Separation Agreement

Negotiating your arrangements and legally signing a separation agreement are the crucial first steps in your divorce process. In essence, this agreement will be the ongoing contract between you and your spouse with regards to all issues moving forward. It is very important that this agreement is prepared properly and in accordance to the law, as the decisions you make now will affect you and your children for years to come.

If you and your spouse have decided to separate, then it’s time to start thinking about your settlement arrangements as well as considering the preparation of a legal separation agreement. With The Common Sense Divorce Negotiated Settlement Solution you do not need to go to court to settle arrangements between you and your spouse – nor do you need to go to court to enter into a separation agreement.

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The Separation Agreement

Signing a Separation Agreement Does Not Legally End Your Marriage

A separation agreement and even court orders may resolve some family matters but they do not legally end your marriage. In Ontario, the only way to legally end your marriage is to apply for a divorce decree. However, a divorce decree does not in any way protect your interests or assets, ensure support, or guarantee any terms.

As part of your Negotiated Settlement Solution, The Common Sense Divorce ensures that these vital elements of your legal separation agreement are properly completed:

  • Full Financial Disclosure
  • Settlement of all Parenting Arrangements
  • Child Support Obligations according to Provincial Child Support Guidelines
  • Spousal Support Obligations
  • Formal Valuation of Pensions
  • Division of Assets
  • Division of Debts
  • Separation of the Matrimonial Home
  • Future Dispute Resolution Clause
  • Independent Legal Advice

“How does The Common Sense Divorce negotiate my Settlement Arrangements?”

In order to keep separation cost-effective and keep separation amicable, more and more Ontarians are turning to The Common Sense Divorce’s Negotiated Settlement Solution to negotiate their settlements and to coordinate their separation arrangements. The Common Sense Divorce Negotiated Settlement Solution makes use of various settlement services such as family mediation, collaborative lawyers, financial professionals or any combination of these processes to get the job done without unnecessarily escalating legal costs or spousal conflict.

By negotiating your settlement arrangements, coordinating your parenting responsibilities and reconciling your marital assets/debts we will ensure that every matter pertaining to your joint lives is dealt with. Our goal is to avoid going to court by using our negotiated settlement service to legally negotiate your parenting plan, division of assets, support and other settlement issues. Most importantly, all settlement negotiations will be formally dealt with according to the laws of Ontario.

10 Things you need to Know about Divorce in Ontario

Full Financial Disclosure

“What is Full Financial Disclosure and why do I need to do it?”

“One of the first questions a reputable lawyer will always ask you is “Where are your financial disclosures and what of your spouse’s disclosures have you seen?” Lawyers ask this because they want to make sure nothing is accidentally missed, that there has not been a misunderstanding of values and to make sure there is no active misrepresentation or non-disclosure. Without reviewing both financial disclosures, a lawyer cannot properly give legal advice on your separation agreement.”

When you separate, Financial Disclosure ensures that everyone is able to make all-important financial decisions based on real and accurate financial information. Full Financial Disclosure protects you by ensuring that you have the information needed to make decisions and ensures that both spouses are being transparent and not attempting to hide assets (or debts).

Full financial disclosure is the process whereby both you and your spouse formally provide supporting documentation regarding all bank accounts, savings, cash on hand, investments, pensions, and any other assets – as well as declare any outstanding debts and liabilities for the present, for the date that you separated and for the day you were married.

Full financial disclosure will confirm bank balances, account statements, property values, verify RRSPs, and/or gather necessary information on the value of a privately owned business. A formal pension valuation (as opposed to a pension statement) is required.

This means there will be no mistakes; no misunderstandings; no secrets; and both spouses are protected. After you and your spouse finally reach an agreement and before you sign any documents, your financial disclosure should be reviewed by a lawyer to ensure that you are fully satisfied with your knowledge of the family finances.


What if I don’t want to complete a financial disclosure?

“Can’t I just take my own homemade Separation Agreement to a Lawyer and get them to sign it?” A lawyer will never just sign off on a document. They are required to give you legal advice based on the information provided. Lawyers can get into big trouble with the Law Society of Upper Canada if they give advice without reviewing the compete scenario and your full financial disclosures. Without complete financial disclosure, a lawyer cannot give you proper legal advice.

On May 2nd, 2015, the Family Law Rules in Ontario were updated to include additional requirements for financial disclosure. The law has one simple stipulation: full and complete financial disclosure is required by both spouses. Though the information in the financial disclosure is important – what really matters is that there has been a full and formal financial disclosure.

The Family Law Act allows the Court to “set aside” (meaning ‘not enforce’) any separation agreement that has not included a full financial disclosure. If your separation agreement is not prepared properly from the beginning and is then later “set aside,” you will have cost yourself more time and money in the long run.

Financial disclosure is a core piece of the separation puzzle. Yet, for whatever reason, people sometimes have difficulty with the concept of full financial disclosure. Typical objections include:

  • “That information predates our date of separation, so it isn’t applicable now.”
  • “My spouse already knows all this information.”
  • “I don’t want my private information reviewed by anyone.”
  • “We are splitting everything up on our own terms, so this information is not necessary.”
  • “Financial disclosure just seems like too much work.”
  • “I’m afraid if my spouse (or their lawyer) sees the real numbers they will come after me for more.”

We know how difficult it is to prepare formal financial disclosure documents. Financial disclosures are complex, tedious and confusing. The Common Sense Divorce Negotiated Settlement Solution is designed to ensure that your financial disclosures are properly prepared and that nothing is missed so that your separation can move forward as smoothly as possible.

You can find out more about financial disclosures by signing up for the FREE Ontario Divorce Guide

The Parenting Plan

A Parenting Plan is the written legal document that outlines how you and your spouse, as co-parents, will raise your children after your separation or divorce.

Your parenting plan will focus on such parenting arrangement as:

  • child support and providing for your children’s needs
  • how decisions about the children are made
  • how information is shared between parents
  • where the children will live and when each parent will spend time with the child
  • how children will have access to grandparents and other relatives
  • how and where holidays and special occasions will be spent
  • how new partners will be introduced to the children
  • how other parenting issues may be addressed.
Research has proven that children cope better with their parents’ separation if parents co-operate while negotiating their settlement arrangements (as opposed to litigating) and while preparing their Parenting Plan.

A good Parenting Plan is created first and foremost with the children’s interests and needs in mind. When negotiated and prepared properly, it will help to reduce conflict between you and your ex-spouse by setting out clear guidelines and expectations.

Reducing conflict is incredibly important and if you decide to negotiate your arrangements out of court, The Common Sense Divorce Negotiated Settlement Solution will ensure that your Parenting Plan takes into consideration the ages, needs and interests of your children and has enough detail to be useful, yet flexible enough to be realistic. Creating a proper Parenting Plan right from the beginning is one of the best things you can do for your children at this difficult time. More than anything, it will minimize conflict by clearly setting out guidelines and expectations of everyone involved.

For More on Parenting Plans, CLICK HERE for the FREE Ontario Divorce Guide

Child Support

Child Support in Ontario must be calculated according to the Ontario Child Support Guidelines. Both parents maintain the responsibility of financially supporting their children and that support is based on your income and the number of children involved. