Net Family Property and Equalization: An Introduction

Equalization is a payment from one spouse to the other at the end of a marriage.  This equalization payment ONLY applies to married spouses, not to common law spouses.  S. 5(1) of the Family Law Act (“FLA“) provides for Equalization when:

  1. A divorce is granted;
  2. Marriage is declared a nullity;
  3. When (married) spouses are separated and there is no reasonable prospect they will resume cohabitation.

One thing I often hear clients ask is whether they have to split 50% of everything.  While somewhat true, it is not entirely accurate.  The real definition of division according to s. 5(1) of the FLA is as follows: “the spouse whose net family property is the lesser of the two net family properties is entitled to a one-half difference between them”.

In simpler terms, separated spouses are entitled to 50% of the value of the marriage.  So how is that value determined?

 

Marriage and Valuation Date

First we need to understand what Net Family Property (“NFP”) is and how to calculate it.  S. 4(1) of the Family Law Act defines NFP as all property that a spouse owns on the valuation date (i.e. separation date) after deducting:

  1. Debts and other liabilities; and
  2. Value of property OTHER THAN A MATRIMONIAL HOME owned on date of marriage.

Therefore we have two dates that are important in determining equalization:

  1. The valuation date; and
  2. The date of marriage.

The date of marriage is simply the date you got married and does not include any cohabitation before marriage.  Spousal support may factor in cohabitation periods before marriage however.  See our post on spousal support for more info by clicking here.

The Valuation date is essentially the date the marriage ended, or the date the parties separated.  It is defined under s. 4(1) of the FLA as:

  1. The date you separate;
  2. Date the divorce is granted;
  3. Date marriage is a nullity;
  4. Date one of the spouses commences an application based on improvident depletion that is subsequently granted; or
  5. Date before the date on which one of the spouses dies leaving the other spouse surviving.

Once we have those two dates, we can begin figuring out how much your Net Family Property (“NFP”) is.

 

Calculating Net Family Property for Equalization

When determining the Net Family Property (“NFP”) of persons who are ending their marriage, we need to look at two important dates: the marriage date and the valuation date.

Let’s pick two dates to help figure out the NFP:

  1. Jane and John married on October 1, 2010;
  2. Separated on February 1, 2018.

That’s almost 8 years of marriage.  You’ll see here that February 1, 2018 is the date of separation, which fits under the definition of Valuation date in s. 4(1) of the FLA.

Now, we take the value of all assets that both parties own on the valuation date, subtract their debts owned at valuation, and finally subtract the value of any property owned on the marriage date.

JOHN

John’s Assets on Valuation Date Car – $25,000

Personal Bank Account – $3,000

$4,000 in Joint account with Jane (50%) – $2,000

Investment Account ending in 1010 – $170,000

 Total = $200,000

John’s Debts on Valuation Date Loan from Friend – $50,000

Total = $50,000

Property Owned at Marriage Investment Account ending in 1010 – $100,000

Total = $100,000

Calculate Final Total

Assets

– Debts

– Property at marriage

 

$200,000

-$50,000

-$100,000

John’s NFP $50,000 

JANE

Jane’s Assets on Valuation Date Car – $20,000

Personal Bank Account – $2,000

$4,000 in Joint account with John (50%) – $2,000

RRSP – $6,000

Matrimonial Home – $320,000

Total = $350,000

Jane’s Debts on Valuation Date Line of Credit – $50,000

Mortgage – $100,000

Total = $150,000

Property Owned at Marriage Matrimonial Home – $220,000

Total = $220,000

Calculate final total:

Assets

– Debts

– Property at marriage

 

$350,000

-$150,000

can’t subtract Mat Home

Jane’s NFP $200,000 

So, something interesting happened here.  Jane’s name is the only one on title to the home and it was valued at $220,000 when they got married.  She should be able to deduct that home from the valuation date value right?

Wrong.

Remember, you subtract property owned at the date of marriage from your valuation date EXCEPT for the matrimonial home.  So Jane has to include the entire value of the home regardless of how much it was worth at marriage.

