FAMILY FINANCIAL MEDIATION |
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CHILD SUPPORT / MAINTENANCE FINANCIAL REPORTS In any war between parents, children are the losers, no matter who "wins" in court. Whether you are married or not, you still have to deal with your ex-spouse at least until your children are independent. It is also a fact, the more that the non-resident parent continues to be involved with the children, the more likely support will be paid and the trauma to the children will be reduced. Simply because two adults cannot live together is no reason that both parents cannot be active in raising the children, even in separate households. Any court system is based on winners and losers, verbal combat, and final solutions. Families are based on co-operation and compromise ongoing over many years. There is up to an 85% default rate in court ordered support payments in most jurisdictions. Where there is such a high failure rate the problem is with the system, not the individuals. There is a naive assumption that the orders were reasonable in the first place. Yet consistently in family law judicial conference test cases the range of awards based on identical circumstances is so wide as to call the administration of justice into disrepute. Judges are particularly embarrassed about these discrepancies, yet are not provided with the necessary tools. The reality is that the proper calculation of quantum of support is far too complex to be done by calculator or the SWAG method (Scientific Wild Ass Guess). In many cases, the orders lack any semblance of credibility and, on proper calculation review, are terribly in error. Family Financial Mediation is a mediation support service specializing in child maintenance appraisals. Working in consultation with members of the judiciary, family law lawyers, accountants, and many other professionals, we have developed a computer program which may serve as a useful tool in resolving most child maintenance issues. Great care has been taken to ensure that the program complies with the Family Law Act and major case law, such as Paras v. Paras. In the objective determination of quantum of child support some critical factors should be considered.
BEST INTERESTS OF THE CHILDREN The use of money as leverage in obtaining other concessions, such as access, affects the stability of the relationships the children have with the parents. Child maintenance settlements or orders which are seen by the parents to be reasonable and necessary for the children are more likely to be honoured over extended periods of time, without incident. As a result, the children will enjoy a standard of living which could be, and often has been, denied to them. Any judgment or order seen to be unjust will be defied, directly or indirectly. There is little point in obtaining a judgment that will not be paid. The leading factor in family breakdown is often financial stress. The same funds which could not adequately maintain one household are now required to maintain two households. What assets existed at the time of the split-up can be rapidly consumed in litigation. Who gains from a long court action? Who wins by getting an order that will not be paid? Who loses? It is a sad fact that the children pay the price for the parents' mistakes. In any child support action, either the parents, or the court, will assign a dollar number, inaccurate to two decimal places. Too often, the true best interests of the children are ignored. Nobody wins in a war or a family law action. Regardless of the outcome of any litigation, the parents have to continue to deal with each other until the youngest child is independent. That period may cover more than 20 years. What is said and done in court will haunt you for years afterwards. Settle the issues yourselves, now. A support agreement based on clear and objective criteria is more likely to succeed and be in the children's best interest. CASE INFORMATIONIn order to prepare the computer calculated report, information outlining the circumstances of the specific family is provided by one or both parents. Certain known costs provided by the parents are used. Where costs are difficult to estimate, we draw on information from public and quasi-public data sources. A detailed financial report is produced from this combined information. THE REPORTCHILD AND ADULT COSTS ARE CLEARLY IDENTIFIED AND SEPARATED It is quite clear in the Family Law Act that the issues of spousal support and child support are separate issues and are therefore to be dealt with separately. However, there is serious concern that the standard court forms do not permit an adequate separation of the costs of the adults from those of the children. This lack of separation of costs can lead to hidden alimony being included in a child support claim, even where no claim for spousal support has been made. Alternately, inadequate provision for the children may be made if costs are not specified and properly separated. NEEDS OF THE CHILDREN In order to determine the appropriate quantum of child maintenance, the Family Law Act has made it quite clear that support is to be based on the NEEDS OF THE CHILD. Since frequently neither parent trusts the amounts claimed by the other in the standard Financial Statement, there is a need for objective reference points. Costs, such as day care and special expenses, may vary radically among families, and reflect the special circumstances which make the family unique. Those costs which do vary significantly often have a major recreational or discretionary component. Where costs