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Separation Agreements – What is Required?

April 25, 2019

The family law system in Ontario encourages litigants to settle their matter together instead of resorting to a judicial determination. The theory is that if the parties enter into an agreement about how to move forward as a separated couple they are more likely to be satisfied, and thereby adhere to, the terms of the settlement. Though formal separation agreements are not required to separate, they provide the peace of mind often required by parties to move on with the confidence of their financial and childcare position.

The hurdle that arises with the parties entering into settlements largely stems from their emotional state at the time of separation and the possible power imbalance that can arise in a relationship. As a result, many parties choose to retain counsel to advise them of their legal options and to provide objective advice regarding the manner and terms of any settlement.

The legislature has enacted a law that provides that a domestic contract must be made in writing, signed by the parties and witnessed (Family Law Act s55(1). The Courts have furthered the onus by discouraging “kitchen table” agreements made directly between the parties without the benefit of previously obtaining legal advice (Sagl v. Sagl 1997). Furthermore, in order to fully understand their financial rights and obligations, full and frank financial disclosure is required from the parties in forming a settlement. For these reasons, parties are strongly encouraged to seek independent legal advice and exchange financial disclosure during the course of negotiating separation agreements.

If one or both of the parties later move to have the domestic contract set aside the Court will look into the manner in which the settlement was negotiated to ensure that it was reached fairly with both parties agreeing to the terms without undue pressure on them and with full financial transparency. It is important to note that the Courts always have the discretion to uphold or refuse the terms of the settlement. The Courts’ discretion in this regard is broad and is based both on the statutes they adhere to and the common law. For example, the Court has an overriding discretion to accept or enforce settlements that deal with the custody and access of children to ensure that the children’s best interests are met. That being said, in Ontario the Courts encourage parties to settle so if the above factors are met they won’t easily set aside your agreement, if for example, on party simply changes there mind and now thinks that the agreement isn’t fair.

The bottom line is to ensure that your settlement will be enforceable and accepted by the Courts you must understand the terms of the settlement, ensure that the negotiation process was balanced and fair and ensure that your partner has complete and honest information about your finances.

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