Agreements after Separation

A separation agreement is contract which records a settlement of the issues which arise when a married or unmarried relationship ends. Unlike marriage and cohabitation agreements which are made when a relationship starts, separation agreements are made when the relationship is over. Separation agreements can be an effective and inexpensive way of settling things, however the terms of the agreement must be fair and the parties must be able to get along well enough to negotiate the deal and then put it into action it when it's done.

This page will provide a brief introduction to separation agreements, discuss how separation agreements are formed and the legal requirements of separation agreements, and look at the typical subjects of separation agreements in some detail. It will also discuss the effect of reconciliation on separation agreements.

DRAFT

Introduction

Every separating couple has three options to resolve the legal issues between them:

1. settle the matters between them out of court through negotiation or mediation, or through some other process like arbitration or collaborative processes;
2. have a judge decide what should happen, after spending a lot of money on lawyers and the litigation process; or,
3. give up and just walk away from the mess.

It almost always better to negotiate and settle a dispute than to being a court proceeding and resolve a dispute by trial. While a settlement usually gives neither party all of what they wished for, it will give them as much of what they asked for as possible. Litigation is stressful and expensive, offers no guarantees of success, and can be extraordinarily acrimonious. A negotiated settlement is less stressful, much cheaper, and gives the parties the best chance of not hating each other at the end of the process.

A couple can reach a settlement at any time, even after a court proceeding has started. Typically a settlement reached before a proceeding has begun is put into the form of a separation agreement. Settlements reached after the start of a proceeding can also be put into a separation agreement, but more typically the terms of such settlements are put into the form of a consent order, an order that both parties agree the judge should make.

Separation agreements can deal with almost any issue a couple have to address, from who will keep the cats, to how the mortgage will be paid, to how the children's post-secondary education costs will be handled. They also offer a lot more flexibility than court orders, as some terms that can be put into an agreement can't be put into a court order. Most importantly, separation agreements can be tailored to meet the specific needs and circumstances of each couple.

Of course, separation agreements aren't for everyone. There must be a certain basic amount of mutual trust and good faith, and each party must have a certain flexibility and a willingness to accommodate the other side. A separation agreement will not be appropriate where a couple are so filled with anger, jealousy or stubbornness that even a basic level of mutual respect is absent and dialogue is not possible.

Alternatives to Separation Agreements

Settlement can be reached in a number of different ways before a court proceeding has started, through negotiation, mediation, the collaborative settlement processes or arbitration. Settlements reached this way are almost always recorded in the form of a separation agreement.

Settlements reached after a proceeding has started are generally only recorded as separation agreements if they are unusually complicated or if there are concerns about whether a term of the settlement can be put into a court order. Otherwise, a settlement of litigation will be recorded as minutes of settlement or a consent order.

Minutes of Settlement

Minutes of settlement are a written record of the settlement of a court proceeding. They are reached after a court proceeding has begun and are usually used to describe the terms of a consent order, an order that both parties agree the court should make. Both of the lawyers and each of the parties will sign the minutes of settlement; usually only the lawyers will sign the final consent order.

Minutes of settlement sometimes have a rough-and-ready feel to them, as they are usually used to record an often hasty settlement of the legal issues, a settlement that is sometimes reached on the morning the trial is set to start. As a result, minutes of settlement are typically less comprehensive than separation agreements. Even though they lack the same fine-tuning and detail, minutes of settlement are just as binding upon the parties as a separation agreement would be: both are contracts and can be enforced as such.

Minutes of settlement should:

1. be signed by both lawyers and by both parties, although the signatures of the parties isn't strictly necessary;
2. deal with each significant issue in a final manner; and,
3. be attached to the draft consent order submitted to the court for its approval.

Consent Orders

A consent order is an order that both parties agree that a judge should make. Consent orders are only appropriate if litigation has started. It is not necessary to have minutes of settlement done before a consent order is agreed to.

When a judge pronounces an order by consent, the order has just the same effect as a final order reached after a trial and is binding upon the parties as a final order.

Minutes of Settlement and Consent Orders

The advantage of minutes of settlement is that the minutes can stand alone as evidence of the written agreement of the parties, while the form of a draft consent order, which may reflect the parties' agreement, still requires the court's approval. Moreover, if the terms of a draft consent order are contested, there may not be any evidence of the agreement — as would be provided by minutes of settlement — on which a court can decide the matter.

Consent orders have unique advantages of their own, in that it is usually extremely difficult to vary an order pronounced by consent without a serious and unanticipated change in circumstances, and because such orders are almost impossible to appeal.

