The Financial Advisor Guide to:
How Divorce Affects Your Prospects & Clients
Self Study Course # 22
OVERVIEW
The purpose of this course is to provide the advisor with some information and tools to help their clients and prospects deal with a traumatic fact – DIVORCE. The information contained in it will be useful for all areas of the Financial and Insurance professions.
It is not our intent to make the advisor an expert in the legal profession when it comes to divorce, but merely provide some useful suggestions that can help enhance the advisors relationship with the people they serve.
The fact of the matter is that when people divorce, their need for insurance and financial products increases, now that there is only one person and not two earning an income.
It is easy to misinterpret and misunderstand facts about divorce. To begin with, much of the media that informs us is American. As a result, we often accept American facts and erroneously apply them to the Canadian situation. We do have to separate Canadian from American facts. Second, official statistics about divorce are sometimes confusing and erroneously interpreted, even by a few researchers themselves. In addition, when research information and official statistics are published, radio, TV, and newspaper people often tend to report on some selected pieces of information and consequently may inadvertently blow them out of proportion. Furthermore, media people may have neither the time nor the space to provide the necessary appreciation of the context and other important facts, which are essential in the interpretation of the information they selectively provide.
INTRODUCTION
Before 1968, Canadian divorce law varied from province to province. Adultery was the sole ground for divorce in most provinces, except in Nova Scotia where cruelty was an additional ground. Spousal support was typically only an obligation that could be imposed on a guilty husband, in favor of his innocent wife. However, the Divorce Act of 1968 introduced nationwide no-fault grounds (in addition to fault grounds) for divorce, and established equality in support rights and obligations between men and women.
Canada's current divorce law came into effect on June 1, 1986. This federal law sets forth the grounds for divorce (which are both non-fault and fault based) and the criteria for spousal and child support and custody of and access to children on or after divorce that apply throughout Canada. The standards for property distribution upon divorce fall outside of the Divorce Act, however, they are regulated by provincial or territorial legislation.
What is Considered Grounds for Divorce in Canada?
Under the 1986 law, there is one ground for divorce in Canada: "breakdown of marriage."
This ground is established if:
1. The spouses have lived apart for at least one year immediately preceding the divorce judgment,
2. The defendant spouse has committed adultery, or
3. The defendant spouse has treated the plaintiff spouse with physical or mental cruelty of such a kind as to render continuation of the marriage intolerable.
The first criterion is a non-fault one and can be invoked by either or both spouses. It should be noted that a divorce action might be commenced before the one-year period has run, but the divorce judgment cannot be granted until it has elapsed. The second and third criteria, which allow a quicker divorce (without the one-year waiting period) are fault-based and are available only to the "innocent" spouse.
Canadian divorce law seeks to encourage reconciliation. The 1986 Act (as did the 1968 Act) requires divorce lawyers to discuss the possibility of reconciliation and to inform clients of available counselling or guidance facilities. The 1986 Act further requires lawyers to promote negotiated settlements and mediation of support and custody disputes.
The 1986 Act (again, like its predecessor) also requires that the court, before considering the evidence in a divorce case, must be satisfied that there is no possibility of reconciliation between the spouses, unless it would not be appropriate to do so under the circumstances. Moreover, the court must adjourn the proceedings if at any stage it sees a possibility of reconciliation, to give the parties the opportunity to attempt to reconcile. The court, either on its own motion or on request of the parties, may appoint a qualified person or agency to assist the parties in this attempt. However, once 14 days have passed from the date of the adjournment, the court must resume the proceeding on the application of either or both spouses. The 1986 Act and its predecessor make clear, however, that any person nominated to assist the parties in a reconciliation attempt cannot testify in any subsequent divorce proceeding, nor is evidence of any admission or communication made in a reconciliation attempt admissible in such a proceeding.
The 1986 Act sets forth four bars to divorce: collusion, connivance, condonation, and the absence of reasonable arrangements for child support. Collusion, which is an absolute bar, exists where the parties have agreed to subvert the administration of justice, for example by fabricating or suppressing evidence. Agreements between the spouses that regulate the economic and child-related consequences of a separation are not collusive.
Connivance and condonation apply only in cases based on adultery or cruelty, and are not an absolute bar (which means that a court may grant a divorce regardless of connivance or condonation if it believes doing so is in the public interest.) Connivance occurs where the plaintiff has actively promoted or encouraged the defendant's commission of the act that is being relied upon. Condonation occurs where the plaintiff, knowing of his or her spouse's adultery or cruelty, forgives the offence and continues or resumes marital cohabitation with the spouse. However, consistent with its aim of encouraging spousal reconciliation, the Act provides that the resumption of cohabitation during a time (or periods) totalling less than 90 days will not be considered condonation. Finally, in all types of divorce cases the court must satisfy itself that reasonable arrangements, in light of the circumstances of the case, have been made for the support of any children of the marriage. If such arrangements are not present, the court cannot grant a divorce until they are made.
THE CONSEQUENCES OF DIVORCE
Division of Property
Provincial and territorial law governs questions of the division of property upon divorce in Canada. Every province and territory in Canada has legislation establishing property-sharing rights between spouses upon divorce. These laws were passed to ameliorate the hardships arising from the doctrine of separate property (whereby each spouse retained his or her own property in a divorce) and to ensure that each spouse would receive a fair share of the assets accumulated during the marriage.