are difficult to estimate, or it is difficult to separate the adult component from the child component, we draw on public and quasi-public data sources. The data identify detailed costs, using objective criteria, for such items as Food, Clothing, Personal Care, Recreation, Household Operations, Transportation, School Needs, Health Care and, in some cases, Housing. The data identify the costs (except housing costs) at various ages and by sex for children, and by sex, occupational and activity level factors for the parents. Where the database is used for housing costs, those costs are reflected in the community in which the parent lives or the nearest community for which Canada Mortgage and Housing Corporation survey results are available. The current Consumer Price Index provided by Statistics Canada and the most current source reports are used to keep the data base information up to date. IDENTIFY WHO PAYS WHAT FOR WHOM In most cases, both parents incur direct expenses for the children in their own households. If the children spend significant time with each parent, there will be household expenses in both residences, often including provision of bedrooms, furnishings and clothing inventories. Some costs travel with the children and are paid for by whichever parent is present at the time. Food, recreation and transportation are examples of such costs. In some cases, the medical/dental costs of the children in both households may be paid by one parent. Costs of the children in both households must be recognized. Each parent is responsible for his or her proportionate share of the total costs of the children in both households as the children have continuing needs in both households. CUSTODY, N. [L. custodia, from custos, a guard], a keeping watch over; protection; confinement. -n., custodian, one who keeps watch over. GUARDIAN includes a person who has in law or in fact the custody or control of a child. [Criminal Code. 1953- 54, c.51, s.185, s.196] Within the sections of the Family Law Act used to determine support there is no mention of custody and therefore no requirement that support be paid only to the parent with "legal" custody. In fact, if the child is in the care of each parent for different periods in the year, the parent with whom the child is present at a given time has defacto custody of the child at that time and a legal responsibility to provide for, protect, keep safe and keep watch over the child. [Criminal Code, Part VI, s.197, s.200] Kelly, J.A. in Paras v. Paras makes reference to physical custody in recognizing costs for the children may be incurred in both households, not just the household with legal custody. MARGINAL COSTS Without responsibility for the children, the parents would still have to live. Section 30 of the Family Law Act provides that every spouse has an obligation to provide support for himself or herself as far as possible. This is a primary obligation. Once that obligation is met within a household, what are the additional, or marginal, costs of the children? Some factors, such as housing, have a basic cost which would be incurred bythe parent, with or without the existence of the children. It is assumed that where there is sufficient income, the parent would have a minimum of a one bedroom apartment for shelter. Additional bedrooms may be needed for the children. The costs of these additional bedrooms are attributable to the children and are calculated by identifying the marginal cost of having the larger accommodations. There may still be some marginal benefit to the parent in terms of larger facilities and common areas, but Kelly, J.A. in Paras v. Paras recognizesthat this may be unavoidable. PRIORITY BUDGETING There are certain costs that must be met. Other costs are optional, depending on available income. Again the definitions of need versus desire should be considered. The program is highly sensitive to the circumstances of the specific family and can take into account a wide range of special needs. The ability to provide for these costs is clearly outlined within each report. SOURCES OF INCOME There are three potential sources of income available for child support - government and the two parents. Through various tax credits and deductions governments make major contributions towards the costs of raising the children. Those funds can exceed $2,500 per child per year and should be identified and applied directly to the costs of the children. Without the existence of the child, those funds would not be available to either parent. The other two major sources of funds are the parents themselves through employment or investment income. They are responsible for the balance of the children's costs, after the application of the governments' shares. The reports clearly outline the child related funds available from governments and the parents and the application of those funds for the support of the children. BASIC ADULT COSTS The parent must be able to have basic needs met in order to determine the parent's true capacity to support the children. Determining ability to pay based on the ratio of gross incomes of the parents places an undue burden on the parent with the lower income. Basic adult costs are relatively fixed, regardless of income. Where a parent has insufficient funds to meet basic adult costs, the shortfall is identified. Court ordered payments (such as support to others in previous families or loan garnishees) are recognized. Ordinary consumer debt payments are not recognized in order to avoid deliberate impoverishment to reduce the ability to pay child