Do You Have an Enforceable & Valid Separation Agreement?
This is the Ontario Family Law podcast, featuring issues related to marriage, separation, divorce, child welfare, and also some children’s rights issues. It is a companion to the book, A Guide to the Basics of Ontario Family Law, which is available on Amazon, or by calling 416-446-5847.
My name is John Schuman, I am a certified specialist in family law and I am a family lawyer, mediator, arbitrator and collaborative lawyer and I am the partner leading the family law group at Devry Smith Frank LLP. In this edition of the podcast, we discussed how to have a valid and enforceable separation agreement.
The vast majority of separated couples do not have a judge or arbitrator to decide how they are going to live the rest of their lives. The vast majority of people come to an agreement to settle their matters after the end of their marriage or a common-law relationship. In that way, they ensure that they live their lives after separation as they want to. People are almost always much happier when they resolve matters by way of a separation agreement instead of a final order imposed by a judge.
The Ontario Family Law Act sets out rules for separation agreement. An agreement is a separation agreement if it deals with issues related to parenting of children after separation, which can include custody and access terms, child support or a spousal support, the division of asset after separation, the treatment of a matrimonial home after the end of a marriage, the assignment of debt after separation, how separated spouses may communicate or see each other, or rights that separated spouses may have to each other’s estates. The Family Law Act says that any agreement that addresses these issues must be in writing (verbal agreements on those issues are not valid), that all the parties to that agreement must sign it, and that each of them must have their signature witnessed. An agreement that follows all of those criteria, is a separation agreement under Ontario Law.
However, Section 56(4) of Ontario’s Family Law Act says that a court does not have to enforce a separation agreement unless it meets additional criteria. If you have worked out an agreement with your former spouse without going to court, you may ask yourself why you care whether a court enforces the agreement. As long as you and your former spouse follow the terms of the agreement, you don’t need to have it enforced. But, if you and your spouse are always going to get along and continue to agree and always follow your agreement, then you probably do not need a formal, valid, enforceable separation agreement.
However, the reality is that people move on with their lives. They find new partners, they start new families, they get new jobs, sometimes they move away, and sometimes their opinions of each other just change. When that happens, separated spouses can change their minds about what they want and what they want to do and whether the agreement they made still works for them.
Do You Have an Enforceable and Valid Separation Agreement?
If your former spouse changes his or her mind about important things, then you may want to be able to hold them to the agreement that they made. That is what courts do. Judges, especially family court judges, believe strongly in holding people to the agreement that they made, when they are properly negotiated and create it in accordance with the law. However, there are circumstances when judges will decide that the court should not respect the separation agreement, and will order different terms instead.
So, if you want your separation agreement to be the final word between you and your former spouse, so that you are not fighting about the same things over and over again in the future, and you can move on with your life with some certainty, then you want an enforceable separation agreement.
Section 56(4) of the Family Law Act says what you need to do in order to have an enforceable separation agreement. There are three valid criteria that you need to meet:
- Both parties need to understand the agreement;
- Both parties need to exchange financial disclosure regarding all matters of financial significance; and
- Neither the contract, nor the matter which was negotiated, must violate the law of contract. If you are trying to come up with the separation agreement, then you really need to understand the specifics of what each of those criteria means.
The first criteria, that both parties understand the agreement, essentially means that both parties need to get independent legal advice from separate lawyers. Lawyers are prohibited from giving legal advice to both sides of a deal where the parties interest were not exactly aligned and after separation, how friendly it is, the separated spouses’ interest are not aligned. The act does not actually say you need to speak to a lawyer to understand the contract, but if you have been following this podcast, you know that there is a lot in the law that non-lawyers, and even non-family lawyers, do not know about family law. So to understand the significance of the contract, and its wording, and believe me there is a lot of legal significance in in the words of separation agreements, which have been decided by courts over for many years to sort out them out, you really need to speak to a family lawyer.
In addition, understanding the agreement does not only mean understanding the terms but it also means understanding whether the deal is a good one or a bad one for you, which means comparing the terms of the agreement to what would happen if you took your matter before a judge or an arbitrator. In family law, you are absolutely free to sign off on a bad deal that has a potential to ruin the rest of your life. However, in order for that deal to be enforceable, you need to know at the time that you signed it, that the agreement is a bad deal that could potentially ruin the rest of your life. You will also need to know about all the problems that arise in the future about your deal. These were all things that a family lawyer will tell you.
Again, consulting with the family lawyer does not mean you have to do what the lawyer says only that you fully understand all the bad things that can happen if you do not follow the family lawyers’ advice.