In general, the statutes address the questions of what property is subject to division, how that property is to be valued, and how it is to be shared. Some distinguish between "family" assets used by both spouses and "business" or "commercial" assets used by one. Most of these laws exclude pre-marital assets and certain post-marital assets (such as third party gifts or inheritances) from division. Most statutes give the court the power to divide specific assets, although in at least one province (Ontario) it is the value of the property, as opposed to the property itself that is shared. In general, under these statues, the division of property upon divorce is not dependent on which spouse owned or acquired the assets.
Custody and Access
Under the 1986 Act, a court may grant “custody of, or access to, any or all children of the marriage to any one or more persons." As a result, split custody and joint custody are options, as is awarding custody of or access to the children to third parties, such as grandparents. However, third party applications for custody or access can only be heard with permission from the court.
The 1986 Act provides that decisions as to custody or access must be based on the best interests of the child.
The court has broad discretion to grant custody or access for a definite or indefinite period and subject to whatever terms, conditions or restrictions it thinks are appropriate given this standard. The court cannot, take into consideration the past conduct of a person unless the conduct is relevant to that person's ability to act as a parent.
In addition, in making a custody or access decision, the court is required under the 1986 Act to "give effect to the principle that a child of the marriage should have as much contact with each spouse as is consistent with the best interests of the child, and for that purpose, shall take into consideration the willingness of the person for whom custody is sought to facilitate such contact."
In a similar vein, the Act entitles a spouse who is granted access to a child to make enquiries and to be given information concerning the health, education and welfare of the child, unless the court orders otherwise. The purpose of this is to facilitate the non-custodial parent's meaningful involvement in the making of decisions concerning the child.
Child Maintenance
Child support may be ordered in a lump sum or in periodic payments, for a definite or indefinite period or until the occurrence of a particular event.
The 1986 Divorce Act sets forth the following factors that a court must consider in determining whether to award child support (or spousal support): "the condition, needs, means and other circumstances of each spouse and of any child of the marriage for whom support is sought, including (a) the length of time the spouses cohabited; (b) the functions performed by the spouses during cohabitation; and (c) any order, agreement or arrangement relating to support of the spouse or child." Moreover, the Act expressly provides that, in determining support, "the court shall not take into consideration any misconduct of a spouse in relation to the marriage."
The enforcement of a child support order is governed by provincial and territorial legislation. Enforcement of spousal support orders, even those granted in a divorce action, is a matter governed by territorial and provincial legislation, not by the Divorce Act.
Divorce Has Increased since 1968
There is no question that divorce has greatly increased in Canada since 1968 when the Divorce Laws entered into effect. We have experienced a seven-fold increase by 1987 and a five-fold increase from 1968 to 1995. Overall, divorce rates peaked in 1987 and have since stabilized at a lower level. Whether they will go up or down in the future largely depends on demographic factors and on people's lifestyle as well as values.
For instance, as more and more young couples choose to cohabit before marriage and as the "children of divorce" who are at a higher risk of divorcing enter into marriage themselves (Amato and Booth, 1996), there are chances that divorce rates could go up again one day.
Experts emphasize the word "chances" because it is important to be cautious in making predictions. The truth is that no one can accurately predict the future. For instance, if the rates of women bearing children out-of-wedlock--what we call "never-married" mothers-- skyrocketed, divorce rates would go down as these never-married mothers have far fewer chances of ever marrying. Furthermore, if the proportion of adults between 25 and 45 in the population declines, the rates of divorce will go down because, as indicated below, this is the age range most susceptible to divorce. As you can see, predictions depend on many "ifs."
SOME SOLID FACTS ABOUT DIVORCE AND THE CANADIAN FAMILY
After three consecutive years of growth, the number of divorces has dropped for two years in a row. In2002, 70,155couples had a divorce finalized, down1.3% from2001and1.4% from2000. The number of divorces is now11.2% below the most recent high of about79,000in1992and27.1% below the all-time peak of about96,000divorces in1987.
A downward trend was also seen in marriages throughout the1990s. Although the number of marriages rose in1999and2000, the number of couples who got married in Canada in2001declined sharply.
The most recent declines in the number of divorces occurred despite increases in the population. As a result, the crude divorce rate fell3.2% between2000and2002. In2002, there were223.7divorces for every100,000people in the population, compared with231.2in2000.
The number of divorces fell in nine of the provinces and territories between 2000 and 2002, particularly in New Brunswick, where the decline was14.9%, and in Saskatchewan, where it was10.7%. Divorces were up in Alberta, British Columbia, Ontario and the Yukon.
Divorces Occurring at a Later Age
Each year for the last17years, men and women have been getting divorced at a later age.
Since1986, the average age at divorce has increased by4.1years for men and by4.2years for women. In2002, the average age at divorce was43.1for men and40.5for women.
Marriage data over the last few decades have shown increases in the average age men and women are getting married. On average, men who divorced in2002were married at the age of28.9, while women had married at the age of26.3.
Between1986and2002, the average age of marriage for individuals who divorced rose by2.9years for both men and women.
The Chances of a Marriage Lasting 30 Years are Slim
The statistics vary over time dramatically. The all-time low was in 1987, when it was expected that 50.6% of all marriages in Canada would end before the 30th wedding anniversary. In 2002, the last year that figures were available for, 37.67% of all Canadian marriages will end in a divorce before the 30th anniversary.