Separation Agreements

From Clicklaw Wikibooks

A separation agreement is a contract that records a settlement of the issues that 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 when it's done.

This section provides an introduction to separation agreements, discusses how separation agreements are formed, and describes the legal requirements of separation agreements. It also looks at the typical subjects of separation agreements in some detail. In addition, it discusses the effect of reconciliation on separation agreements.

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 settlement 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 is almost always better to negotiate and settle a dispute than to begin 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, a collaborative settlement process, or arbitration. Settlements reached in these ways are almost always recorded in the form of a separation agreement.

Settlements reached after a proceeding has started may be recorded as separation agreements if the terms of the settlement are complicated or if there are concerns about whether a term of the settlement can be put into a court order. In that case, the parties may enter into a separation agreement followed by a short consent order that resolves the issues raised in the court proceeding. Otherwise, a settlement of litigation will be recorded as minutes of settlement and 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. However, 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 signature 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 argued about, there may not be any evidence of the agreement — as would be provided by minutes of settlement — which a court can use to 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 can be made between 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, including unmarried spouses who lived together for less than two years, who only need to deal with child support and/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.

Family law agreements can also involve more people than the people involved in a relationship. 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 between themselves (and, hopefully, in consultation with their lawyers as well). They attempt to reach a resolution of each of the legal issues that 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 that 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, to check whether anything was left out, and to make sure that there are no other issues that need to be discussed and included.

Drafting a separation agreement is something that 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, I highly recommend that you hire a lawyer to deal with the matter when the content of your agreement is anything other than completely straightforward.

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 on 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 that 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.
  3. It stops either party from claiming, later on, that they didn't know what the agreement meant or that they were 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 sign the agreement in the presence of a witness if 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 themself.

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 their 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 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 her 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 that 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 the agreement if it is attacked.

A separation agreement must therefore conform to certain basic rules, including these:

  • A separation agreement must be in writing.
  • The agreement must be signed by each party, and should be signed in the presence of a witness. Although an agreement made without a witness can still be valid and binding, it is a very good idea to have a witness (or witnesses) because she (or they) can confirm that the parties signed the agreement. In addition, sections 94 and 165 of the Family Law Act provide that a court cannot make an order about division of property and debt or spousal support that has been dealt with in a written, witnessed agreement between the parties unless the court has set aside the agreement.
  • Neither party should be under a legal disability at the time the agreement is signed, however children who are parents or spouses may enter into a binding agreement.
  • 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 such as 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 that 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.

Family law agreements are also subject to other principles 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 then, unless the agreement says otherwise, only that term will fail and the rest of the agreement will continue as a valid agreement that is binding on the parties.
  • 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 they was supposed to do.
  • While the parties can later 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 that attempts to contract out of a statutory obligation. Child support, for example, is a positive, almost absolute, obligation a parent has toward their children. The court will not consider itself bound by an agreement that says 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, and other people who have an interest in the care of a child.

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 the guardians of a child and have parental responsibilities and parenting time, and people who are not guardians and have contact.

Custody and access

There are two basic types of custody available under the Divorce Act: sole custody and joint custody. Sole custody is less common than it used to be, and is usually only appropriate where the parties are constantly at each other's throats or where one party is or 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 and both have responsibility for making decisions about 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.

Guardianship

Under s. 39(1) of the Family Law Act, a child's parents are usually the child's guardians as long as they have lived together during the child's life. These parents are guardians and don't need an order or an agreement to make them a guardian. A parent who has never lived with their child isn't a guardian unless the parent "regularly cares" for the child.

Under s. 50, only a parent can become the guardian of a child through an agreement with all of the child's guardians. (Of course, the only parents who would need to become a guardian in this way, are parents who aren't guardians to begin with — parents who have never lived with the child and have not "regularly cared" for the child.) Someone who is not a parent can't be made a guardian by an agreement.

Parental responsibilities

Only a guardian can have parental responsibilities for a child under the Family Law Act. These responsibilities are listed at s. 41:

(a) making day-to-day decisions affecting the child and having day-to-day care, control and supervision of the child;

(b) making decisions respecting where the child will reside;

(c) making decisions respecting with whom the child will live and associate;

(d) making decisions respecting the child's education and participation in extracurricular activities, including the nature, extent and location;

(e) making decisions respecting the child's cultural, linguistic, religious and spiritual upbringing and heritage, including, if the child is an aboriginal child, the child's aboriginal identity;

(f) subject to section 17 of the Infants Act, giving, refusing or withdrawing consent to medical, dental and other health-related treatments for the child;

(g) applying for a passport, licence, permit, benefit, privilege or other thing for the child;

(h) giving, refusing or withdrawing consent for the child, if consent is required;

(i) receiving and responding to any notice that a parent or guardian is entitled or required by law to receive;

(j) requesting and receiving from third parties health, education or other information respecting the child;

(k) subject to any applicable provincial legislation,

(i) starting, defending, compromising or settling any proceeding relating to the child, and

(ii) identifying, advancing and protecting the child's legal and financial interests;

(l) exercising any other responsibilities reasonably necessary to nurture the child's development.

