Spousal Support Obligations for High Income Earners

When a relationship breaks down, managing your finances and understanding your rights and obligations can be incredibly stressful. In some situations, your lifestyle may change quite significantly without sharing finances with your former spouse. This may be especially the case where your former spouse earns a particularly high income.

The following blog provides a brief overview of how spousal support is typically determined for high income earners, which may be helpful if you are thinking about separation or divorce or trying to come to an agreement with your former spouse. However, you should consider hiring a lawyer to help you navigate the emotional and legal complexities of obtaining your entitlements, especially in cases of contested spousal support obligations.

Entitlement to Spousal Support

Section 160 of the British Columbia Family Law Act sets out that spouses have a duty to provide support to the other spouse where that other spouse has been deemed entitled to receive spousal support. For more information on determining whether your unmarried partner is a spouse, you can read this blog post.

Under the federal Divorce Act, section 15.2(1), a court may, on application by both or either spouse, make an order requiring a spouse to pay a lump sum or periodic sums as the court thinks reasonable for the support of the other spouse.

The entitlement to spousal support typically arises on one of three bases: contractual, compensatory, or non-compensatory. Contractual support entitlement arises where the spouses have agreed between themselves that one spouse will be entitled to support from the other following the breakdown of the relationship. Compensatory support entitlement for a spouse comes from any economic sacrifices made by that spouse or economic losses suffered in order for the other spouse to further their career. Non-compensatory support orders, by contrast, are needed where there is a disparity of needs or means after the relationship breakdown, even if that disparity is not causally connected to the relationship.

Determining the Amount

The leading case on determining support quantum is Bracklow v. Bracklow, [1999] 1 SCR 420. The amount of spousal support will vary with the circumstances and the practical and policy considerations affecting particular cases. The main factors to be considered in determining the amount of child support are the same factors used in deciding whether there is a support obligation in the first place. As per section 162 of the Family Law Act, mirroring the language of section 15.2(4) of the Divorce Act, the factors to be considered are the condition, means, needs and other circumstances of each spouse, including:

(a)  the length of time the spouses cohabited;

(b)  the functions performed by each spouse during cohabitation; and

(c)  any order, agreement or arrangement relating to support of either spouse.

These factors are applied within the discretion of the trial judge, in attempt to construct a just and fair order. Limited means of the paying spouse may dictate a reduction in spousal support, as may obligations arising from new relationships in so far as they have an impact on means. The means and resources of the receiving spouse are also an important factor, including any impact of re-partnering on their means and resources.

Spousal Support Advisory Guidelines

Following Bracklow, the Spousal Support Advisory Guidelines (the “Guidelines”) were developed to assist trial judges in determining spousal support quantum. This Guidelines are not a legislative instrument, but rather they are “soft law”, meaning judges are not entirely bound by the Guidelines but typically do follow them.

The Guidelines are very flexible, providing a range for the spousal support amount, not a single figure. The Guidelines also enumerate several exceptions, which enable judges to take into consideration any unique circumstances of the parties.

The Guidelines set out a “ceiling” on the income levels to which this formula is applicable: a gross annual income of the payor of $350,000. This is not intended to be a “cap” on spousal support, nor does it entirely bar the use of the formulas within the Guidelines. Rather, the Guidelines set this “ceiling” to recognize that certain issues may arise with such high levels of income, therefore extending additional discretion to trial judges to craft fair and just spousal support orders without the constraints of the Guidelines in such cases. In sum, the larger stakes and complexity levels at such high income levels mean the Guidelines will generally have less application.

Case Law

The question of the appropriate spousal support quantum in high income cases is therefore highly discretionary and fact dependent. The following section will consider two case examples in which spousal support orders were made, or spousal support agreements considered, with respect to high income payors.

Megson v. Megson, 2014 BCSC 2467

In Megson, the British Columbia Supreme Court upheld an agreement for spousal support in which the payor, earning $1.2 million at the time of separation, paid his former spouse $25,000 per month in spousal support. When the parties separated in 2009, after 27 years of marriage, they entered into a comprehensive separation agreement, including with respect to spousal support. Following this agreement, Mr. Megson applied to the court to reduce the payments to $12,500 per month. The Court declined to vary the spousal support agreement because Mr. Megson failed to demonstrate a material change in the means, needs or other circumstances of either party. The Court also dismissed Ms. Megson’s counterclaim, in which she sought to increase the amount of spousal support payable to her.

T.N. v. J.C.N., 2015 BCSC 439

In T.N., the British Columbia Supreme Court ordered spousal support payments of $24,000 per month, to decrease to $23,500 once the payee began earning nominal income, to be paid by a high income payor earning just under $1 million per year. The parties had married in 1986, had one child, and separated in 2009. The court noted the importance of exercise discretion on a principled basis in consideration of the Guidelines in high-income case. The court concluded that an amount of $24,000 in compensatory spousal support would reflect the factors and objectives set out in the Divorce Act, the interdependency of the parties' economic interests over the course of their marriage, and the significant disparity in the parties' standard of living following the break-down of the marriage.

Want to learn more? Please contact our team of Vancouver family lawyers for a consultation.