Other Final Agreements

Any dispute a couple has can be resolved by a formal contract of some nature. Separation agreements are usually signed by married spouses or unmarried spouses and deal with a large range of issues, from the care of children to the division of property and debt. Some couples may only have one issue to resolve and the usual sort of separation agreement isn't required.

People who are just parents and never married or cohabited may want a parenting agreement that talks about parental responsibilities and the allocation of parenting time. Couples who only need to deal with child support or spousal support may want a support agreement that deals with either or both issues. Couples who only need to resolve who keeps what property and which debts may want a simple property agreement.

Agreements like these can involve more people than a couple. Separated parents might sign an agreement for contact with grandparents who want to see their grandchildren. A separating couple might sign a loan agreement or promissory note with a friend or family member to whom they owe money.

Entering into a Separation Agreement

A separation agreement can be negotiated and signed at any time after a married or unmarried relationship has broken down. A separation agreement can be signed after a court proceeding has been started or before one has even been considered.

The Basic Process

The process for entering into a separation agreement is fairly simple. The parties discuss the issues resulting from the breakdown of their relationship among themselves (and, hopefully, in consultation with their lawyers as well), and attempt to reach a resolution of each of the legal issues which is as satisfactory to both of them as possible. It's a good idea to take notes and record how each issue is resolved, as these notes may wind up forming the basis for any agreement that might be reached.

The settlement process is a process of negotiation: each party usually has a pretty good idea of how they would like to see things resolved, and then, following the exchange of these ideas, a compromise is reached which represents a blending of the two positions. Once settlement is reached, one of the parties will draw up a formal agreement and give it to the other party. This draft is carefully reviewed to ensure that it accurately reflects the agreement that was reached, check whether anything was left out, and make sure that there are no other issues which need to be discussed and included.

Drafting a separation agreement is something which requires a great deal of skill and a solid understanding of family law and contract law. While kits are available that can guide you in drafting an agreement, when the content of the agreement is anything other than completely straightforward, I highly recommend that you hire a lawyer to deal with the matter.

Once both parties are content with the text of the agreement, they must each take the agreement to their respective lawyers — or to any lawyer, for that matter — for advice as to how the agreement affects their legal rights and the options they may have open to them if they don't sign the agreement. This is called getting independent legal advice. This stage is critical for three reasons:

1. if you are entering into an agreement which will resolve a legal problem, you must know how that agreement affects the rights you would have had if you had pressed on with a court proceeding;
2. you must understand the obligations and rights you have under the agreement; and,
3. it stops either party from claiming, later on, that the he or she didn't know what the agreement meant or that the party was at a disadvantage because the other party's lawyer drafted the agreement.

After each party has had independent legal advice about the agreement they will then sign the agreement in the presence of a witness, assuming they're still willing to do the deal. Normally, each party will execute the agreement before the lawyer who provided the independent legal advice, but anyone can witness a party's signature, as long as the witness isn't under the age of 19 and doesn't stand to benefit from the agreement. The witness will watch as the party signs the agreement, and the witness will then sign the agreement him- or herself.

Someone who witnesses an agreement does not become a party to that agreement and isn't responsible for seeing that the agreement is followed. The signature of a witness on an agreement merely says "I know Mr. Smith and I saw him sign the agreement."

If the parties had legal advice, the lawyer who gave the advice will usually also sign a certificate confirming that: the party received advice as to how the agreement affects his or her legal interests; the party understood the terms of the agreement; and, the party wasn't forced into making the agreement. This is usually called a Certificate of Independent Legal Advice.

Normally, four separate original copies of a separation agreement are executed. This is so that the parties and their lawyers can each have an original copy of the agreement. Sometimes, an extra original copy is executed in case the agreement must be filed in court.

If you are Negotiating an Agreement and have a Lawyer

Even if you have a lawyer it can be extremely tempting to work something out with your ex on the side. If you feel even remotely tempted to do so, call your lawyer! Make sure your lawyer knows that you're trying to explore settlement, and make sure you understand what to say and what not to say.

Nothing is quite as frustrating as finding out that a client has negotiated an inadequate or prejudicial agreement without the lawyer's input. While you, the client, are free to do as you want and can arrive at any settlement you wish, be warned that you may find yourself settling for extremely poor terms compared to what your lawyer might have been able to negotiate for you or compared to the results you might have obtained at trial. Remember that you may be stuck with any agreement that you freely enter into, regardless of whether it's a good agreement or a bad one.

Call your lawyer before you sign or initial anything. This is what you're paying for.

