How Family Mediation Handles Section 7 Expenses?

Quick Answer

Toronto Family Mediation may assist parents in determining what section 7 expenses are under discussion, exchanging information regarding finances, looking at how the costs might be split, and developing a procedure for approving future expenses.

Parents may use family mediation to discuss whether the expense is necessary, whether the amount is reasonable, the contributions from each parent, and how the receipt or expense reimbursement may be managed.

The aim is to develop an arrangement that works for both parents and not to have to constantly debate every single expense.

What Are Section 7 Expenses in Ontario?

What Types of Expenses May Qualify Under Section 7?

Depending on the circumstances, Section 7 expenses may include certain costs for:

• childcare required because of a parent’s employment, education, training, or illness;
• medical or dental expenses that are not fully covered by insurance;
• certain health-related expenses;
• particular educational programs or needs;
• postsecondary education;
• certain extracurricular activities; and
• other qualifying special or extraordinary child-related costs.

How Are Section 7 Expenses Shared Between Parents?

Are Section 7 Expenses Always Split 50/50?

Not necessarily. A 50-50 split is not always the solution for every Section 7 expense.

The parents could talk about sharing the expense according to their income ratios.

For instance, if one parent makes considerably more money than the other, the contribution will vary. It really all depends on the financial data and context of the expense.

In family mediation, the parents will have the opportunity to look at the numbers.

The discussion may include:

• each parent’s income;
• the total cost of the expense;
• any reimbursement available;
• subsidies or benefits;
• insurance coverage;
• whether the expense is recurring;
• whether the expense remains reasonable based on the parents’ financial circumstances.

The mediator can help parents organize this information and identify where they agree or disagree.

Why Does the Net Cost of a Section 7 Expense Matter?

The stated amount on the invoice is not always going to be the total that must be divided by the parents.

For instance, a portion of the medical or dental bills could be covered by the health insurance plan, and childcare charges might be subsidized.

In such cases, parents would have to determine the net amount first.

Relevant information may include:

• insurance payments;
• childcare subsidies;
• employer benefits;
• government benefits where applicable;
• reimbursements;
• other amounts that reduce the out-of-pocket cost.

Use of the net cost approach can assist both parties in working with identical financial data.

Moreover, this will reduce arguments resulting from one party demanding compensation before taking into account that funds have been received elsewhere.

How Can Family Mediation Resolve Section 7 Expense Disputes?

What Section 7 Disagreements Can Be Discussed in Mediation?

Common disputes may include situations where:

• one parent enrols the child in an activity without discussing it first;
• one parent believes the expense is too expensive;
• parents disagree about whether the expense is necessary;
• parents disagree about whether the expense qualifies under Section 7;
• receipts or invoices have not been provided;
• parents disagree about the income figures being used;
• past expenses remain unpaid;
• one parent wants reimbursement for an expense that was not discussed in advance; or
• parents disagree about how recurring expenses should be handled.

Each conflict needs to be handled differently.

For instance, the case where there are no receipts is entirely different from one where someone feels that the extracurricular activities chosen are too costly.

The process can become more productive if the exact problem is known.

Does a Parent Need Approval Before Incurring a Section 7 Expense?

There is no single answer that applies to every family.

Parents may need to review:

• their existing separation agreement;
• any court order;
• previous arrangements between them;
• the type of expense;
• whether the expense was urgent;
• whether advance consultation was practical; and
• any established process for making decisions about child-related costs.

Some parents believe that certain costs need to be discussed before money is spent. Others set limits that allow small costs to pass through without discussion.

Mediation will help parents develop better guidelines so that future conflicts will not arise.

How Does a Mediator Help When Parents Disagree?

A mediator can help parents break the disagreement into manageable parts.

The process may include:

1. Identifying the specific expense.
2. Clarifying why it is being disputed.
3. Reviewing receipts, invoices, and supporting documents.
4. Reviewing relevant financial information.
5. Discussing whether the expense is necessary and reasonable.
6. Exploring possible contribution arrangements.
7. Creating a process for reimbursement.
8. Developing rules for similar future expenses.