We’re almost there.  The language of the equalization rule is: “the spouse whose net family property is the lesser of the two net family properties is entitled to a one-half difference between them.”

 

EQUALIZATION

Jane’s NFP

– John’s NFP

$200,000

-$50,000

$150,000
Difference divided by 2 $150,000/2
Equalization Payment or, the one half difference $75,000

In this instance John, who is the lesser of the two net family properties, is entitled to the one half difference between them, $75,000.

Therefore Jane makes an equalization payment of $75,000 to John.  With that, John would have $125,000 and Jane would have $125,000.  They are equalized.

 

Additional Exclusions

You also have the ability to exclude other property on the valuation date other than just debts under S. 4(2) of the Family Law Act.

These include things such as:

  • Property acquired by gift or inheritance after marriage date
  • Income from property that was gifted or inherited if donor EXPRESSLY stated it is to be excluded from NFP
  • Damages from a settlement resulting from personal injuries, nervous shock, mental distress, or loss of guidance care and companionship
  • Proceeds or right to proceeds of life insurance policy payable on death of insured
  • Property OTHER THAN MATRIMONIAL HOME into which property above can be traced
  • Property both spouses agree not to include as a result of a domestic contract (see our post on separation agreements for more info)
  • Unadjusted pensionable earnings under Canada Pension Plan

If you’re thinking of separating and want help to ensure you are properly protected, contact Rabideau Law to see how we may assist.

Spousal Support: The Spousal Support Advisory Guidelines

Spousal Support: The Spousal Support Advisory Guidelines

Spousal support is often a very contentious issue on separation as it has a much more subjective approach than child support.  A lot more factors go into determining a spousal support amount and there is no hard and fast rule on how it is to be calculated.  The government has provided a set of guidelines called the Spousal Support Advisory Guidelines (“SSAG”), but not even this is followed strictly.  Sometimes a judge may just pick a number they feel is appropriate having looked at all the factors.

What will follow is an overview on how spousal support is generally approached via the SSAG so that you have a good background on the general principles behind its calculation.

Under the SSAG there are two ways of calculating spousal support: the with child support formula and the without child support formula.

Please keep in mind that the following examples are not accurate calculations but approximations for educational purposes.

 

With Child Support Formula

With this formula, you look at the following factors:

  1. Gross income
  2. Child support being paid
  3. 7 expenses being paid
  4. Taxes and other deductions
  5. Government Benefits and credits
  6. Length of the marriage and/or cohabitation
  7. Age of children
  8. Recipient needs
  9. Ability of payor to pay

What we need to do is look at the amount that should be paid and how long it should be paid.  When calculating spousal support you usually come up with a range and determine where in that range you should fall.

Step 1: Calculating the spousal support amount

Start by determining your gross income, which is your income before taxes and other deductions are applied.  Then you subtract child support (or add it if you are the recipient), taxes and other deductions.  Finally, you add back any government benefits and credits that may apply.  This initial calculation will provide you with your Individual Net Disposable Income (“INDI”).  See the example below for a couple with 2 children who cohabited for 2 years before being married for 10 years.

Malik’s Monthly Gross income $125,000/12

=$10,417

Child support for 2 children in Ontario (see post on child support for information on how to determine child support) $1,777
Taxes paid ~30% $10,417*30% = $3,125
Malik’s INDI Calculation

Monthly Gross income

-Child support

-Taxes

(No benefits or credits to apply)

 

$10,417

-$1,777

-$3,125

 $0

$5,515

Malik has an INDI of $5,515.  Next we move on to the recipient, a similar formula with a little bit of a difference.

