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Tariff Trepidation: Will my spousal support be adjusted for inflation?
Every party wants to know what to expect when separating. If there was a book like “What to expect when you’re expecting” called “What to separate when you are separating;” we promise we would send it to you.
Unfortunately, the uncertainty of separating – especially when it comes to spousal support – is not so easily reconciled. This brings us to this blog series called Tariff Trepidation covering various current economic issues that may play a role in your spousal support payments. This article “Tariff Trepidation: Will my spousal support be adjusted for inflation” is the first in a series of four articles to be published this month.
Spousal Support and Inflation: Is Indexing Still Relevant?
One current issue in spousal support is whether payments should be indexed to account for inflation. While indexing was once a more common practice, it is now considered less frequent, especially in the era of the Spousal Support Advisory Guidelines (SSAG). In this blog post, we’ll explore why indexing is less common today, when it may still apply, and the legal reasoning behind its use.
Why Courts Prefer Flexibility Over Indexing in the SSAG Era
In the SSAG era, courts generally prefer to leave spousal support amounts flexible, allowing for variations based on material changes in either spouse’s circumstances. This flexibility ensures that the spousal support amount can be adjusted as needed, without being locked into an automatic adjustment for inflation. Indexing spousal support, on the other hand, can limit a court’s ability to modify support based on evolving financial situations.
When Does Indexing Spousal Support Make Sense?
Indexing is seen as less responsive to the individual needs of the spouses because it simply adjusts the amount according to inflation, without considering other factors, such as changes in employment, health, or living expenses. As a result, courts tend to avoid indexing unless there is a compelling reason to apply it.
In cases where indexing has been applied, courts generally focus on the principle of fairness and balance between the spouses. For example, if one spouse is significantly affected by inflation, resulting in a serious decline in their standard of living, while the other spouse is not impacted in the same way, the court may decide to adjust the support amount to reflect the change in circumstances. On the other hand, if both spouses are equally affected by inflation, indexing is typically not necessary.
One of the most notable recent cases involving indexing is Nault v. Nault (2022).1 In this case, the Court reaffirmed that indexing is still an available tool in spousal support cases, though it is less common today. The Court ruled that in situations where the recipient’s income is unlikely to change, and the payor spouse’s income is not increasing significantly, applying indexing can be a sensible way to ensure the support amount continues to meet the recipient’s needs.
In Nault, the Court also considered the impact of inflation caused by the COVID-19 pandemic. The recipient’s standard of living had been negatively affected by inflation, and the Court ruled that this constituted a material change in circumstances. The Court modified the support order to account for the increased cost of living, applying indexing as a result.
Could U.S. Tariffs Lead to Spousal Support Adjustments?
It is not clear yet how Courts will adapt to inflation based on tariffs from the USA. While these unforeseen tariffs could be a material change like COVID-19 in Nault, we can never be certain.
Additionally, courts generally prefer to maintain flexibility, allowing for adjustments based on the changing circumstances of both parties.
Conclusion : Should You Consider Indexing in Your Spousal Support Case?
If you have questions about spousal support or the possibility of indexing in your case, it’s important to consult with an experienced family law team like McKenzie Lake who can provide guidance tailored to your situation.
This article was written by Family Law Lawyer, Katrina Wiegers.
If you require assistance with any Family Law matter, speak to a Family Lawyer at McKenzie Lake Lawyers LLP by calling (519) 672-5666.