Formal Requirements of Separation Agreements

A separation agreement is a contract, in just the same way you have a contract with your employer, your landlord or the company from which you lease your car. On the other hand, it's a special kind of agreement, different from commercial contracts, because it deals with family law issues which are also discussed in the Family Law Act and the Divorce Act. As a result, the law dealing with separation agreements is a blend of legislation, the common law relating to family agreements, and certain parts of the law dealing with traditional commercial contracts.

The whole point of a separation agreement is so that, at some later time, the contract will be enforceable in court if the parties fail to live up to it. As such, the agreement must be enforceable and it must be able withstand a challenge in court, that is, it must be drafted in such a way and contain terms that are reasonably fair such that a court will uphold it if it is attacked. A separation agreement must therefore conform to certain basic rules, including these:

• A separation agreement must be set out in writing.
• The agreement must be signed by each party, and should be signed in the presence of a witness.
• The parties shouldn't be under a legal disability.
• The agreement must clearly identify the parties and the nature of their rights and obligations to one another.

In addition to these simple formalities of a proper family law agreement, you might want to think about certain other principles of contract law like these:

• The parties must each enter into the agreement of their own free will, without any coercion or duress by the other party, or by anyone else for that matter.
• Both parties must make full and complete disclosure of their circumstances going into the agreement.
• The parties cannot make an illegal bargain, that is, they can't make an agreement which obliges them to do something against the law.
• Where an agreement is prepared by one party's lawyer and the other party doesn't have a lawyer, any portions of the agreement that are vague may be interpreted in favour of the party who didn't have the lawyer.
• The court will attempt to give effect to a contract wherever possible, that is, they will attempt to give meaning to the terms of a contract rather than declare it void.
• If a term of a cohabitation agreement is found to be invalid, only the invalid part of the agreement will stop being in effect. The remainder of the agreement will continue to be valid and binding on the parties.

Family law agreements are also subject to other principles, princples that don't necessarily apply to commercial contracts:

• The parties must make full, complete and honest disclosure of their financial circumstances going into the agreement.
• If one term of a separation agreement is void, only that term will fail and the rest of the agreement will stand as a valid agreement.
• A separation agreement will not be considered to be invalid just because one party doesn't comply with a term of the agreement, that is, you can't say the whole agreement has been broken because the other party didn't do something he or she was supposed to do.
• While the parties can agree to do something different than what their agreement says about a particular issue, the remainder of the agreement will remain in force.

Note that the courts will rarely if ever uphold an agreement which attempts to contract out of a statutory obligation. Child support, for example, is a positive, almost absolute, obligation a parent has toward his or her children. The court will not consider itself bound by an agreement which provides that a person will never have to pay child support.

The Possible Subjects of a Separation Agreement

The potential subjects of a separation agreement are limited only by common sense and what the law will allow. That said, it is always best to be as realistic as possible when drafting a separation agreement. Is a schedule of payments unrealistically difficult for one party? Will the children be able to adapt to a shared parenting arrangement? Are the parties' obligations to one another too complex? Are they too optimistic? Are they affordable? While it is best that all of the issues between the parties be dealt with in a separation agreement, the simpler an agreement is, the better it will usually work in real life.

Children

Issues about parenting after separation are covered by the federal Divorce Act for married spouses and by the provincial Family Law Act for married spouses, unmarried spouses and other unmarried couples.

The Divorce Act uses some pretty old fashioned language to talk about children, custody and access. The Family Law Act talks about people who are guardians STOPPPED

Custody

There are two basic types of custody available, sole custody and joint custody. Sole custody is fairly rare, and is usually only appropriate where the parties are constantly at each other's throats or where one party expects to be absent from the child's life. Joint custody is far more common than sole custody. In this situation, both parents are custodians of the children.

Joint custody has little to do with how much time the child spends with each parent. The child's time can be shared equally or almost equally, or the child can see a parent only on weekends, and the parents can still have joint custody.

See the chapter Children > Custody for more information.

Guardianship

Like custody, guardianship can be held solely by one parent or held jointly by both. A parent who has sole guardianship of a child is entitled to make all sorts of decisions affecting the child's life without the necessity of seeking input from or getting the agreement of the other parent. Where the parties share joint guardianship of the child, they each have responsibility for managing the child's life, from the choice of the child's school, to the manner of the child's religious education, to selecting the child's medical treatment in case of illness.

Joint guardianship is the most common form of guardianship. Sole guardianship is usually only appropriate where:

a parent expects to be absent from a child's life; a parent has absolutely no interest in raising his or her child or being a part of the child's life; or, the parents simply can't get along well enough to talk civilly about the child. When guardianship is shared, it is a good idea to spell out exactly how the parties will share their responsibilities in a little more detail than simply saying "Jane and John will share joint guardianship." The Joyce model and Horn model of joint guardianship, the two most common expanded definitions of joint guardianship, are described and available for download in Word format in the chapter Children > Guardianship.