When a judge looks at overturning an agreement, probably the first thing the judge will look at is whether there are certificates of independent legal advice attached to the agreement and what those certificates say. If the judge does not see the certificate of independent legal advice, or those certificates of independent legal advice suggest that one of the parties did not understand the contract or did not sign it voluntarily, then there is little chance that the judge will uphold the agreement.
So, to have an enforceable separation agreement, you need to meet with a lawyer and have a sufficiently in-depth discussion about your situation and the agreement so that the lawyer will be able to sign a certificate of independent legal advice.
The second criterion, which is about exchanging financial disclosure, is closely linked to the first. In order to understand whether an agreement over any financial matter is a good one or a bad one you need to fully understand both your financial circumstances and those of your spouse because both affect how things like child support, spousal support, and property division works.
If you do not know, and understand, your spouse’s income, then you have no way of knowing whether the support provisions in your agreement are right. If you don’t know, and understand, what your spouse’s assets and liabilities were on both the date of marriage, if you are married, and on the date of separation, then you have no way of knowing whether the property settlement you worked out is a good one.
How to Have a Valid and Enforceable Separation Agreement
To have an enforceable agreement you have to know whether the terms of the deal and whether it is a good or bad deal for you. Probably the second thing the judges look for when reviewing an agreement is whether there was a sufficient financial disclosure to allow the parties to the agreement to understand each other circumstances sufficiently well to know whether this deal was a good one or not.
When you meet with the lawyer to discuss your separation agreement, if you want your separation agreement to be enforceable, the lawyer will tell you that you have to exchange financial disclosure, probably in a formal way. That formal way usually involves sending a sworn family law financial statement with all the backup documentation for your spouse to understand the financial statements, all bound or electronically transferred together in one package. The idea behind doing that is that if a spouse later said they don’t want to follow the agreement because they did not get sufficient or proper financial disclosure, you can put that bundle of documents before the judge and say here is what they had at the time of the agreement and it was enough for them to understand what was going on. Having the disclosure in one bundle makes it a neat little package that allows the judge to understand that there was sufficient financial disclosure for the parties to understand the agreement.
The last criterion to have an enforceable separation agreement is compliance with the law of contract. Your agreement will not survive if it has terms that are illegal. And there are terms that are illegal on separation agreement. You cannot, for example, require that your former spouse remain chaste. That is specifically prohibited. There are other things that are prohibited. If you speak to a lawyer about your separation agreement, that lawyer will make sure you do not include any terms that are illegal. The lawyer also makes sure you don’t run into any other problem under the law of contract such as the concept of “mistake”, or that you or the other party made a contract over something that you had no right to contact over.
There are some additional concerns, specifically in relation to separation agreement, that can cause problems. Those relate to the manner in which the agreement was negotiated. Judges will not uphold a separation agreement if it was negotiated while one party was under duress or there was a significant power imbalance during the negotiation. Minor or little issues are not sufficient to create concerns under these categories. But, again, both parties having lawyers ensures that these sorts of situations do not exist at all and there is nothing that a judge could be concerned about in the future.
Another significant consideration about the negotiation is that separation agreements are forward looking documents. To deal with things that are happening in the future and that are expected to keep going on in the future. In marriage, you made vows to stand by your partner for the rest of your life, but your separation agreement is potentially ending that commitment. So your agreement must take into account all the facts that may have gone on until the end of your life. Separation agreements can be set aside if they do not contemplate a difficult set of circumstances in the future. This is a particularly important thing to be concerned about if your agreement contains a spousal support release or places limits on the amount of spousal support that will be paid. In order to provide some certainty that those terms will not be changed, the negotiation, and the agreement, must specifically contemplate all the circumstances that would otherwise give rise to a change in the agreement, show that you have considered those circumstances, and that having considered them you do not want the agreement to be changed.
During the negotiations, and you speaking with your lawyer, and the signing of the agreement, you must think about your future and all the things that could happen and be satisfied that those circumstances should not result in a change in the agreement.
Separation agreements are great and they are usually the best way to bring finality to your relationship with your former spouse and all the issues related to that relationship. However, to ensure that the agreement is final, and brings the finality that you want and need, you have to do the required steps and make sure you have a valid and enforceable separation agreement.
[Podcast #24] How to Have a Valid and Enforceable Separation Agreement
This is in the Ontario Family Law Podcast. My name is John Schuman. You can reach me by calling 416-446-5847 or at our website DevryLaw.ca. Look on our website, or on iTunes for many other Podcasts in these series. We will talk again soon about other family law and children’s rights issues.
Thanks for listening.