Home | Contact us for a confidential consultation | 905-864-9550 | contact@maplaw.ca

Family Law Blog

man and woman discussing finances

A guide to post-separation expenses and adjustments

by Stephen Morgan

The transition from married spouse to divorcee is one of the most challenging that a person will make in their lifetime, so it's no surprise that things can get messy in the time between.

One of the trickier parts of the transition concerns post-separation expenses and the adjustments that must be made to ensure that each party pays their fair share until the divorce is finalized.

Some of my earliest conversations with clients will focus on post-separation expenses, which can be awkward since I am often a bearer of bad news.

By the time a divorce order has been made — finalizing the equalization of property and fixing child and spousal support — both parties intuitively understand that they are responsible for their own finances and cannot expect their former spouse to take responsibility for all of their expenses. However, in the midst of the separation, when emotions are running high and finances are still very much entangled, people do not always like to find out that they are playing by new rules.

Setting the separation date

The date of separation is the key moment in the breakdown of a marriage, and from this point onward, spouses are responsible for their own expenses. However, getting the parties to agree on the same day is not always straightforward.

I understand why some people struggle with the concept of post-separation expenses, especially if one or both spouses continue to live in the marital home. In some ways, the separation date feels like a magical line: on one side of the divide, the same bills and expenditures can suddenly cease to be considered family expenses.

The Holy Trinity

In general, I tell clients that both spouses should expect to share the fixed costs of owning the matrimonial home, regardless of whether they live in the property.

Typically, the key fixed expenses are the mortgage, property taxes and home insurance (sometimes called the Holy Trinity) are split on a 50-50 basis post-separation in recognition that provincial law ensures each married spouse a 50-per-cent interest in the home.

Things get trickier when it comes to utilities and more discretionary expenses associated with the former family home, but if one spouse is no longer living there and both are earning incomes, I would say it is arguably unfair to expect them to contribute to costs for which they enjoy no benefit.

The allocation of other expenses to one spouse or another may be more straightforward, but practical issues can result in a request for an adjustment. For example, one spouse may not initially notice that car insurance or student loan payments for their ex are still coming out of their bank account after the date of separation.

Dispute resolution

The sooner parties can reach an agreement on post-separation expenses, the better so that they are not seeking large adjustments later. In many cases, former spouses can quickly come up with an arrangement for ongoing expenses, while others address the issue during mediation.

Judges are not often interested in getting into the weeds of who paid for which bills after separation, especially if more important issues such as parenting time and child support are in dispute. However, the court will not look kindly on freelanced post-separation adjustments, which we sometimes see from a spouse who unilaterally cuts their spousal support payment to account for what they see as an unfair distribution of post-separation expenses.

In one extreme Ontario case, a judge was compelled to take action to penalize a wife's irresponsible spending post-separation. According to the 2013 ruling, the wife ran up a $27,000 deficit on her child support payments, failed to service her debts and defaulted on the mortgage, incurring liens against the family home that put the property at risk before the husband stepped in and obtained refinancing.

As a result of the wife's apathy towards servicing her debts and the near miss with the family home, the judge found that an equal division of family property would be "unconscionable," ordering a reduction of her equalization payment.

If you're considering a separation and need legal guidance, I'd be happy to hear from you.

Let us help you navigate life's changes and challenges. Set up a confidential consultation today.

by Stephen Morgan

Stephen Morgan practices exclusively in family law and is highly skilled and experienced in litigation. He aims to guide clients through a difficult and stressful time in their lives with understanding, support, and practical advice.