Note that if nothing is spelled out in the agreement with respect to guardianship, the parent or parents who have custody of the child are assumed to also have guardianship of the child.

Access

Access can mean the child's general parenting schedule, although it is usually used to describe the parenting time of the parent with the least amount of time with the child. The terms of a parent's access can be very specific or, where the parties get along exceptionally well with one another, the terms can be as vague as "Jane will have liberal and generous access to the child."

If there has been a history of difficulty exercising access or there is even a smidgen of conflict between the parties, it can be terribly important to spell out access to avoid future arguments. The terms of access usually spell out when the parent will see the child on a week-to-week basis, such as "John will have the child from Friday at the end of school to the following Sunday at 7:00pm, every other week, plus each Wednesday from the end of school until 7:00pm." They can also take into account:

the child's birthday; Mothers' Day and Fathers' Day; the parents' birthdays; school and religious holidays; extended access when there is a civic holiday or a professional development day at school; contact by telephone and computer, including email, instant messaging and video conferencing; responsibility for picking up and dropping off the child; school events; the child's extracurricular activities; and, birthdays of the child's friends. See the chapter Children > Access for more information.

Child Support

Child support is a monthly sum, paid by the parent who has the child for the least amount of time to the parent who has the child for the most amount of time, to defray the day to day living expenses of the child. The amount of child support which is paid is almost always dealt with by referring to the federal Child Support Guidelines, which sets out the amount of a parent's child support obligation in table format according to the number of children support is being paid for and the payor's income.

A good separation agreement will:

state the income of each parent at the time the agreement is made; state the monthly child support to be paid; set up a system which requires the parties to exchange copies of their tax returns and Canada Revenue Agency notices of assessment each year or every other year; provide for a review of child support if the payor's income rises or falls; and, provide for the recalculation of the parties' shares of the cost of the child's special expenses if either party's income rises or falls. The Guidelines are an extremely convenient way to calculate a party's child support obligations up to the point where the spouse paying support, the "payor," has access to the child for 39% or less of the time. Once the payor has 40% or more of the child's time, the Guidelines tables become less important, and child support is assessed based on, among other things, each party's income and the amount of expenses related to the child each party is paying. In the context of separation agreements, this allows for a little more flexibility in determining child support, but makes the annual exchange of financial information even more important.

See the section Child Support for more information. Child Support > The Guidelines has calculators for child support and children's special expenses.

Spousal Support

Spousal support is paid by one party to the other to help defray the recipient's day to day living expenses. A separation agreement which provides for the payment of spousal support should be negotiated bearing in mind all of the things the court would have considered in making an order for spousal support. Of course, when a separation agreement is being drawn up, the amount of spousal support payable, if any at all, is the product of the parties' negotiations.

Typically, a separation agreement which provides for spousal support will include some means of limiting the length of time for which support will be payable. Such terms might include:

a fixed length of time over which support will be paid, after which the payor has no more responsibility to pay; an indefinite amount of time that support will be paid, with one or more dates set when the question of spousal support can be reviewed; a series of graduated payments, so that the recipient receives a declining amount of support as he or she re-enters the work force; the termination of support if the recipient remarries or otherwise becomes supported by someone else; a fixed lump-sum payment of support; a mutual waiver of any entitlement to receive spousal support; or, triggers that might result in an early termination of spousal support, such as the recipient's death or remarriage. In some situations, of course, permanent support may well be required, especially if the relationship was lengthy or if the recipient is unlikely ever to become self-sufficient.

Some agreements also provide that no spousal support will be payable. If you are the spouse who would ordinarily be entitled to receive support, you must be confident that the agreement fair as it may prove very difficult to obtain support later on if your personal circumstances change.

Calculating the amount of support to be paid used to depend almost wholly on the recipient's reasonable monthly needs and the payor's monthly disposable income. In January 2005, the federal Department of Justice issued the first draft of an academic paper that describes mathematical formulas to calculate how much support should be paid and for how long. This paper, the Spousal Support Advisory Guidelines, has been warmly received in British Columbia and is commonly used by lawyers and judges to calculate spousal support, whether the issue is being litigated, mediated or negotiated.

The major problem with the Advisory Guidelines is that the Department of Justice has thus far failed to make spousal support calculators available to the public, and you may want to consult a lawyer who has access to spousal support software to see what the formulas say in your case.

See the section Spousal Support for more information about spousal support in general. The chapter Spousal Support > The Advisory Guidelines talks about the Advisory Guidelines in more detail and has a link to a website where the paper can be downloaded.