Nubia’s Monthly Gross income $50,000/12

= $4,167

Child support received $1,777
Taxes paid ~20% $4,167 * 20% = $833
Benefits Recieved $651
Nubia’s INDI Calculation

Monthly Gross income

+ Child support

-Taxes

+ Benefits and Credits

 

$4,167

$1,777

-$833

$651

$5,762

With both INDI’s known we add them together: $5,515 + $5,762 = $11,277 total

Since Nubia has both children living with her, Malik pays spousal support that would put Nubia within the 54-60% range of the total (note: this number changes depending on how many children are living with the recipient, if it was only one child the recipient might receive anywhere from 45-50% of the combined INDI).  For example:

  • Nubia is the recipient
  • 54-60% of $11,277 = $6,089 to $6,766

We now subtract Nubia’s INDI from these amounts to see what spousal support could be paid:

  • $6,089 – $5,762 = $327
  • $6,766 – $5,762 = $1,004

Nubia’s spousal support could then range from $327 to $1,004 monthly in order to bring her to that 54-60% share.  We use the factors mentioned above to determine where in that range she should fall and this is done on a case by case basis with need being one of the most important factors.

How long is spousal support supposed to be paid?

The upper part of the range is the length of the marriage or the date the last or youngest child finishes high school; the lower range is half the length of the marriage or the date the youngest child starts full time school.  Generally, only the length of the relationship is used and I will continue with that in mind.  We could simplify as follows: length of marriage * 0.5-1.  For Nubia and Malik’s relationship of 12 years, that would be a range from 6-12 years.

All this does is give us another set of ranges to make a decision with.  So how do we know WHERE within the range we should ultimately be?

There are multiple factors that are considered to determine where to fall within the range.  These can include:

  1. Compensatory claims
    1. The recipient needs (limited income earning capacity or age a factor here)
    2. Age, number, needs and standards of living children. Are there any special needs?
  2. Needs and ability to pay of Payor
    1. Consider meaningful access by Payor
  3. Work incentives for Payor
    1. Consider net income and out of pocket costs
  4. Property division and debts
  5. Self-sufficiency incentives
  6. Compelling Financial Circumstances
  7. Debt payment – used where negative net worth and one spouse paying disproportionate share
  8. Prior support obligations
  9. Illness and Disability

For example, if there are no special needs of the children, Malik has no concerns regarding his ability to pay, he has no other support obligations, and Nubia has no significant need for the money, Nubia would likely receive the lower end of support being 6 years.  Again, this is all hypothetical and each situation can vary.  Also, there are different formulas depending on whether there is shared custody, split custody, step children, adult children and more.

 

Without Child Support Formula

This is similar to the with child formula as you start with the same values.  How you calculate the actual payment is different though.  The range here is 1.5-2%, times the income difference between the spouse’s gross income, times the years of cohabitation to a maximum of 50% of that income difference.

Here is what that looks like:

Malik’s Gross income $10,417
Nubia’s Gross Income $4,167
Income Difference $10,417

– $4,167

$6,250

Years of cohabitation 2 years cohabited

10 years married

12 years total cohabitation

Notice here we do not subtract any taxes or any other deductions here.  We now have the numbers we need in order to perform the next step of the calculation (note that this is just one method of doing the calculation):

  • Convert the percentages into decimals: 1.5% = 0.015 and 2% = 0.02
  • Multiply these decimals by the difference in income
    • 0.015 * $6,250 = $94
    • 0.02 * $6,250 = $125
  • Finally, multiply these final numbers by the years of cohabitation:
    • 94 * 12 = $1128
    • 125 * 12 = $1500

This gives you a range of spousal support to be paid from $1128 to $1500 monthly.  Alternatively, you could multiply 1.5-2% by the years of cohabitation then just multiply those numbers by the income difference and you would reach the same result.

Isn’t math fun?

Is the duration or payment different with this formula?

Somewhat.  The duration is 0.5 to 1 for each year of cohabitation only (no child factors to consider here).  Duration is indefinite if the marriage is 20 years or longer, OR if the marriage lasted 5 years or longer when years of marriage and age of support recipient at separation total 65 or more.

So in our example the range is from 6 years to 12 years of support payments.

Otherwise the same factors mentioned above that can affect the duration of support can apply here as well.

Is there a deadline to Apply for Spousal Support?