Guardians can share one or more of these parental responsibilities, or one or more parental responsibilities can be allocated just to one guardian, so that only that guardian has responsibility for that issue.

Parenting time and contact

Parenting time and contact are both about the child's parenting schedule, although parenting time is about a bit more than just the child's schedule. Only guardians have parenting time; people who aren't guardians have contact with a child.

The terms of a child's parenting schedule 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 parenting time with the child."

If there has been a history of difficulty exercising parenting time or contact, or there is even a smidgen of conflict between the parties, it can be important to spell out the child's schedule in more detail to avoid future arguments. The terms of the child's schedule usually spell out when the party 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."

Children's schedules can also take into account:

  • the child's birthday,
  • Mothers' Day and Fathers' Day,
  • the parties' birthdays,
  • school and religious holidays,
  • extended access when there is a civic holiday or a professional development day at school,
  • communication 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.

Child support

Child support is a monthly sum, paid by the parent who has the child for the least amount of time, the payor, to the parent who has the child for the most amount of time, to help cover the day-to-day living expenses of the child. Child support may also be paid when the parents share parenting time with the child more or less equally but there is a difference between the parents' incomes. The amount of child support that is paid is almost always dealt with by referring to the Child Support Guidelines, which set out the amount of a parent's child support obligation according to the number of children support is being paid for and the payor's income.

A good separation agreement will:

  1. state the income of each parent at the time the agreement is made,
  2. state the monthly child support to be paid,
  3. set up a system that requires the parties to exchange copies of their tax returns and Canada Revenue Agency notices of assessment each year or every other year,
  4. provide for a review of child support if the payor's income rises or falls, and
  5. 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 parenting time with 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 that 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.

Spousal support

Spousal support is paid by one spouse to the other to help cover that person's day-to-day living expenses. A separation agreement that 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.

Typically, a separation agreement that requires spousal support to be paid 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 will have no more responsibility to pay,
  • an indefinite amount of time that support will be paid, with one or more dates set for spousal support to be reviewed,
  • a series of graduated payments, so that the recipient receives a declining amount of support as they re-enters the work force,
  • the termination of support if the recipient enters a new spousal relationship, or
  • the payment of support in a single, lump sum.

In some situations, of course, permanent support may be required, especially if the relationship was lengthy or if the recipient is unlikely ever to become self-sufficient because of illness, for example.

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 need to be pretty confident that the agreement is fair as it may be very difficult to get support later on if your personal circumstances change.

The division of property and debt

The ways that a separation agreement can deal with the division of family property and family debt are virtually unlimited. Under the Family Law Act, each spouse is presumed to keep the property they brought into the relationship and share in the property bought during the relationship. The spouses are presumed to be each half responsible for any debt incurred during the relationship. However, you can make whatever other arrangements you want, as long as you both agree to those arrangements and they're reasonably fair.

When the division of property and debt are issues, it's often helpful to exchange Financial Statements. A Financial Statement, Form F8 of the Supreme Court Family Rules, is a helpful court form in which each party describes their income, assets, expenses and debts on oath or affirmation, like an affidavit. This form can be very useful for each spouse to get a clear idea of the family's financial situation before negotiations start. You can find links to and examples of a Financial Statement and other forms in Supreme Court Forms & Examples.

A separation agreement should talk about how debts will be managed. Separating couples typically pay out family debts by the sale of a shared asset where there's not enough cash to pay it out, which is usually how the mortgage on the family home gets paid out, or they can allocate a different share of the family property to compensate for a family debt that can't be paid out. When a debt won't be paid out, it's essential to do two things: allocate responsibility for the debt; and, provide that the party remaining responsible for the debt will protect the party from having to repay the debt.

Other issues

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

The parties' future relationship with each other

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 their 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 their 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 expenses the other party incurred in finding the asset, plus a financial penalty.

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 resume their relationship and live as a couple. This rule was upheld in a 2003 decision of the Ontario Court of Appeal, Sydor v. Sydor, 2003 CanLII 17626 (ON CA). 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 their relationship.

The upshot of all this is that if there's a chance that you and your spouse might get back together, and you want your separation agreement to survive your reconciliation, you must put a term to that effect in your separation agreement. Without it, your agreement may be worthless if you reconcile and the relationship breaks down again at some point afterwards.

Separation agreements filed in court

Agreements that are filed in court can be enforced as if they were orders of the court in which they are filed. Among other things, this means that the Family Maintenance Enforcement Program can enforce an agreement for support exactly as it would enforce an order for support.

To find out how to file an agreement, or to see if your agreement has been filed in court, read How Do I File an Agreement in Court? It's located in the How Do I? part of this resource under Separation Agreements.

Resources and links

Legislation

Links


This information applies to British Columbia, Canada. Last reviewed for legal accuracy by Beatrice McCutcheon, February 22, 2017.


Creativecommonssmall.png JP Boyd on Family Law © John-Paul Boyd and Courthouse Libraries BC is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 2.5 Canada Licence.
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