the purchase of the Shirley Road property can be traced back to the inheritance, such that it does not lose its character as an inheritance.”

So, it appears for now, that as long as you can trace your excluded property, it is safe if used to purchase property placed in joint tenancy with your spouse.  I note the reference to the ‘intentions’ of the wife at the time she received her inheritance, which still appear to be relevant in consideration of claims to excluded property. 

23 November 2016

Home is where the Heart (ache) is


My Colleague Jonathan M. Lazar recently led a panel discussion on the Family Home, at the   Collaborative Divorce retreat on November 18th.  It’s no wonder that the Family Home is one of the most difficult issues to settle in a family law file, when there are so many facets to consider.  Here is some of what Jon and the panel discussed. 

SYMBOLISM:  HOUSE AS A HOME

As most of us know, as house is not just a house, as lawyers we need to consider what it means for our clients, for their children, for the family as a whole.  There is certainly a stigma attached  to ‘losing the house’, so there needs to be great deal of thought given to how to deal with it in the context of a separation and divorce. 

OPTIONS – other than selling

There are many options other than selling the Family Residence, Jon and the panel listed a few including, sharing it (nesting) one spouse buying the other spouse’s interest, creating an income stream by renting out part of the house, one partner retaining an interest as an investment, asking a relative to move in or co own the home.  The panel discussed creative ways to re-finance including a blend and extend to lower payments and deferral of property taxes. 

CONSIDERATIONS  - legal and financial

In making a decision about the Family Residence, the panel acknowledged it isn’t all about affordability, the parties need to consider the welfare of the children, the ability of one party to physically maintain the property, new partners, the proximity of parents and children to each other, transit, and schools, as well as any special needs, the capacity to manage household debt and the ability of the other party to find affordable housing.  There are also the pets to consider, and whether one party has an emotional or historic connection to the house.  Are there mental health issues that need to be taken into account and what will be the financial impact of the timing of the sale? 

Lawyers also need to advise their clients about excluded property claims and claims for occupational rent should one party be living in the house while the other party is living on their own and paying their own accommodation expenses.  Lawyers need to discuss timing and listing of sale, as well as how to determine the value of the home if one party is buying out the interest of the other. Parties need to know how and when to change the locks, how to decide who gets what in terms of furniture, right down to the towels and the cutlery. These are things that can cause a heck of a lot of grief if not handled properly at the outset.  Some good advice is to tell people that it is not worth paying a lawyer to decide the value of your favorite couch which is probably worth almost nothing to anyone else. 

Lawyers also need to help parties come up with clear agreements about listing and sale of property so that the process is clear, and everyone knows what will happen if the house doesn’t sell within 90 days for instance, and the price has to be lowered. Agreements should be in place setting out the process for listing and selling, and what is happening with the sale proceeds, as well as a dispute resolution mechanism to deal with conflict when it arises, which it will.   

CONSIDERATIONS  - personal and emotional

The Panel also discussed the potential or perceived bias and loss that can be experienced by one party if they ‘lose’ the Family Residence.  How will it affect the children to see a parent move out of the home?  What are the implications for the parent moving out and what are the implications for the children? 

CONSIDERATIONS  - financial

In terms of financial considerations, the panel discussed basic affordability and how to guide clients towards financial advisors who can give advice and help make good decisions.  Considerations included what tradeoffs would have to be made in order to be able to maintain the home as an investment.  How would each person’s budget be affected by the house purchase, and were there other options like downsizing?  The financial concern of course being that a person is making an emotional decision and committing themselves to an “all eggs in one basket” financial position which may or may not be in their best interests. 

As the list grows longer it’s easy to see why decisions about the Family Home are so difficult to make.  Thanks to Jon Lazar and the panel for a fascinating discussion. 
Karen F. Redmond, Family Law Lawyer

 

24 October 2016

New CRA Rules for Declaring Sale of Family Residence

A colleague brought this to my attention today and I thought it was worth sharing since in the context of family law and separation, the sale of the family residence is often an issue. 


CRA announced on October 3, 2016 that they had made administrative changes to the reporting requirements when it comes to sale of a principal residence.  Previously, if you sold your principal residence you did not have to report the sale on your tax return if you did not have to pay tax from the gain of the sale.  This would be the case if you were eligible for the full income tax exemption meaning that the residence was your principal residence for every year that you owned it.  Conversely, if you sold an investment property, you are required to report the sale and pay tax on the gain.  The new CRA policy says that starting in 2016, and retroactive to January 1, 2016, you are required to report the sale of your principal residence in order to claim the full exemption, and you need to provide information about when you bought it, the sale price and so on. 


More information can be found on the CRA website HERE


Karen F. Redmond

23 October 2016

CBABC Family Law Working Group's Submissions to the BC Ministry of Justice

As detailed in our September 19, 2016 post, the BC government sought input on its two Discussion Papers regarding the Family Law Act's guardianship provisions and the presumption of advancement and property division.

