A Separation Agreement between you and your spouse or common-law partner can save you a significant amount of time and money. A Separation Agreement can be used to settle support, property, and parenting disputes without needing to involve the court system, which can quickly become a costly process.
1) What is A Separation Agreement?
A Separation Agreement is a written agreement between two people who are separating or are separated. A Separation Agreement typically deals with matters regarding:
- The ownership and division of property, especially the matrimonial home.
- Support obligations (child support and spousal support).
- Parenting rights regarding decisions about the children’s lives.
- Custody and access rights to the children.
- Any other matter in the settlement of their affairs.
2) Full Financial Disclosure
Before signing a Separation Agreement each side should be provided with the other’s full financial disclosure. Full financial disclosure protects each person by ensuring they have access to all the financial information needed to make an informed decision. Without full financial disclosure the Court may not enforce a Separation Agreement.
Full financial disclosure includes formally providing the other person with supporting documents for:
- Bank account statements
- RRSP amounts
- Information on a private owned business.
- Debts and liabilities.
- Formal pension valuation.
- Property owned and value.
- Any other relevant financial information.
Each side should have a lawyer review the financial disclosure. Full financial disclosure is essential to ensure that a separation agreement will be enforced.
3) Spousal Support
In Ontario, when spouses separate the spouse with more income or assets may need to pay spousal support to the other spouse.
A Separation Agreement should detail how much spousal support will be paid from one person to the other and for how long. Things that need to be taken into consideration are how much support the other person requires to have their needs met and how much the other spouse can afford to pay.
If spousal support is being waived or is a relatively small amount, then it is highly recommended to have the Separation Agreement prepared by a lawyer to ensure that this waiver remains enforceable. The Courts sometimes view ‘one-sided’ Separation Agreements that waive spousal support with suspicion.
4) Child Support
Within a Separation Agreement it is recommended that child support payments be decided in accordance with the Child Support Guidelines’ table amount. Parents will also need to decide how to pay for any of the children’s extraordinary expenses. Examples of extraordinary expenses would be: team sports, daycare, and post-secondary education. A general rule of thumb is that extraordinary expenses will be paid in proportion to each spouse’s income.
If child support payments are being varied from the guideline amount in your Separation Agreement you should review the agreement with a lawyer to ensure the agreement is enforceable.
5) Parenting Arrangements
A Separation Agreement should include a written outline of how spouses will co-parent the children moving forward. The parenting arrangements should cover topics such as:
- How will decisions impacting the children be made?
- How will information about the children be communicated to each parent?
- Where will the children live?
- How often, when, and where will the children visit with the other parent?
- Who else will the children be able to visit?
- How will holidays be celebrated?
- Any other parenting issues that need to be outlined.
6) Matrimonial Home
The Separation Agreement should outline whether the house will be sold or who will take ownership of it or continue to live in it. You should have a formal Separation Agreement before attempting to change any aspect of the ownership of the home.
7) Dispute Resolution Clause
A properly drafted Separation Agreement will include a dispute resolution clause. This clause will outline how future disagreements will be addressed. A dispute resolution clause may be that the parties must attend mediation or arbitration. The value of the dispute resolution clause is that it can help save each side time and money. Without the dispute clause the spouses may resort to costly litigation to solve each dispute.
8) Independent Legal Advice
It is in both side’s best interests to receive independent legal advice (ILA). Ensuring your spouse gets ILA helps prevent them from being able to claim that they did not understand the nature or consequences of the Separation Agreement, which can cause the agreement to be unenforceable.
Spouses should each have their own lawyer. A lawyer cannot give legal advice to both spouses. Not receiving ILA can be a costly mistake that leads to the Separation Agreement being set aside and a resulting expensive court process.
9) Property Division
The Separation Agreement should outline how the net family property will be divided, whether there will be an equalization payment and, whom it will be paid to. The agreement should be clear in specifying if certain benefits are given in exchange for others. For example if one spouse is waiving spousal support in exchange for the other taking over all of the family debts, that should be clearly written.