The Anatomy of a Separation Agreement

Our Ontario Family Law Firm Can Help You Avoid Court

You and your spouse or common-law partner do not need to go to court to settle matters between you. You can always come to an agreement yourselves and enter into a separation agreement in order to finalize issues of support, property, and parenting.

Separation agreements and other forms of domestic contracts (marriage contracts and cohabitation agreements) are regulated under Part IV of the Family Law Act. This section allows parties who are able to agree on the terms of their separation to order their own affairs as they choose, outside of the court system and the default scheme set out in the rest of the Act. In order to be enforceable, all domestic contracts must be in writing, signed by the parties, and witnessed.

What Does a Separation Agreement Look Like?

Section 54 of the Family Law Act specifies that:

“Two persons who cohabited and are living separate and apart may enter into an agreement in which they agree on their respective rights and obligations, including,

  • ownership in or division of property;
  • support obligations;
  • the right to direct the education and moral training of their children;
  • the right to custody of and access to their children; and
  • any other matter in the settlement of their affairs.”

A separation agreement should generally include specific information regarding how any issues facing the separating couple are to be resolved. For example:

  • Parenting Arrangements: Spouses should determine who has custody and what the access schedule will look like. How much time will the children spend with each parent, and when? What about holidays? Parents will also want to give details of a parenting plan, for example where the children will go to school, what extracurricular activities they will participate in, whether and where they will attend camp, etc. Parents will also want to specify what happens if one parent wants to relocate, and how this will change the parenting schedule.
  • Child Support: The basic amount of child support should be determined in accordance with the Child Support Guidelines’ table amount, unless the child will spend essentially equal time with each parent. Parents will also need to decide on any special or extraordinary expenses for the child, and how they will be paid for. These expenses may include daycare, private school, special needs programs, or particularly expensive extracurricular activities. Parties should specify when child support will end, and what types of changes in circumstances would lead to a change in support payments.
  • Dispute Resolution: Parties should specify how any future disputes will be resolved, if issues come up in the future on which they cannot agree. Parties may wish to specify a mediator or arbitrator to whom they will turn in case of disagreement.
  • Spousal Support: Parties should specify if any spousal support will be paid from one spouse to another, and if so how much, when, and for how long. If spousal support claims are waived, the agreement should indicate why this is (for example, in exchange for a larger share of the matrimonial home, or some other asset in property division). Parties may want to indicate what circumstances would lead to the termination or change of support (for example, the recipient’s remarriage, or a drop in the payor’s income). They will also want to indicate what sorts of changes in circumstances will not lead to a change in support.
  • Medical and Dental Benefits: Parties may wish to indicate that one or both parents maintain the children on his or her extended health and dental plans for a certain period of time. Parties can also specify how payment for uncovered medical and dental care will be divided.
  • Life Insurance: Spouses may wish to specify, for example, that even after separation, each partner keeps the other or the children as his or her beneficiaries.
  • Property Division: The agreement should determine how net family property will be divided, how the equalization payment will be paid (as one lump sum, or in installments) and when it will be paid. Property division and spousal support provisions may be intertwined; the agreement should specify if certain benefits are given in exchange for others.
  • Matrimonial Home: The agreement should indicate whether this will be sold, and if so how, when, and how the proceeds from that sale will be divided. The agreement should also specify who, if anyone, will continue to live in the home and pay for its upkeep until the sale. If one spouse is going to remain in the family home, or buy the other out, the agreement should also set out the details of that arrangement.
  • Debts: If the parties have debts, the agreement should indicate how those will be divided.
  • Pensions: If either party has a pension, agreements regarding that pension should be set out.

Creating a Separation Agreement

There are various separation agreement templates and toolkits available online and in stores. While these can offer guidelines of the types of issues you and your spouse need to negotiate and finalize, they should be approached with caution.

Separation agreements have serious and lasting consequences. The terms you agree to will shape your future finances, parenting arrangements, and general lifestyle plans.

It is important to keep in mind that the separation process can be emotionally difficult and can affect individuals’ decision-making ability in various ways. As a result, you might find yourself impatient to conclude matters, or unable to properly envision your future needs or desires. But you do not want to permanently sign away rights without proper understanding or contemplation. An experienced Ontario family lawyer can help protect your rights and ensure that you understand the implications of any agreement.

While one lawyer can prepare the separation agreement, you and your spouse should each get your own lawyer to obtain legal advice on the agreement. In addition, many of the separation agreements that are arrived at through a template are set aside when one party feels that the agreement was unfair and applies to a court to have it set aside. There are many reasons that this may occur, but it is far more common for these template agreements to be set aside than upheld.

Enforcing/Setting Aside a Separation Agreement

Once all issues surrounding separation have been dealt with definitively in an agreement, spouses will be free to move on with their lives with some sense of certainty about the future. However, there is always a danger that a separation agreement will be overturned by a court if one spouse applies to have it set aside. A lawyer can help ensure that the agreement is not vulnerable to being overturned.

The Family Law Act s. 56(4) specifies that, upon application of one of the spouses, a court may set aside a domestic contract in one of 3 instances:

  • If a party failed to disclose to the other significant assets, or significant debts or other liabilities, existing when the domestic contract was made;
  • If a party did not understand the nature or consequences of the domestic contract; or
  • If the contract is otherwise not in accordance with the law (i.e., if the contract is unconscionable or there has been a mistake or undue influence.)

It is important to keep these grounds in mind when negotiating and signing your separation agreement. Problems relating to disclosure (the first ground listed above) are common. If one spouse is unaware of important financial information, that can be grounds for overturning the contract.

Give your spouse all financial information, and ensure it is accurate and up to date. Along with your disclosure, include an outline of all the financial information you are including, so that your spouse cannot later claim that he or she did not receive some of the information. Ensure that you receive confirmation that your disclosure was received.

The more one-sided a separation agreement is, the more important it is to make sure there has been full disclosure. A one-sided agreement will make courts suspicious that one spouse was not fully aware of what they were entering in to, and any indication of a failure to disclose will therefore make the agreement vulnerable.

It is also in both spouses’ best interests to ensure that each spouse understands the agreement they are entering in to, and is signing it voluntarily. If one spouse feels pressured, confused, rushed, or unable to negotiate freely, this can be grounds to contest the agreement later. Courts look for any indication of pressure, exploitation of vulnerability, or oppression. If any of these factors were present and led to a contract that is seen as unfair, all or part of that contract may be overturned.

Any provisions in a separation agreement relating to children’s care and financial support are subject to the “best interest of the child” test. Those provisions, even if both parties consent to them, must make reasonable arrangements for the support of the child or children. If you and your spouse have a separation agreement in place and then apply for divorce, the court will review the child support arrangements and make sure that the arrangements are reasonable in light of the Child Support Guidelines. In addition, on application by either spouse, the court will make an order for support that mirrors the Child Support Guidelines, regardless of what the parties previously agreed to in their separation agreement, unless special provisions have been made for the child support which are in the best interests of the child, and the court agrees that the special provisions are in the best interests of the child.

Varying Agreements Relating to Spousal Support

Often, couples will specify in their separation agreements that one spouse’s right to spousal support has been waived, or that spousal support will be provided for only a limited time. What happens if the recipient spouse has a change in circumstances, or realizes they require ongoing support?

In Miglin v. Miglin, the Supreme Court laid out a test (referred to as the “Miglin test”) to determine whether the spousal support provisions of a domestic contract should, upon application, be set aside. The court will do a two-stage analysis, first looking at the contract in the time of its formation, and then at the contract at the time of litigation.

Looking to the time of formation, the court will examine the negotiation process for potential problems such as vulnerability, undue influence, or lack of disclosure. The court will then look to see if the contract conforms to the objectives of the Divorce Act, which are: the finality and certainty of the parties going forward, the recognition of the advantages and disadvantages of the parties arising from the marriage or its breakdown, the apportionment between the spouses of the financial consequences arising from care of children of the marriage, the relief of any economic hardship arising from the marriage breakdown, and the promotion of the self-sufficiency of the former spouses. If the court finds problems with either of these aspects of contract formation, then the contract can be set aside.

At the second stage of the Miglin test, the court will examine the contract in light of present circumstances, and can set aside the contract if it no longer reflects the intentions of the parties and is no longer in line with the objectives of the Divorce Act.

Working with Feldstein Family Law Group P.C.

Considering the high cost of litigation, it can be far cheaper and more efficient to seek legal advice when creating and signing a separation agreement than to attempt to uphold (or overturn) that agreement in court later. At Feldstein Family Law Group P.C., we offer a range of services to those looking to draft, review, and enter into separation agreements. With both comprehensive and unbundled legal services, our Ontario separation lawyers can assist you in reaching a resolution that is in your best interests – within the constraints of your budget.

To learn more, call (905) 581-7222. We serve all of Ontario, including Oakville, Vaughan, Mississauga, and Markham.

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