When two spouses separate, the one who earns less income will often be entitled to receive spousal support. Spousal support, sometimes know as alimony, is a payment that one spouse makes to the other spouse to help with their living expenses or to compensate them for economic choices that were made during the relationship.
Spousal support most often takes the form of monthly payments, made by the spouse who earns more to the spouse who earns less. Once entitlement to spousal support is established, the size of these payments is determined by comparing the respective incomes of the two former spouses and applying a formula, set out in the Federal Spousal Support Advisory Guidelines to the difference between their incomes. A description of the formula can be found here: http://hart-legal.com/spousal-support-part-1/
As the income of one or both spouses can change over time, so can the amount of spousal support payable. If the payor spouse begins earning a higher income, or if the recipient spouse earns less income, the amount of support payable can increase. The general principle is that in order to vary the amount of support payable, an applicant to the court must establish that there has been a “material change in circumstances” since the original court order or agreement for spousal support was put into place. A material change in circumstances can include situations such as retirement or serious injury or illness of one of the parties which results in their income changing.
I often advise my Vancouver family law clients who will be paying support to protect themselves from a variation application and settle the issue by offering a lump-sum spousal support payment up front. The way this typically works is by first calculating the entire value of the stream of spousal support payments (say, $1,000 per month for 5 years, which has a total value of $60,000). The payor spouse would then offer to pay a lump sum to the recipient spouse in an amount typically equal to 30-35% of the total value of the payments. This payment would be made at the time the parties’ assets are being split and would usually come out of the payor’s share of these assets. The whole arrangement would be enshrined in a separation agreement, which is an essential part of any negotiated divorce.
The advantage of a lump sum spousal support payment lies in its certainty. It eliminates the risk that either spouse will seek to vary the support arrangements several years later, which is an often costly and contentious affair