The Division of Assets

The ways in which a separation agreement can deal with the division of family assets are virtually unlimited. Some spouses are willing to walk away from a relationship with only those assets held in their own names; in some circumstances, however, this would be grossly unfair and a division of some or all of the assets is required.

Where assets are an issue, it's often helpful to exchange Financial Statements. A Financial Statement is a form set out in the Supreme Court Family Rules in which each party itemizes their income, assets, expenses and debts. This form can be extremely useful for each spouse to get a clear idea of the exact financial situation of the other before any property-related negotiations start. You can download a blank Financial Statement in Word format and an example of what the form looks like when it's filled out in the downloads segment of The Legal System > Starting an Action.

The ways that assets can be divided in separation agreements are almost limitless, and depend entirely on the circumstances of each party, the length of the relationship and whether the parties are married or unmarried. Some people take what they brought into the relationship and divide the things bought afterwards; some people sell everything and divide the proceeds; others allot certain assets to each spouse and equalize the value of what each is taking; some people divide their assets equally and others do not. Regardless of how the assets are divided, however, don't forget to account for shared debts and remember that pension plans and RRSPs are family assets that married spouses have an entitlement to!

Remember that the rules that apply to dividing assets between married couples do not apply to unmarried couples, who only have a presumptive interest in assets that they both own. What is fair for a married couple is unlikely to be fair for most unmarried couples, except perhaps for couples involved in very, very long relationships.

See the section Family Assets for more information.

Other Issues

Arrangements for the care and control of children, the payment of support and the division of family assets are the most common issues that come up in family law. There are a whole host of other issues which couples may have to deal with, including some that can only be dealt with in separation agreements.

The Parties' Future Relationship

Most separation agreements include a whole section devoted to describing how the parties will deal with each other once the agreement is executed. Typically, this portion of an agreement requires the parties, among other things, to:

not incur debts in the name of the other party; not interfere with the personal life of the other party, including interfering with the other party's relationships with his or her parents, family, friends and future partners; and, not molest, harass or annoy the other party. Some separation agreements will also describe what will happen if the parties reconcile with each other. Most often an agreement will simply say that it becomes a marriage agreement or a cohabitation agreement if the parties reconcile and that it will not cease to be in effect simply because of the reconciliation.

Life Insurance

Where children are involved, it can be a good idea to provide that each party will maintain a life insurance policy until the children have all reached the age of majority. Each policy will name the other parent as the sole beneficiary of the policy in trust for the benefit of the children, in order to ensure that the kids will be looked after in the event that either party dies. Most agreements that deal with insurance allow the parties to change the beneficiaries of their policies once the youngest child turns 19.

In general, it's only appropriate to include a term about insurance policies if the parents can afford to pay for those policies.

Undisclosed Assets

If you have even the slightest doubt that the other party hasn't been entirely forthcoming about the extent of his or her assets, a term governing undisclosed assets can be important. These sorts of terms usually provide that:

any property that wasn't disclosed when the agreement was executed will automatically be deemed to be owned equally by both parties; the party that didn't disclose the asset will have to give the other party one-half of the asset's value; and, the party that didn't disclose the asset will have to pay the costs the other party incurred in finding the asset, plus a financial penalty. 4. Family Debts A separation agreement should deal with how the parties' debts will be dealt with, including debts that are owed only by one party. Separating couples typically pay out shared debts by the sale of a shared asset, which is usually how the mortgage on the family home gets paid out, or they can allocate a different share of the family assets to compensate for a debt.

When a debt won't be paid out, it is essential to do two things: allocate responsibility for the debt; and, provide that the party keeping the debt will preserve the other party from any financial consequences of that debt.

The Effect of Reconciliation

Separation agreements don't always contain special terms providing for the reconciliation of the parties and the resumption of their relationship. But if a couple does reconcile, what happens to their separation agreement? Does the agreement stay in force? What happens if the parties separate again?

The general rule here comes from the common law. Without a specific clause preserving some or all of the terms of a separation agreement, the agreement will be void if the parties reconcile and resumed married life. This rule was upheld in a 2003 decision of the Ontario Court of Appeal, in Sydor v. Sydor. In that case, the court held that unless a separation agreement contains a term to the effect that the agreement will survive reconciliation, the agreement will be void when the couple reconciles, notwithstanding a term of the agreement that it is a "full, final and conclusive settlement" of all issues arising from the marriage.

The upshot of all this is that if you believe you and your partner might get back together at some point in the future and want your separation agreement to survive your reconciliation, you must put a term to that effect in your separation agreement. Without it, your agreement will be worthless if the relationship breaks down again at some point afterwards.

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