The mediator remains impartial and does not impose any decision.

The aim is to help the parents comprehend the situation well enough to arrive at a consensus on their own.

Can Mediation Address Past Unpaid Section 7 Expenses?

Yes, parents may use mediation to discuss older expenses that remain unresolved.

They may review:

• previous receipts;
• proof of payment;
• reimbursement requests;
• amounts already contributed;
• disputed balances;
• whether the expense was discussed beforehand; and
• whether the existing agreement addressed that type of cost.

Issues that arise in history can become complicated due to the incompleteness of documentation or different perceptions of events by the parents.

Arrangement of the available information can help limit the dispute.

Parents can also consider putting in place new processes for the future, such as requiring receipts within a particular time frame.

This will not only make the mediation process effective for resolving the present dispute but also help prevent future occurrences of similar issues.

What Happens After Parents Agree on Section 7 Expenses?

What Should a Section 7 Expense Agreement Cover?

Parents can discuss clear terms for managing special or extraordinary expenses after separation.

Depending on their circumstances, an agreement may address:

• which types of expenses are covered;
• how each parent’s contribution will be calculated;
• whether proposed expenses must be discussed in advance;
• how parents will communicate about new expenses;
• what supporting documents should be provided;
• how receipts and invoices will be exchanged;
• how reimbursement requests will be submitted;
• how quickly reimbursement should be made;
• how recurring expenses will be handled; and
• when income or contribution percentages should be reviewed.

Procedures could decrease ambiguity.

For instance, parents could agree to discuss an extra-curricular activity before its enrollment. They could also decide on how estimates would be communicated and when each parent has to reply.

What If There Is Already a Separation Agreement or Court Order?

Parents should consider any existing separation agreement or court order before making a new arrangement about Section 7 expenses.

An existing document may already address:

• which expenses are shared;
• each parent’s contribution;
• consultation requirements;
• reimbursement procedures;
• proof of payment;
• extracurricular activities;
• medical or dental costs; or
• educational expenses.

The mediation process will allow parents to determine how the current terms apply to the dispute at hand.

A mediation process does not necessarily have to change any existing orders made by the courts.

Parents who wish to change the current legal terms might like to seek independent legal advice on what to do next.

Parents can also seek independent legal advice on how the suggested terms affect them.

What Happens When Parents Reach an Agreement in Mediation?

Once parents have reached common ground, the agreed terms can be recorded clearly.

The document may identify:

1. Which expenses are being addressed.
2. How the expenses will be shared.
3. Which income figures are being used.
4. How receipts will be exchanged.
5. When reimbursement must occur.
6. How future expenses will be proposed.
7. Whether advance consultation is required.
8. How recurring expenses will be reviewed.

As per the mediation process and the situation of the parents, the terms might be contained in a Memorandum of Understanding, or they might serve as the foundation of some other legal document. Parents may also seek independent legal advice before implementing the terms in a separation agreement or any other legal arrangement.

What If Mediation Does Not Resolve the Disagreement?

Mediation does not guarantee that parents will reach an agreement.

Sometimes the disagreement may continue because:

• the parents cannot agree whether the expense qualifies;
• income remains disputed;
• important financial documents are missing;
• one parent believes the expense is unreasonable;
• the parents interpret an existing agreement differently; or
• they cannot agree on an appropriate contribution.

Even when mediation does not fully resolve the dispute, it may help identify the exact issues that remain outstanding.

Parents may then consider options such as:

• obtaining additional financial information;
• seeking independent legal advice;
• obtaining accounting or other professional information where appropriate;
• continuing negotiations;
• returning to mediation after missing information becomes available;
• considering another family dispute resolution process; or
• addressing the matter through court where necessary.

Court does not need to be treated as the automatic next step. The appropriate option depends on the nature of the disagreement and any existing legal arrangements.