support. Support for the children takes priority. A court order for support may be in effect for many years, while consumer debt is usually a short term problem. Remaining discretionary funds can be used for debt service or discretionary expenditures. These considerations are in line with similar considerations under the Family Benefits Act. ACTUAL COSTS VERSUS SHARE OF RESPONSIBILITY A parent may pay, cash out-of-pocket, more than that parent's fair share. The other parent should compensate through a transfer payment. TAX EFFECTS When the net after-tax transfer amount is identified, it is necessary to determine which before-tax amounts are required by that parent to meet the needs of the children and maintain a fair sharing ratio of actual out-of-pocket costs. It is this transfer payment which is the amount of child support. DISCRETIONARY FUNDS A key factor in the psychology of parent/child bonding is the ability of a parent to "do something special" for, or with, the child. A gift is not a gift if it is the subject of a court order. Many separated parents significantly over indulge their children. Whether this is to ease parental guilt feelings or is a result of heightened involvement with the children, the ability to exercise discretion is important. A child's standard of living is not as dependant on material trappings as it is on the quality of caring and love provided by the parents. In the majority of cases, the continuing frequent involvement of both parents with the child will do more to enhance the child's true standard and quality of living than money itself can provide. In many cases, particularly where both parents are actively involved in the parenting roles, lifestyle enhancements should be at the discretion of the parents. The key is in keeping BOTH parents involved in the life of the child. REGULAR UPDATES These reports should be part of a regular review process and an alternative to costly variation proceedings. Family circumstances, child consumption patterns and available incomes change. Those changes do not follow the Consumer Price Index. Periodic reviews using current family information and this program can more accurately reflect the circumstances at any given point in time. NEEDS OF THE CHILDREN AND THE PARENTSFOOD The Food Budget is based on the "Dietary Standard forCanada", recommended by the Department of Health andWelfare in 1980. The Food Budget has been devised to: (a) provide adequate nutrition at moderate cost; (b) allow sufficient variety for individual tastes; and (c) include foods readily available in all markets and part of the ordinary diets of most residents of Metropolitan Toronto.The food budget allows for occasional restaurant meals. Special diets or daily restaurant meals required by occupational or other factors can be dealt with under Special Expenses. CLOTHING Basic objectives in the development of the standard for clothing were low cost, durability, and consistency with apparent trends in clothing customs today. Special committees consisting of members of the Social Planning Council and buyers for major department stores formed judgments as to clothing purchases required to maintain an adequate clothing stock, suitable for the Toronto climate and consistent with current usage. Major considerations included: (a) Hygiene requirements - For families of two or more children, this is the equivalent of laundry done twice weekly. (b) Growth Needs - Sufficient clothing is provided for young children and teenagers so as to maintain a reasonable fit. (c) Social Acceptability - Clothing needs are largely socially determined. Accordingly, actual family clothing practices provided the guidance for clothing needs. The clothing budget has been allocated to the parent with whom the child ordinarily resides unless we have been instructed that full clothing stocks are maintained in each household. PERSONAL CARE Includes items such as haircuts, toothpaste, toothbrushes, shampoo. SCHOOL NEEDS Includes items such as swim & gym clothes, books, supplies, field trips, dances, games, student activity cards, insurance. RECREATION, READING AND COMMUNICATIONS Actual recreational practice among families varies widely with a family's composition and stage in life cycle, as well as with the preferences and customs of the family and its members. A major concern in the development of the recreational standard has been to encourage social participation, as well as meeting the social and physical development needs of family members. It is recognized that people do tend to specialize in particular facets of recreation, and consequently may out-spend the amounts allocated for some items. Some "trading-off" of expenditures to concentrate on an area of preference is to be expected. The standards and costs for children vary by age and include the purchase of a limited number of magazines and paperbacks. The recreation budget includes phonograph records, admissions to movies and other entertainment, memberships, toys and games, sports equipment, and other recreation activities (including hobbies, crafts and lessons). The adult recreation budget includes a one week rental of a housekeeping cottage. HOUSEHOLD OPERATION Includes such items as household cleaners, laundry materials, light bulbs, and toilet paper. The bulk of household operations costs would be incurred by the parents, even without the presence of children. TRANSPORTATION Where public transportation is used, costs shown are based on the average number of trips required for school, shopping, social and recreational activities of families