The CBABC Family Law Working Group has published their submissions to the BC Ministry of Justice. Their submission on guardianship provisions is available here, and their submission on the presumption of advancement and property division is available here.

The Ministry of Justice's website explains that staff is now reviewing the feedback and determining whether there is support for developing recommendations for amendments to the Family Law Act.


Jennifer Woodruff

10 October 2016

October 2016 Update on Excluded Property in British Columbia


In 2016 our Court of Appeal handed down two decisions which have changed the way family lawyers advise their clients about excluded property.  The Family Law Act defines Excluded Property in section 85, as property that is excluded from Family Property and includes:

 (a) property acquired by a spouse before the relationship between the spouses began;

(b) inheritances to a spouse;

(b.1) gifts to a spouse from a third party;

(c) a settlement or an award of damages to a spouse as compensation for injury or loss, unless the settlement or award represents compensation for

(i) loss to both spouses, or

(ii) lost income of a spouse;

(d) money paid or payable under an insurance policy, other than a policy respecting property, except any portion that represents compensation for

(i) loss to both spouses, or

(ii) lost income of a spouse;

(e) property referred to in any of paragraphs (a) to (d) that is held in trust for the benefit of a spouse;

(f) a spouse's beneficial interest in property held in a discretionary trust

(i) to which the spouse did not contribute, and

(ii) that is settled by a person other than the spouse;

(g) property derived from property or the disposition of property referred to in any of paragraphs (a) to (f).

(2) A spouse claiming that property is excluded property is responsible for demonstrating that the property is excluded property.

 

 

On plain reading of the Family Law Act, it would appear that a person, who received an inheritance and could prove it, was entitled to claim it as Excluded Property.  Not so, the Court of Appeal tells us.  These cases tell us that the provisions of the Family Law Act cannot be considered in isolation, that FLA is not in itself a complete code, and that we must look at the intentions of the parties at the time the inheritance was received or the property was transferred. 

 

In Cabezas v. Maxim, 2016 BCCA 82, the parties met in 2005 and began living together in 2006.  In 2007 they purchased property together and Mr. Maxim paid a $56,000 down payment.  The balance of the purchase was funded through a mortgage of $256,000.  The parties struggled financially so Mr. Maxim’s parents paid a total of $187,349 to discharge the mortgage, without any written agreement or loan document.  After separation in 2013 and following the sale of the family residence, Mr. Maxim argued that the net sale proceeds of $196,070 were his excluded property.  Mr. Maxim’s mother testified at trial that she intended the money to be given only to her son as an advance on his inheritance, and not to the couple together.  In the absence of any contemporaneous evidence suggesting the payments were loans, as well as the manner in which she gave  money to her other  children, the trial judge concluded that the funds were given as a gift intended to benefit both parties (at para. 67).  The judge found that the mother’s intention to provide the funds as an advance on her son’s inheritance were found to have been made after the gifts had been made, therefore they were not excluded property. 

 

Mr. Maxim appealed the trial decision and on February 23, 2016 the B.C. Court of Appeal handed down this first decision which confirms that the Family Law Act is not a complete code, meaning that the common law principles can still be considered in each case.  Madam Justice Garson, at paragraph 38 clearly states that the common law provides interpretative context to the Family Law Act. 

 

 

On April 28, 2016 the Court of Appeal handed down the decision in V.J.F. v. S.K.W., 2016 BCCA 186.  At paragraph 72 Madam Justice Newberry, citing the Cabezas and Maxim case, says that case “provides additional support for the conclusion that common law precepts continue to apply at the earlier categorization stage.”  The Court found that the 2 million dollar inheritance received by the husband, and used to purchase a property solely in the name of the wife was properly characterized by the trial judge as family property, subject to equal division. 

This clarifies that the common law and equitable principles as they relate to property have not been eliminated by the Family Law Act. 

 

So, what do we know now? 

These cases tell us that the Excluded Property provisions of the Family Law Act are not a complete code and in advising our clients we need to look at the intention of the parties and or their parents or relatives at the time the gifts or inheritances were given or property was received or transferred.  It isn’t enough at separation for a person to say,

hey I know I put all of my inheritance down on the mortgage on our joint property for twenty years of our marriage but I really meant to keep it all to myself if we separated…”

 

there needs to be evidence of intention at the time these decisions were made. 

In 2015, and certainly before these Court of Appeal decisions, lawyers may have been telling their clients that the Excluded Property Provisions of The Family Law Act would protect their gifts and inheritances in any circumstance, but those assurances can no longer be given. 

 

So, what can you do?

  1. Draft a marriage agreement or a cohabitation agreement and clarify your intentions.
  2. Make sure you have documentation at the time your property/gift/inheritance is received or transferred.
  3. Sign a Declaration of Trust if you intend that your spouse will hold property in trust for you.
  4. Be aware of the inference of joint right of survivorship that arises with joint bank accounts and property held in joint tenancy.
  5. Talk to a family law lawyer about your options. 


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2016 Cases that have applied the V.J.F and Cabezas decisions: