It is not abnormal to have one partner in a relationship who is generally more responsible for dealing with the couple’s financial matters, more so than the other. However, in cases where one spouse entirely controls the finances of both people in the relationship, it can be quite a difficult transition for the other spouse when that relationship breaks down.
A First Step- Open Your Own Account
The very first step that a spouse who finds themselves in such a situation should take, is to open a bank account which is independent of, and inaccessible to their partner. This is the beginning of the process of disentangling your finances from that of your spouse. While it is common that bills remain paid out of joint accounts, it is important to have an account to place funds that ought to be entirely under your sole control, such as spousal or child support payments.
A Second Step- Preparing for Financial Disclosure
A next potential step is to learn as much as you can about the finances you share with your partner before you are required to exchange financial disclosure with them per the Family Law Rules (“FLR”). Where assets and accounts are held jointly by the parties, this may not be a difficult task. The joint holders of an account or an asset usually have equal rights to access them and records pertaining to them. It is advisable in such a scenario, to attend each of your financial institutions and request to be given online banking access to the accounts. If you do not have banking cards for any or all of the shared accounts/assets, these should also be requested so you can gain tangible access to your shared funds.
Requesting such access is also essential in order to comply with the financial disclosure requirements laid out in the FLR. Per Rule 8.0.1 of the FLR, there is an automatic disclosure order applied to certain family law cases when they are initiated on or after February 1, 2022. This applies to claims made for decision-making responsibility and parenting time for children (whether under the Divorce Act or the Children’s Law Reform Act) as well as claims for a division of net family property, or claims related to the matrimonial home (under the Family Law Act). Claims for support (child or spousal) will also trigger this automatic disclosure order (whether under the Divorce Act or the Family Law Act). Additionally, many family law practitioners will still seek to receive and exchange financial disclosure in compliance with the typical automatic order, even where they are negotiating outside of court.
The disclosure required by the automatic order includes, but is not limited to, documents like personal Income Tax Returns, Notices of Assessment and Reassessment for the last three years, and Financial Statements from each spouse.
Even if you have had very little understanding or access to your own finances during the relationship, the expectation that you exchange such financial information with your spouse still applies. This means it is prudent that you seek access to any jointly or solely held accounts and assets in your name, so you are able to request the appropriate documentation for exchange purposes.
If your spouse was responsible for having your taxes filed, it is also a good idea to get into contact with your accountant, and request copies of your full T1 Income Tax Returns for the past three years. Income Tax Returns are also important documents to help you understand how your spouse has been organizing your finances on paper. You may be aware of the income you earn from your employment, but there are situations where your total income may look different on paper because of the way your spouse has allocated other sources of income. For example, you could be noted as a recipient of investment or rental income on your Income Tax Return, and not be aware of this if you never scrutinized those documents.
A Third Step- Analyse Your Options
Becoming financially independent of your spouse is a long process that may range in difficulty depending on your specific circumstances. Where most of your assets or accounts are held jointly, it may be easier to learn about how your finances have been handled during the relationship due to your right to access records. You also have a presumptive right to half of the funds held in those joint accounts/assets.
Where the bulk of your assets or accounts are held solely by your spouse, there are other challenges. In that case, you may not have a presumptive right to access such funds or records pertaining to the accounts. While you could make a claim to share in the value of those accounts/assets, such as equalization of net family property (exclusive to married couples), or constructive trust, such claims are often only resolved at the end of a separation matter. In such a situation, it is essential to evaluate your immediate need for spousal or child support. A spouse without access to shared assets or income may need to seek support on an urgent basis, among other orders, if their spouse refuses to maintain the financial status quo in the interim, and bills begin to go unpaid.
Further, if you are concerned that your spouse may attempt to transfer funds out of joint or solely held assets before your claims on them can be resolved, it is also possible to seek a non-depletion or freezing order from the court. It should be noted that a non-depletion order may ensure that a party cannot deplete the full value of the assets/accounts like selling or completely spending them, while still allowing some basic activity or management of said assets/accounts. In contrast, a freezing order is typically a stronger remedy, wherein the party cannot deal with the assets/accounts at all, even for mundane activities like using the assets/accounts to pay bills.
To understand the full breadth of your options and the appropriate remedies you could seek for your circumstance, we advise that you seek the advice of a licensed Family Law Practitioner.