Nelligan O'Brien Payne gratefully acknowledges the contribution of Paula Lester, Student-at-Law in writing this blog post.
If you pay child support, the amount of support you pay is generally based on your annual income and the number of children for whom you pay support. When you retire your income will likely decrease. Does this mean that you can reduce your child support payments? The answer is: maybe, but maybe not.
The court may not allow you to reduce your child support payments if it finds that the decision to retire was unreasonable in your circumstances. If the court decides your retirement was unreasonable, it will impute a higher income to you despite your retirement. The court can impute income to you even if you are eligible to retire with a full pension and it personally makes sense for you to retire, because of your child support obligations.1
In order to determine whether income should be imputed to a parent who chooses to retire, the court will examine the reasonableness of the retirement in light of the age, education, experience, skills and health of the parent,2 as well as in light of the parents’ joint responsibility to financially provide for dependent children.
More specifically, the following factors are important in determining whether retirement is reasonable:
1. The age of the parent: are you approaching or past the age of 65?3
2. The age(s) of the child(ren): even if you are at the ‘normal retirement age’ do you have young children who are going to be dependent on you for a number of years to come? 4
3. The health of the parent: Do you have any serious physical or mental health issues that prevent you from working? Are there no reasonable alternative work opportunities for you? 5,6
4. The intentions of the parties and plans for retirement: Before you and your co-parent separated, did you have any plans to retire at a specific age? Have you made any plans to provide for your children upon retirement? 7
The decisions in these cases are very fact specific and hard to predict in advance. For example, in Bursey v. Base, the court found that a 65-year-old father ought to have been actively seeking to grow his advertising firm back to its former size, or look for alternative employment.8 He had three dependent children, the youngest of whom was 13-years-old. The Court found that the father was already middle-aged when his children were born and he would have known that they would still be dependent at this time.
On the other hand, in Buenten v. Harr, the court reduced a father’s child support when he retired at the age of 65 because it appeared to have always been the parents’ intention that the father would retire at age 65.9 The company for which the father had worked for required employees to retire at the age of 65, and he had built a small farm to provide supplementary income after his retirement.
If you have a child support obligation, and are considering retiring, you should consult with a lawyer first.
1McPherson v. McPherson-Hull, 2014 ONSC 188 (available on CanLII) [McPherson]; Danby v Danby, 2008 CarswellOnt 5512 (Sup Ct J).
2Drygala v Pauli (2004), 61 OR (3d) 711 at para 45 (CA).
3C(N) v C(N), 2012 ABQB 326 (available on CanLII) [C(N)]; Sullivan v. Ludwig, 2007 CarswellMan 428 (QB).
4Bursey v. Base, 2007 CarswellOnt 1894 (Sup Ct J).
5Bosomworth v. Bosomworth, 2007 SKQB 66 (available on CanLII); McPherson, supra note 1.
6C(N), supra note 3; Stephen v Stephen, 2004 SKQB 386, 253 Sask R 228; Donovan v Donovan, 2000 MBCA 80, 150 Man R (2d) 116.
7Buenten v. Harr, 2003 BCSC 1287, 43 RFL (5th) 259.
8Supra note 4.
9Supra note 7.