Under s. 16(1)(c) of the Limitation Act, there is no deadline (or limitation period) to apply for spousal support.  However, need is a prominent factor in determining how much support to award.  If a spouse waits too long and a court deems that they are financially stable enough to not need support, it may not be awarded at all.

If you have any questions or concerns regarding support in your circumstances, give the experts at Rabideau Law a call to see how we can help.

 

Child Support

Child Support

One of the major issues at separation is how much child or spousal support will be paid from one spouse to the other.  This can often become very contentious between separating spouses as it can greatly impact both of their finances.

The Family Law Act (“FLA”) recognizes that each parent has an obligation to provide support for the children in accordance with the Child Support Guidelines, and that spousal support should recognize each spouse’s contribution to the relationship (see ss. 33(7) and (8) of the FLA).  This is to ensure that there are fair provisions to assist a spouse to contribute to their own support after the relationship ends.

Both types of support can be paid to married AND Common Law partners.  See our previous blog post regarding the differences between Married and Common law partners to learn more here.

This post will focus on child support.  See our next family law post for information on how spousal support is determined.

 

Child Support

Courts generally consider child support non-negotiable.  This is a right of the child and can be enforced strictly to ensure that children are properly taken care of.  This child support is meant to cover things like food, clothes and other essentials for the child’s well-being.  Additionally, parents can be required to split extraordinary expenses or s. 7 expenses.  These can be payments for things like after school programs or health related expenses.

Child support is determined by:

  1. The number of children;
  2. The province or territory where the paying parent lives; and,
  3. The paying parent’s before tax annual income.

These factors help us determine the “table” amount of child support to be paid.  A very rudimentary and approximate formula used to determine this support amount is to pay 10.8% of your monthly Gross income for one child (“the initial amount”).  If you have multiple children, you multiply the initial amount by the following approximate amounts:

  • 1.6 for 2 children
  • 2.1 for 3 children
  • 2.5 for 4 children

Of course this only gives you a ballpark figure and is not completely accurate as the factors in the formula are slightly adjusted as income changes.

For a more accurate answer, follow this link and plug in your details to determine what child support could be paid from one spouse to the other.

As of the date of this post, and according to the calculator provided in the link above, a parent living in Ontario with an annual income of $60,000 and 2 children would pay $915.00 per month in child support.

This takes into account the fact that both children reside in the same home.  If a parent has multiple children with multiple partners who all live in different households, you restart the calculation for each household.  As an example, using the above facts again, a father paying support to two different mothers would pay $556 per month to each mother, rather than $915 split between them both.

Considering that child support is the right of the child and necessary to ensure they are supported throughout their development, it is understandable why courts are so strict in enforcing the table amounts of support.  However, child support can change depending on certain factors.  Generally, child support is paid to the parent who has the child the most.  Yet should this residency arrangement be that one parent has the child 40% of the time and the other parent has the child 60% of the time, then child support payments can be reduced.

Another reason why child support could be reduced is as a result of the paying parent suffering an undue hardship.

 

Undue Hardship

S. 10 of the Federal Child Support Guidelines provides a means for parents to apply to change the set amount of child support if the parent or a child in respect of whom the request is made would suffer undue hardship.

Circumstances that could cause a spouse or child to suffer undue hardship can include:

  1. responsibility for an unusually high level of debt incurred to support spouses and children prior to separation or to earn a living
  2. unusually high expenses in relation to exercising access to a child
  3. a legal duty under a judgment, order or written separation agreement to support any person
  4. a legal duty to support a child, other than a child of the marriage
  5. a legal duty to support any person who is unable to obtain the necessaries of life due to an illness or disability

 

Is there a deadline for Apply for Child Support?

There is no limitation period for applying for child support that has been ordered by a court or that was to be paid as a result of a written agreement.  The problem arises when parents attempt to apply for child support without any court order or agreement in place.  Under s. 31(1)  of the FLA, every parent has an obligation to pay support for a child of the relationship if the child is:

  1. Unmarried;
  2. A minor;
  3. Enrolled in a full time program of education; or
  4. Unable by reason of illness, disability or other cause to withdraw from charge of their parent.

