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Parties spend a great deal of time negotiating Separation Agreements and are often relieved when the document is executed. This provides a sense of finality and closure that people often need especially in light of the stress and uncertainty that accompany a separation. However, a question arises as to whether or not these agreements may be overturned by a judge in the future or are they bullet proof?
Hello again. I am Anna Troitschanski and I thank you for joining me today to discuss the topic pertaining to the validity of separation agreements.
Although separation agreements are meant to have a sense of finality and parties should be able to decide the terms of their separation without interference of others, it should be noted that there is always a risk that a court may overturn a Separation Agreement sometime in the future, especially if the circumstances surrounding the matter at the time that the Agreement is being challenged result in an unfair arrangement to one of the parties. This is why lawyers spend a great deal of time drafting Separation Agreements and trying to ensure that they include all necessary precautions so as to avoid such a consequence in the future.
The current law seems to indicate that the courts will look at four factors when assessing whether a Separation Agreement should be set aside.
Firstly the court will look at whether or not the parties have exchanged sworn Financial Statements and full Financial Disclosure. It is necessary that both parties enter into an Agreement with a full understanding of their respective entitlements. In the event that such disclosure is not provided, one of the parties may challenge the agreement in the future and a judge may be inclined to set it aside and review it based on fairness.
This brings us to the second issue, that of fairness. A judge may be inclined to overturn an unfair agreement if it has been entered into without full Financial Disclosure. In other words, if the Court is of the opinion that one of the parties has received the short end of the bargain, they may be inclined to rectify the situation by revisiting the terms of a Separation Agreement. Again, it must be noted that fairness only becomes an issue if full and complete Financial Disclosure was not provided.
Independent Legal Advice
The Court will also look at whether or not both parties have received independent legal advice. In other words, each party should have their own lawyer review the Agreement with them and ensure that they understand what it is that they are contracting out of or into. In the event that one party did not receive Independent legal advice, there is a risk that they may later argue that they did not understand the terms of the Agreement and as such should not be bound to same.
Whether the Agreement is in accordance with the Divorce Act
Lastly, the Courts will evaluate whether the Separation Agreement is in accordance with the Divorce Act, both at the time of entering into the Agreement and at the time of the review. This results in the greatest risk to the validity of an existing Separation Agreement, as what was in accordance with the Divorce Act at the time of drafting may no longer be in accordance at the time of review. As such, a Separation Agreement may be overturned simply as a result of uncontrollable circumstances that occur with the passage of time. This risk mainly relates to spousal support.
Although a lawyer cannot guarantee that an Agreement will never be overturned in the future, we can definitely ensure that we incorporate all the necessary terms into a Separation Agreement to protect our clients to the best of our abilities in the face of the current law. It is thus very important that all individuals consult with a lawyer prior to signing any documents.
If you would like more information about the validity of separation agreements or have any other questions pertaining to your matrimonial matter, please contact us in order to book a consultation with one of our lawyers at (905) 581-7222.