When Should You Think About Restructuring?

In practice, restructuring has often been ignored. Here we try to flag the different kinds of fact situations, under each formula, where restructuring should be considered as an option.

10.3.1 Restructuring under the without child support formula

The primary use of restructuring will be under the without child support formula. To trade off amount against duration ideally requires a fixed duration for the award. As a result, restructuring will generally only be advisable in cases where the formula generates time limits rather than indefinite (duration not specified) support. It will thus have limited application under the with child support formula where duration is often uncertain.

More specifically, restructuring should be kept in mind in three particular kinds of cases under the without child support formula where it may often be appropriate:

• shorter marriages without children

In some very short marriages cases where the support entitlement is limited and there is available property, a lump sum award that allows for a clean break may be

appropriate. Restructuring allows for this.

In other short marriage cases without children the purpose of the award is to provide a period of transition to allow the recipient an opportunity to adjust to a lower standard of living. Such awards, under current practice, often provide fairly generous levels of support during this transitional period. The amounts generated under the formula in the case of shorter marriages are often lower than current practice. Restructuring should be considered as a way to increase the amount of the award beyond the high end of the formula’s range by reducing duration.

The possibility of this use of restructuring to generate amounts consistent with current practice was a crucial factor in the development of the without child support formula. We knew that the amounts generated by the formula in some medium-length

marriages, assessed on their own, would often be lower than current practice. But we also recognized that current awards were consistent with the total value of the awards generated by the formula when amount and duration were combined to yield global ranges.

Example 10.1 illustrates this use.97

• long-term disability after a medium-length marriage

The use of restructuring to extend duration should be considered in medium-length marriages where the recipient spouse will have long-term need because of illness or disability. The recipient may prefer more modest supplements to income over a longer period of time than more generous payments over the maximum time period permitted by the formula.

Example 10.2 illustrates this use.

We do recognize, as discussed in Chapter 12 on exceptions, that current law is uncertain in its treatment of illness and disability cases. In some cases, therefore, courts may find restructuring inadequate and then treat these cases as exceptions warranting a departure from the global ranges generated by the formula.

• longer marriages where the formula generates a time limit but current practice dictates indefinite support

Under the without child support formula, support becomes indefinite (duration not specified) after 20 years of marriage. For marriages under that length, the formula

generates time limits. Current practice, however, may preclude time limits in marriages shorter than 20 years, for example after 15 or 18 years.

What often happens in practice is that these longer durational limits of the Advisory Guidelines are simply ignored and only the ranges for amount are considered. In Chapter 7 we recognize that some courts may not be willing to implement the longer time limits under the without child support formula in initial orders and we suggest a “softer” use of the time limits to structure the on-going process of variation and review. But if it is contemplated that the support will likely not terminate at the end of maximum duration, even on this “softer” use of time-limits, restructuring should be applied. The extension of duration beyond the maximum end of the formula’s range will require some trade-off of amount, at least a reduction to the low end of the range, if not below.

By way of example, this use of restructuring may arise in cases where there were dependent children at the time of separation who have since become independent and there has been a cross-over from the with child support formula. The age of the recipient may be such that the maximum duration based on length of marriage will not run to age 60 or 65 for the recipient, whenever pension income kicks in. Restructuring may be used to extend duration to that age by adjusting amount downward.

10.3.2 Restructuring under the with child support formula

For the most part, restructuring has less relevance for marriages with dependent children, for a number of reasons. After explaining these limitations, we will identify the

circumstances in which restructuring is a practical option under this formula.

First, under the basic with child support formula, all orders are indefinite in form, within the framework of the two tests for determining the durational range that will structure the process of review and variation. The “softer” nature of the time limits under this formula make restructuring a more uncertain enterprise.

Second, restructuring to extend duration is unlikely to turn up under this formula. By the time the spouses reach the end of this formula’s maximum duration, they will most likely have “crossed over” to the without child support formula, as explained above.

The third important limit on restructuring under this formula is the payor’s ability to pay, applicable to the options of front-end loading or a lump sum. Where there are three children or more (or sometimes two children plus large section 7 expenses), there is little or no room to increase spousal support above the ranges, except for very high payor incomes.

The most likely circumstances for the use of front-end loading or a lump sum under the basic with child support formula will be cases where the recipient wants spousal support above the upper end of the range for a shorter period, e.g. to pursue a more expensive educational program. Many of these will be shorter marriage cases. To convert periodic payments to a lump sum, obviously there will have to be assets or resources available to

the payor to make the lump sum payment. For front-end loading to occur, the following cases would be prime candidates, as there will be some additional ability to pay available:

• only one child;

• shared custody

• two children, no s. 7 expenses and higher incomes

• higher incomes generally.

The addition of a lower end to the durational range under this formula in this final version does create more room for negotiation over duration, which creates the conditions

amenable to restructuring in these cases and perhaps some others. 10.3.3 Restructuring under the custodial payor formula

The custodial payor formula, applicable in cases where there are dependent children but the recipient spouse is not the custodial parent, is a modified version of the without child formula. Its adoption of the without child support formula’s durational ranges means that restructuring may be used the same way under this formula as under the without child support formula, discussed above.98

98 _{The Ontario case of Martin, supra note 92, is a good example of restructuring under the custodial payor}

formula, used to create a lump sum award at the low end of the global range for the husband after a nine year marriage.