So generally, if the child is over 18 and self-sufficient, it is very unlikely that a court would make an order for child support.

The parent may be successful in a claim for retroactive child support.  The general rule is that retroactive child support can be ordered back to three years before the child support recipient can prove that they asked for child support, or that child support should be changed.  Keep watch on our blogs for a future post related to the topic of retroactive child support for more details.

Speaking with a legal representative about the support issues involved in your specific situation is a great way to ensure you can plan for your future.  Contact Rabideau Law to see how we can help you.

Separation and Divorce

Clients often contact our office inquiring whether we can assist with their divorce. In these cases, one of the first questions I always ask is how long they have been separated for.  If they tell me they’ve only been separated for a few months I inform them that they can’t get divorced unless one of the following things occurs:

The Divorce Act (“DA”) requires that there be a “breakdown of the marriage” under s. 8(2).

This means that:

  1. You live separate and apart for one year;
  2. The other spouse has committed adultery; or
  3. One spouse has treated the other with physical or mental cruelty.

If you meet one of the criteria above then you can get a divorce. If you are separated, you can start an application for divorce at any time, but the court will not grant you the divorce until you have been separated for one full year.  The DA even has a section on how to determine that period of separation under s. 8(3) The basic requirements are that the spouses have an intention to separate and that they do not try to reconcile their relationship for more than 90 days.

Keep in mind that divorce only applies to married spouses; if you are common law then you only need to be separated in order to effectively terminate the relationship. See our previous blog post covering the difference between common law and married spouses.

Even if you start the divorce application, the divorce does not actually take effect until 31 days after a Judge provides a judgment granting the Divorce (see s. 12(1) of the DA).  Furthermore, s. 11(1)(b) of the DA states that a divorce will not be granted until the court is satisfied that reasonable arrangements have been made to support the children of the marriage.

A divorce or annulment is the only way to end a marriage.

You won’t NEED any formal documentation to show that you are separated, however it is HIGHLY recommended that you get a separation agreement drafted to protect your interests. http://www.rabideaulaw.ca/separation-agreements-an-overview/

Adultery and Abuse

The “separated for a year” rule does not apply if there is a breakdown of the marriage resulting from adultery or abuse. If a person is relying on adultery or abuse as a reason for the breakdown of marriage, s. 11(1) of the DA makes it clear that there can be no collusion, condonation, or connivance on the part of the spouse bringing the application.

This means that the spouse bringing the application for divorce cannot accept the behaviour or conspire to orchestrate the adultery or abuse. Also, the spouse committing the adultery cannot use it as a reason for the breakdown of the marriage.  However, the court will grant the divorce if it is their opinion that the public interest would be better served by granting the divorce.

The DA also provides a definition for collusion.  Here, collusion means an action taken directly or indirectly by a spouse applying for divorce to subvert the administration of justice.  This includes an agreement or conspiracy to fabricate, or suppress evidence to deceive the court (see s. 11(4) of the DA).

The Separation – Living Separate and Apart

In order to be separated, courts need to see that you are living “separate and apart”.

But what does this mean exactly?

There are a few factors that courts will consider regarding whether or not two persons are actually separated. Simply saying you’re separated may not be enough.

Factors courts will consider to determine if you are separated include the following (see paragraphs 37-47 of T.R. v A. K, 2015 ONSC 6272)

  • Is there a physical separation, (Note that this doesn’t have to mean spouses live in separate houses)
  • An intent of ending the marriage/relationship
  • Absence of sexual relations
  • Level of communication between the spouses
  • Are there joint social activities
  • Meal patterns
  • What chores are being performed between them
  • How do others view their relationship

Keep in mind that this is not an exhaustive list as courts can consider other factors.  Also, you don’t need to meet all of these factors in order to be considered separated.  What needs to occur is that courts see a physical separation and that you both are seeking to pull out of the marriage (or common law relationship). What is important is the INTENTION to separate.

Does the date of separation matter?