travelling by bus, streetcar or subway. One taxi fare weekly is allotted to all single parent families for return from a weekly supermarket shopping trip. Some communities do not have public transportation available or there may be other factors requiring a car. Where a private vehicle is used, the children's portion of the car expenses will be shown at the same ratio of total car operating cost as compared to public transportation apportioned between the parents on a per diem basis. The formula is as follows: Child's Public Transit X Days/year with parent X Car Op. Cost Household Public Transit 365 Car Operating Costs do not include loans for the capital cost of purchase or lease payments. The choice of type of car and capital expenditure should be determined from the remaining discretionary funds available after provision has been made for the children. In any given case, judgement must determine whether a car is a matter of necessity or convenience. Normally, such a purchase is made for employment purposes or for the convenience of the adult(s). HEALTH CARE This section covers the children's medical/dental needs, Prescription Drugs, Dental Care, Medicine Chest Supplies and Other Health Care Needs. (a) The Ontario Hospital Insurance Plan, is available to all permanent residents of Ontario, and covers necessary medical care, 24 dental surgical procedures, if carried out in-hospital; certain preventive procedures such as health examinations for school children; specified optometric and limited chiropractic, osteopathic and podiatric services; and hospital care. (b) For Prescription Drugs, the costs used represent the annual premiums required for private coverage insurance plans. (c) The allocation for Dental Care is based on estimates of the cost if a universal prepaid governmental dental plan were available. These estimates were originally provided by O.H.I.P. and have subsequently been increased by the Consumer Price Index for dental care in Canada. The resulting cost estimates closely parallel average Canadian dental costs. (d) Medicine Chest Supplies include items such as first aid supplies, thermometer, aspirin, petroleum jelly, antiseptic solution. (e) Other Health Care needs include nominal allocations for glasses, private nursing services, medical appliances and like items. HOUSING NEEDS The data base housing standard is based on the Canada Mortgage and Housing Corporation Survey of Housing for all rental accommodation at the 50th percentile level, adjusted by the Consumer Price Index. In the particular community, one half of the apartments of that number of bedrooms are more costly and one half are less costly. Basic adult housing cost is based on a one bedroom apartment. Larger accommodations are based on variations of the number, ages and sexes of the children. Client input determines the number of additional bedrooms the parent feels to be appropriate for the children. The data base calculates the cost of the children's portion of the housing cost for the extra bedroom(s). Actual current housing costs of the parties can be used. Where the parents' actual current housing costs are used, the formula for the children's portion of the costs is as follows: Rental cost of children's bedrooms X Parent's stated cost Total rental cost for household It would appear that normally the best method of identifying housing cost is to use the data base approach for rental housing. On this basis, if there are discretionary funds remaining after providing for the children, then the decision to obtain larger or more costly accommodations can be made. Additionally, often, in the property settlement, one parent will re-mortgage the matrimonial home in order to buy out the other parent's share. Then, faced with increased housing costs, the purchasing parent will claim a need for additional support or relief. This may be viewed as an attempt to re-capture the entire matrimonial home on the instalment plan. This is contrary to the Family Law Act, Part 1, Family Property. CHILD (DAY) CARE Children aged 10 years and older are not normally considered to require extra day care facilities or expense. Child care varies widely in availability and cost. Where child care is required, the parent identifies the actual annual costs incurred. SPECIAL EXPENSES This section is based on information provided by the parent(s) and is intended to cover items which vary widely among families. For example, such items may include special medical/dental/orthodontic expenses not covered by insurance, special education, or other special expenses directly attributable to the children. This section is also used to identify "standard of living" items and help narrow the issues in the case. SUMMARY Every aspect of the Child Maintenance Financial Reports complies with the legislation under the Family Law Act 1986. The program also complies with the findings in Paras v. Paras. Don't let "hired guns" fight a battle over your children's wounded bodies and minds. Don't destroy your remaining assets in an orgy of self-destruction before the courts. At one time you believed in each other enough to bring children into this world. You have a duty, a supreme obligation, to give those children all the love, protection, education, encouragement, courage, and moral integrity, that you can muster, even if your pride has been hurt by your former spouse. Life is far too short and your children are too precious to waste in court battles. Click here to go to a sample Parenting Agreement which you may wish to consider.
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