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When people are contemplating divorce, the goal is to negotiate a mutually-acceptable separation agreement between the spouses which addresses all of the outstanding issues, including equalization of family property, child support, spousal support, custody and access, payment of joint debts, etc. If the parties can agree on the terms of a separation agreement, you can avoid having to start a court process, which could become contentious and expensive.
However, separation agreements are completely voluntary. If you and your spouse don't have a basic agreement on the issues, or at least an agreement in principle, it's probably too soon to be discussing the possibility of a separation agreement with a lawyer. If you don't think it's likely that you're going to reach an agreement with your spouse within a reasonable time after separating, you may need to think in terms of litigation. Sometimes, you need to initiate litigation so that the other party will take negotiations more seriously.
Not unlike the litigation process, working towards a separation agreement starts with an exchange of detailed financial information between the parties, including sworn financial statements. Because family property is equalized upon separation, both spouses are required to calculate their respective net family properties.
Family property is, essentially, a quantification of your net worth over the course of a marriage. The most significant assets in people's net family property are the matrimonial home, investments, and workplace pensions. In arriving at your net family property, you will receive a deduction for any debts that you have, such as a mortgage. Additionally, any property you owned prior to the marriage, and certain types of excluded property you acquired during the marriage such as inheritances, will also be deducted from your net family property. When completing the financial statement, you want to take advantage of any deductions allowable so as to minimize your net family property.
As part of the financial disclosure, both parties will also exchange 3 years of tax information, including tax returns and notices of assessment. Because it's such an important part of the financial disclosure, it's advisable to keep up-to-date on the filing of your taxes. If you're not up-to-date, make arrangements to file any outstanding returns as soon as possible. The process of negotiating the separation agreement will be put on hold until current notices of assessment can be produced.
For individuals fortunate enough to have defined benefit pensions, this is likely your largest asset. Since the value of your pension is included in your net family property calculation, your pension can, in effect, be equalized after separation. Although the pension itself may not be equalized, the value of the pension will be.
The value of a pension is determined by a pension valuator. Depending upon the pension plan administrator, it can take a few weeks, or several months, to acquire a professional valuation for a pension.
For provincial pension plan members, there is now a procedure in place for the family law value of your pension to be calculated by your pension plan administrator (although there can still be cases where it is worthwhile to obtain a professional valuation).
Once financial disclosure is complete, the parties will need to sit down with each other, or else negotiate through their lawyers, regarding how and when the equalization payment will be made, and whether any child or spousal support will be payable.
Many people who are separating try and write their own separation agreements. While it might make sense to negotiate directly with your spouse to see if you can achieve consensus on the general terms of an agreement, going one step further and drafting your own separation agreement is not advisable for a few key reasons:
Independent legal advice
When you have a separation agreement where both parties have retained their own lawyers, a certificate of independent legal advice is attached to the agreement. This certificate serves as confirmation that both of you had your own legal advice before signing the agreement. Without this certificate, you're leaving the door open for the other party to argue that they didn't understand the nature and consequences of what they were signing. This argument can form the legal basis for a court to set aside the separation agreement (or certain provisions in the agreement).
Signing a separation agreement without the benefit of legal advice might save you money in the short term, but you take the risk that the other party might try and overturn certain aspects of the agreement years down the road. One of the goals of a separation agreement is to give you peace of mind in knowing that the terms are conclusive and cannot be opened up again for review. You can only get this assurance if both parties have had independent legal advice.
Proper valuation of assets
When you're doing your own negotiations and financial calculations, you might not be inclined to review your ex's net family property statement with a critical eye. An ex may intentionally, or inadvertently, exclude certain assets from their net family property, or they might undervalue these assets. Valuations cannot always be accepted at face value- you need to request confirmation that all entries on a financial statement are accurate. If your spouse owns a business, for example, it can be difficult to accurately value what the business is worth without professional assistance.The real value of having a lawyer advise you on the financial aspects of a separation agreement is confidence in knowing that the settlement you receive (or the settlement you pay), is fair and based on the law.
Understanding legal consequences
People don't always appreciate the legal ramifications of signing a separation agreement. For example, whatever child custody or access arrangement is specified in an agreement might prove very difficult to modify in the future. Once a status quo is achieved with child custody & access, courts are reluctant to alter it without good reason. If you're not sure if a shared custody arrangement can work with your ex, you're better to try it out on a temporary basis before committing to it in a final separation agreement.
Most lawyer-drafted separation agreements will contain a number of releases, including a mutual release from spousal support. The intention behind negotiating a release from spousal support is that if your ex becomes unable to work through disability or other factors at some point in the future, he or she cannot come after you, having already waived or released their claims to support. If your agreement doesn't contain a specific waiver of spousal support, then it hasn't been waived and your liability to pay support to an ex-spouse continues, possibly indefinitely.
Why hire a lawyer to prepare a separation agreement?
Why use me as your lawyer?
I'm a lawyer representing clients in Kanata, Nepean, and the west-end of Ottawa.
Kerry Fox, LL.B.
Barrister & Solicitor
90 Centrepointe Dr,
Nepean, ON K2G 6B1
Tel: (613) 224-4400
Fax: (613) 226-8767
Hours & Information
There is plenty of free parking located at the back of the building.
Monday to Friday
8:30AM - 5:00PM
I also have Saturday appointments available.