The actual separation date or valuation date as defined in s. 4(1) of the Family Law Act is an essential part of the separation process.  The valuation date is the date from which all values related to property and support are calculated from.  As an example, a valuation date in the winter versus one in the spring or summer could affect the value of the matrimonial home and how much is to be distributed between the parties.  This is why it is crucial to seek out a family lawyer to advise you of your rights and responsibilities to ensure that you and your family are properly protected.

Keep an eye out for future blog posts discussing issues related to property.

Common Law vs. Marriage

Common Law and Marriage are often confused when it comes to the division of property and other rights and obligations upon separation. In order to know what you’re entitled to, it’s important to understand the distinction between these two terms so you can create the best plan for your future.

What may be confusing to some is the fact that the Family Law Act (“FLA”) has two definitions for spouse and that these two types of spouses are treated very differently upon separation.

Definition of Spouse in Ontario

Keep note that the definition of spouse and the rights that flow from that definition differ from province to province. This post is restricted to the definition of spouses and their rights in Ontario.

The first type of spouse is defined in s. 1(1) of the FLA and it means either of two persons who:

  1. Are married to each other, or
  2. Have together entered into a marriage that is voidable or void and in good faith

This includes marriages from anywhere else in the world.

The second type of spouse is found in s. 29 of the FLA.

Here, spouse means any spouse as defined in s. 1(1) (the married spouses) AND anyone that meets the following criteria:

Persons who are NOT married to each and have cohabited:

  1. Continuously for a period of not less than three years; or
  2. In a relationship of some permanence, if they are the parents of a child.

What is also important here is the part that says “cohabited continuously.” Consider the following example for a couple with no children:

  • Partners live together for 2 years starting January 1, 2015;
  • They then live apart for 7 months from January 1, 2017 to August 1, 2017;
  • Then they start living together for 5 more months starting August 2, 2017.
Start of cohabitation – 2 years Break in cohabitation – 7 months Restart of cohabitation – 5 months End of three years
January 1, 2015 January 1, 2017 to August 1, 2017 August 2, 2017 January 1, 2018

 

In this example, they would not meet the criteria of common law spouse as defined in the FLA.  They would have to live together for 3 more uninterrupted years from August 2, 2017 to August 1, 2020 to be considered common law spouses.

However, if this couple had children, then they would likely be considered common law.

How do these separate definitions of spouse affect me?

These two definitions mean that there are different property rights for a married spouse and a common law spouse. Under the FLA, married spouses have automatic property rights in addition to support rights.  This means they have rights to an equalization payment, property such as the pension, the matrimonial home, support payments, and intestacy rights.

Common law spouses on the other hand, only have automatic rights to spousal support on separation under s. 29 of the FLA. This comes as a shock to some clients as they believe that simply living in the home is enough to guarantee rights to the home or any other shared property. This is only true in common law where both parties share property as joint tenants or tenants in common.

However, spousal support is not guaranteed like child support is. Spousal support is granted according to various factors, one of which is need (see s. 30 of the FLA).

Now that doesn’t mean a common law spouse can never claim rights to property out of the common law relationship and succeed; it just means they will have to seek one of the following alternative remedies;

  1. Unjust Enrichment;
  2. Quantum Meruit;
  3. Constructive trust; or
  4. Resulting trust.

These types of remedies are called “equitable claims” and usually involve litigating the matter in court in order to successfully receive the remedy.

Contact Rabideau Law’s caring and experienced staff for a consultation to see what legal options are available in your specific situation.

The Process of Getting a Separation Agreement Done

The Process of Getting a Separation Agreement Done

What follows below will be a general overview of the process for completing a separation agreement.  It begins by contacting our office and concludes with the completed separation agreement that is provided to the client.

Please note that this is not a precise account of how the process works, but merely a general guideline.  Each situation is unique. Furthermore, different types of agreements and different types of retainers with our firm necessitate varying approaches to this process.  Keep in mind that this process is not limited to just separation agreements, but can be applied to any kind of domestic contracts such as a cohabitation agreement or a marriage contract (and/or a prenup).

