How does Spousal & Child Support work when one is a Sole Proprietor?

[Goodoer]

How does Spousal & Child Support work when one is a Sole Proprietor?

I'm salary (>40+ hours/week) and she's a sole proprietor (<40 hours/week - 2 late nights + Saturday offset against 4hr Mondays and Fridays and working Tuesdays for only half the year). After manipulation of deductions, she can run-down her income to approximately a 1/3rd of my base salary (my bonuses are not factored in).

When I look at some "calculators", I'm fucking depressed/shocked as to what I may have to pay out based on pre-tax income...

My questions are as follows:
1. Would the Courts not recognize the deduction game and try to better balance out her income for fairer support calculations?
2. Could I request that the calculations be based off of her working a true 40 hour/week? This would drive her crazy as she complains she works too much. (In turn, I'd like for it to be recognized that me busting my ass is what generates my income - especially bonuses),
3. My credit rating is super-fantastic whereas hers is ignored? Does her credit issues affect me going forward? She'd have a tough time getting any loan.

Bonus Questions:
1. I'd try to go for custody over my kids as I'm the one who takes them to near-all extra curricular activities (sports). My parents live local and play a regular role in partial babysitting due to our work schedules. Her parents are divorced with one flighty and the other living in the USA for 6 months/year. I can be a home-body whereas my SO wants to travel the world and live the life of adventure. Does this play to my advantage?
2. I was told by a divorced friend that if I throttle back my work, I'm still on the hook for my previous salary and earning potential. Jesus Christ, really?

Splitting assets aside (ouch), I realize that Child Support would be in my future - even if I have the kids for the majority of the time. The thought of Spousal Support and the term to keep paying pisses me off as I know she could be self-sufficient.

Based on my situation, she's planning to "retire" in 10-15 years (eg. no later than 50) whereas I'll need to keep working... I don't want to get screwed later on in life if I stick it out.

Thanks for any help. I realize consulting a lawyer is what I should do, but the helpful TERB member comments can offer opinions and angles to think about beforehand.

 

[icespot]

Your case sounds like the one of a Crown Attorney I used to know.

His wife was a court clerk and her base lets say was 30,000. But if you are familiar with the system court clerks make extra money for transcripts. One single transcript depending on size can make her over 1,000. But since it was cash they never declared it. With time the love was gone and came the divorce.

Since they only claimed she made 30,000 and he made over 100,000. He got screwed large with alimony and child support. In order to fight it he would have to admit to tax fraud.

So the point I be careful with the claim you will make, Revenue Canada doesn't hire people that look outside the box.

Try to come to a friendly resolution, it's always the best outcome.

 

[essguy_]

Yes, retain or consult a good lawyer as an immediate step. Second is start to document EVERYTHING going forward and as far back as you can. Get organized, keep receipts and a diary of what you do for the kids.

You usually have to submit historical tax records so any obvious attempt to manipulate income down for the purposes of the divorce is pretty obvious and everybody does this.

For custody, the courts will try to balance what they feel is in the kids’ best interests. So you might have a challenge there if you want sole custody and your wife fights this. Keep records of all the stuff you do or have done for the kids and document it for easy presentation. Family network and support IS important for the courts to consider. But be prepared for shared custody and think about what arrangement of shared works best for you and the kids. Eg: I did every other week but in hindsight - would have been better for everybody to do 2 week stretches as there is less shuffling. Or start off with a higher frequency of change during the separation and move to a longer frequency as everybody adjusts to the reality of the divorce. INSULATE THE KIDS FROM ANY FIGHTS OVER CUSTODY and the divorce in general. It sucks to give up your kids for stretches but no way around it unless your wife is an alcoholic meth addict.

For spousal - since you both work - try to make it lump sum if you think she’s going to throttle back and try to live off of you by claiming a change in circumstance in the future. Weigh the risks. It’s a bigger immediate hit, but you get it over with and no arguments going forward. But get professional advice on this. Eg: I wouldn’t worry so much about potential tax fraud implications as the family court isn’t Revenue Canada and all submissions are “without prejudice” unless you end up in divorce court. Besides, she is the one claiming the dubious deductions... you could try to use this as leverage lol! So your wife’s REAL income may be a significant factor.

Again, having gone through this - the biggest advice I can tell you is to start preparing by gathering and organizing historical documents and records and compiling and keep a diary going forward and back for all things Finance and family related. And lock this away from prying eyes. But above all, get advice from a professional. And try to keep it short and out of the courts - fighting takes time, emotion, and legal fees. Being prepared is more than half the battle.

 

[spaman]

slow down cowboy.
listen it would be best if you could calmly discuss this situation at the dining room table with your ex. If you go the route with lawyers you are letting a third party dictate what you can and cant do. Work it out fairly and respectfully and be fair. Divorce is not about a winner and a loser, its about what you can swallow because every divorce sucks especially for the kids. Example i spent all of $1750.00 on my divorce because i gave my ex plenty of child support and bought her out of our house. My brother who is a broke dick spent 30k on lawyers wound up charged with assault thrown in jail and made a complete mess of it. my 2 cents

 

[Goodoer]

My side of the family all come from marriages that last a zillion years whereas her side are seasoned veterans all being divorced... I'm not sure if I can out-angle them.

 

[Lifes2short]

Couple of thoughts
!) Being a Sole Proprietor is a choice. What are industry averages for full time employment in the same field. You could argue that the industry averages are a better comparable
2) Length of spousal support depends upon number of years of marriage. Over 20 years of marriage, spousal support continues for life! Under 20 it is a fixed term and may be easier to negotiate a lump sum settlement.
3) Spousal support is deductible from income for tax purposes were as child support is not.

Best of luck!

 

[out4fun]

You will need to agree on declared incomes and support levels unless you care to see things out through a court proceeding. Yes, variable factors can be considered to impute incomes, but that is a lengthy, very expensive process. Try to find points to agree on and get on with your life. You will need legal advice, but that is very different from having a judge involved.

 

[K Douglas]

No doubt your ex wife has an advantage in that she can manipulate income. However, if you have a good lawyer he/she will demand greater transparency of her self employment income. For example if she's claiming home office expenses (which are considered soft expenses) they need to be added back to come up with an adjusted net income. Same goes for some vehicle, internet, cell phone etc.

 

[Perry Mason]

Your situation is not the usual or "run-of-the-mill" kind in which general rules-of-thumb will give you a fair general idea of what to expect.

Before you sit down to negotiate with your ex, sit down for an hour or 90 minutes with a lawyer with expertise in this area. Prepare a written outline with accurate details of both your financial situations and get an informed opinion about your situation and how best to approach it. You don't have to retain her/him to do anything more...

Best money you will ever spend if you really want to know where you stand. And you have to know where you stand before you can negotiate intelligently.

Perry