What is Financial Disclosure?

Parties to a family law proceeding are expected to produce full disclosure of his or her financial situation such as a financial statement and income tax returns in any case that involves issues of property or support. Financial statements include a sworn itemized list of the party's income, assets and liabilities.

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The exchange of financial disclosure gives each party an accurate picture of the other's finances and helps ensure that each spouse is able to assess what issues are at stake and what types of claims they have.

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The obligation to provide financial disclosure is both immediate and ongoing. Failure to provide accurate or complete financial disclosure will increase costs and delay your family law matter. The sanctions that a court may impose on a party for failure to comply with his or her disclosure obligations are severe and can include anything from orders for costs, drawing adverse inferences based on the non-disclosure, or striking a party's pleadings.

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Setting Aside a Domestic Contract

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Spouses entering into a separation agreement should ensure essential formalities are met. A separation agreement is unenforceable unless it is made in writing, signed by the parties, and witnessed. 

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Generally speaking, separation agreements entered into between separating or separated spouses are presumed to be valid and enforceable. However, a spouse may challenge the separation agreement for certain reasons, including:

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Inadequate Disclosure 

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Both the Family Law Act and the Divorce Act require the exchange of financial disclosure concerning the assets, liabilities and financial circumstances of each party. The value of all significant assets, debts or other liabilities at the date of marriage or the date of separation, must be fully disclosed at the time the agreement is entered into.

If a spouse withholds any material information about their assets, liabilities or income, misrepresents the true value of assets or income, or in any way misleads the other spouse, while negotiating a separation agreement, the separation agreement can be set aside for inadequate disclosure. 

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Independent Legal Advice​

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Independent legal advice is advice provided by an independent lawyer who is unrelated to the spouse's matter, and who does not have a conflicting interest. It is an important means of ensuring that the spouse signing the agreement fully understands the nature, consequences and effect of the separation agreement. Both spouses must retain separate legal counsel. A spouse may challenge the validity of a separation agreement where they did not receive independent legal advice throughout the negotiation and signing of the separation agreement.

Undue Influence/Duress

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Both spouses must enter into the separation agreement freely and voluntarily without being forced by the other spouse. If a spouse was forced, coerced, tricked, pressured, or compelled into signing the separation agreement or one of the spouses uses their position of power to achieve an unfair advantage, the agreement could be held unenforceable by reason of undue influence or duress. 

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Unfair and Inequitable

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If the separation agreement favours a spouse unfairly, the court may not enforce the separation agreement on the grounds that it is unconscionable and should not be enforced.

While spouses can make their own agreements, without the assistance of lawyers, such agreements are more likely to fail, either for lack of formality, or for lack of financial disclosure or independent legal advice. 

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Whether you need to negotiate and draft a separation agreement, overturn a separation agreement or enforce one, we can provide legal advice and assistance. For more information or to schedule a consultation, please call us today. 

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