Step 1 – Initial Contact: A potential client contacts our firm by phone, email or in person, and we arrange an in office meeting with one of our lawyers for a consultation (click here if you would like to book a consultation, hyperlink to relevant part of website).

Step 2 – The Consultation: The potential client brings any relevant documents to the consultation so that we can determine what may be the best legal solution to their legal problem.  This consultation is an information session, and we are not hired at this stage to represent the potential client.

Step 3 – The Retainer (aka the Contract): If the potential client wishes to draft a separation agreement, we will draft a formal retainer (i.e. contract between you and the lawyer) that must be signed by the client and our firm before we begin any work. This document covers the type of legal services that the firm would provide to you.

Step 4 – Gathering Info: Once the retainer is signed by the potential client and our firm, that potential client is now our client.  We provide the client with a questionnaire that asks them to provide as much information as possible including things such as their finances, children, employment, assets and debts.

Step 5 – Drafting the Agreement: After the questionnaire is complete, the client provides it to our firm and we use that information to draft a separation agreement.   This can also include drafting financial statements.  We take this time to include the details from your questionnaire into the agreement, and include any specific terms or conditions that may have been discussed.  During this stage we may ask you for more information in order to effectively include all necessary items.

Step 6 – Reviewing the First Draft: Once the first draft is completed, we contact the client to review the agreement with them to see if any other provisions need to be included or removed.  This is to ensure that the agreement matches the client’s intentions and wishes.

Step 7 – Opposing Party Review and Negotiation: Once the first draft is approved by the client, we send a copy of the draft to the other spouse’s lawyer for them to review.  If any terms need to be adjusted, we contact the other lawyer to negotiate until all parties agree to the terms and conditions of the separation agreement.

Step 8 – Final Review and Execution: Once everyone is in agreement, we create a final draft copy of the agreement for your review.  We arrange a meeting where you attend our office and we review the final draft of the agreement in detail.  Should everything be in order, we execute the agreement by having you sign the agreement with a witness and date your signature.  This is done on multiple copies of the agreement, usually one for each party and one for each lawyer totalling 4 copies.  Once executed, the lawyer at our firm will sign an Independent Legal Advice Certificate (“ILA Certificate”).

Step 9 – Completion: We then provide all signed copies to the opposing party for them to sign, witness and date, and for their lawyer to also provide an ILA Certificate.  Once that is done, they mail two completed copies back to us and we provide the client with one completed separation agreement completing the process.

Typically this process takes about 2-3 weeks to complete.  This timeline is dependent on how much negotiation needs to take place in order to resolve all outstanding issues.  However, negotiating the details of your separation outside of court is a faster, simpler, and more cost-effective means of dealing with issues.

Should your spouse provide you with an agreement, we can discuss providing Independent Legal Advice services for you.  This would essentially reverse the roles of the parties in the process outlined above.

If you are looking to get a domestic contract drafted, feel free to contact our firm to see what legal services may be best suited to your particular needs.

Separation Agreements: An Overview

Separation Agreements: An Overview

What is a separation agreement?

Separation agreements are contracts between two persons in a romantic relationship regarding their familial rights and obligations towards each other.  These types of agreements allow people to negotiate issues such as how children will be taken care of, what kind of support will be paid between the spouses, and how to distribute assets such as the home.  Once the issues are identified and agreed upon, the separation agreement can provide certainty and peace of mind for both parties as they move on from the relationship.

 

Do I need a separation agreement to get divorced or get separated?

If you are married, (if you aren’t married skip on to the next paragraph) you don’t actually NEED a separation agreement in order to get divorced or to separate from your spouse.  The Divorce Act requires that there be a “breakdown of the marriage”.  This means that:

  1. you live separate and apart for one year;
  2. the other spouse has committed adultery; or
  3. one spouse has treated the other with physical or mental cruelty.

If you aren’t married, all that is required is that you live separate and apart.  However, what that means can be complicated depending on your circumstances.

