Many spousal support payors assume that their spousal support obligations will end when they retire. If you are paying support to a former spouse, however, don’t assume that your support obligations will end with your employment. The courts look at the question of whether a support payor’s retirement justifies the termination of his or her support obligations on a case-by-case basis. In many instances, support payors have been ordered to continue to pay some or all of their spousal support payments even after they have retired.
WHEN CAN THE ISSUE OF RETIREMENT BE RAISED?
There are several different periods at which spousal support payors may raise the issue of whether they must pay support post-retirement with the courts. The issue can be raised at the time when an order is made or an agreement is reached in the aftermath of the separation. It can also be raised after a final order for support has been made or an agreement is entered into. In the latter case, support payors can raise the issue prospectively, before they retire, or after they have already retired.
Different considerations come into play, depending on when the issue is raised.
The courts rarely set a termination date for support in anticipation of the payor’s retirement at the time that an initial support order is made. Instead, the courts tend to adopt a “wait and see” approach to the payor’s retirement. Even when support payors provide evidence of their intention to retire, the courts usually “decline… to hypothesize into the unknown and unforeseeable future”.1
In circumstances where an indefinite spousal support order was made or a separation agreement was reached and no termination date for spousal support was set, payors are usually under an obligation to demonstrate both that they have retired and that their income has been reduced before a court will conclude that the retirement constitutes a “material change in circumstances” that would justify a variation or termination of their support obligations. This is easier to demonstrate when the retirement has already happened; the Ontario Court of Appeal has directed the courts to exercise great caution when hearing applications for the variation or termination of spousal support because of an upcoming retirement.2
When a support payor who has already retired brings an application to have his or her spousal support obligations varied or terminated, the court will consider whether the retirement was reasonable. The payor’s capacity to work and financial preparations for retirement are both relevant considerations. Although these and other factors will be considered on a case-by-case basis, the older a payor is and the better financially prepared he or she is for retirement, the more likely the court will conclude that the retirement is reasonable. Support payors who are found to be unreasonably unemployed are almost certain to have their applications dismissed.
In exceptional circumstances, courts may order the variation or termination of spousal support as of a future retirement date. The key consideration is whether the court is satisfied that the retirement is a certainty; support payors will need to satisfy the court that the plans are firm, as well as reasonable. They will also need to provide evidence of their post-retirement income and assets, in order to give the court a clear picture of what their financial circumstances will look like in the future.
HOW WE CAN HELP
The prospect of paying spousal support for an indefinite period is, understandably, daunting for most support payors. However, uncertainty in the duration of spousal support is a two-way street; spousal support recipients usually do not know if and when their support will end at the time an initial order is made. This uncertainty often creates an opportunity for a creative resolution of the issue of spousal support duration.
Family law lawyers frequently work with our clients, whether they are support payors or recipients, to reduce the uncertainty to both parties by defining the duration of spousal support in a separation agreement. While intense negotiation is often required before the parties can agree on the right time for spousal support to end, support payors and recipents both have an incentive to come to a solution which works for them. Compromises may include: paying more support, but for a shorter duration; signing over property to the support recipient; and, paying support in a lump-sum.
Most people begin making plans for their retirement long before they retire. If you are a recently separated spouse or you are already paying spousal support, the variation or termination of your spousal support obligations at retirement is one more thing you will want to carefully consider. Unfortunately, the uncertainty of whether a court will agree to vary or terminate the support, and when the order can be made, makes planning more complicated. It is usually better to negotiate an agreed-upon termination date than to leave the matter in the hands of the courts.