Separation Agreements are agreements between the parties made pursuant to section 54 of the Family Law Act.
A properly executed Separation Agreement is an enforceable and binding contract, which usually outlines division of property, support obligations, custody and access to the children, and any other matters relevant to the issue of separation and divorce.
The date of separation is one of the important details of a Separation Agreements. A separation date (for the purposes of the family law) is a date when spouses cease to be spouses, even though they may continue to reside under the same roof. Very often parties agree as to the separation date. When the separation date is in dispute, the Court will look at variety of issues to determine which party’s separation date is correct: when the parties separated their accounts or other property, whether spouses vacationed together and/or went out together, whether the parties represented themselves as being spouses to their relatives and friends, whether spouses were intimate, etc. The list is not exclusive.
The separation date is important because it is relevant to the issue of equalization. Equalization, in simple words, is the process of equalizing of each party’s net family properties to account for accumulation of assets during the marriage. Section 5 of the Family Law Act states: “5. (1) When a divorce is granted or a marriage is declared a nullity, or when the spouses are separated and there is no reasonable prospect that they will resume cohabitation, the spouse whose net family property is the lesser of the two net family properties is entitled to one-half the difference between them. R.S.O. 1990, c. F.3, s. 5 (1).”
Separation Agreements are signed by married and unmarried spouses. Even though unmarried spouses are not entitled to claim equalization under the Family Law Act, it is still wise to address issues of property division in a Separation Agreement when common law spouses separate. This is so because there are other avenues, such as the doctrine of resulting trust, to rely upon in claiming an interest in ex-spouse’s property upon breakdown of the relationship.
It is important that a full financial disclosure is provided by both parties before a Separation Agreement is executed. Financial disclosure will ensure that the parties enter into a fair agreement, or, that, at the very least, the parties are fully informed before waiving any of their entitlements under the Separation Agreement. It may be difficult to change or set aside a properly executed Separation Agreement later in Court.
It is important to understand that if either one or both parties do not provide full and accurate financial disclosure, the Court may set aside some sections of the Agreement or the entire Separation Agreement, if it finds that the non-disclosure led to an innocent party making an uniformed choice with respect to his or her rights or obligations under the Agreement, and that, had that party known the full extent of the financial circumstances of the other party, the innocent party would have likely acted differently with respect to agreeing to the terms of the Separation Agreement.
It is often preferable to first execute a Separation Agreement, thereby narrowing the issues for the Court to address, and only after that to apply for divorce, in which case the divorce may proceed on an uncontested basis, or may address only the issues not addressed in the Separation Agreement.