Regardless of how you and your spouse (partner, husband, wife, boyfriend, girlfriend etc) broke up, getting a separation agreement can help both parties negotiate and finalize matters between them without involving costly and lengthy court proceedings.

 

We’re working well together, why bother with an agreement?

Although you and your spouse are cooperating well at this point, there is no telling how well you two will work together in the future.  If something happens in the future where the other person suddenly refuses to work with you, and the both of you do not have an agreement in place, there could be severe consequences regarding your ability to see your children, how support payments will be made, or how assets should be redistributed.  The best thing to do is to ensure that both of you are on the same page by drafting an agreement outlining your rights and responsibilities so you won’t be faced with any unpleasant surprises in the future.

 

Why can’t I just download an existing agreement and draft it myself?

You can.  Nothing prevents you from drafting a separation agreement that both you and your spouse sign together.  However, this is an agreement that will bind the both of you into the foreseeable future.  You want to make sure that all angles are covered and that you did not omit something or improperly word something that could have serious repercussions for you in the future.  There is no guarantee that the online agreements out there are up to date or that they have the appropriate clauses to protect you especially if your ex tries to challenge or have it set aside in court.  Having a lawyer draft the agreement for you is the best way to ensure that all important issues are covered, that everything is current to today’s laws in your jurisdiction, that the law surrounding those issues regarding your rights and obligations are explained to you, and that the agreement is executed properly.

 

Can I only get an agreement at separation?

No.  There are multiple types of “Domestic Contracts” under the Family Law Act.  Other types of agreements include:

  1. a cohabitation agreement if you are cohabiting (living) with another person and are not married;
  2. a marriage contract if you are getting married (colloquially known as a pre-nup); or
  3. a marriage contract after you get married (colloquially known as a post-nup).

Be mindful that there are certain issues (eg. Access to children) that cannot be addressed in these other types of agreements.  Feel free to contact our firm to see what agreement may be best for you.

 

What are the best reasons for hiring a lawyer to draft an agreement?

One of the biggest concerns for separating spouses is how the children will be taken care of.  The agreement can help both parties create a stable and effective parenting plan for how decisions will be made for the children such as residence, school, health care, religion and education.  The agreement can also help set out a visitation and/or time sharing schedule for the parents to follow.

Another major concern for spouses at separation is the family home.  Usually, this is the largest asset that both parties have during the relationship, and a separation agreement can go a long way to outlining who is getting the home, or how the home is to be sold and distributed between the two of you.  Also, if one of you is looking to purchase a new property after separation, mortgage companies will usually ask for an agreement between the two of you before they are willing to provide a mortgage for the new property.

Other assets that can be dealt with in agreements can include: joint bank accounts, debts, pensions, RRSP’s (Registered Retirement Savings Plans), pets, cars, and life insurance.

 

How do I make sure the agreement is enforceable?

Ensure that it is signed, written, and witnessed.

Ensure that you are well educated on:  what the law is, the legal meaning and consequences of the agreement terms and the assets and debts of both parties.  Hiring a lawyer to draft the Agreement and/or provide you with independent legal advice (“ILA”) provides this assurance.

ILA is provided when one party has their own lawyer review and explain the agreement to them.  This helps to ensure that the party understands the rights and obligations they are agreeing to.  The lawyer then signs an “ILA Certificate” stating that they reviewed the agreement with their client, that their client has not been forced into the agreement, and that they believe their client understands it.

Another common addition to agreements is a sworn financial statement.  Sworn financial statements outline things such as the parties’ income, their monthly spending, and their assets and debts.  Having this financial picture helps clearly identify the financial situation of both parties so that there is no confusion regarding either party’s assets.

Having both ILA and sworn financial statements in your agreement goes a long way to ensuring that the agreement won’t be overturned by a Court in the future  (if it ever ends up that) and that you have a strong shield to protect you should anything be challenged.

Finally, you can look at separation agreements as a ”living document” meaning that it should grow and change as your financial and/or family situation changes.  It’s a good idea to review it every few years to ensure that the terms of the agreement still say what you want them to say.

The Process of Executing a Separation agreement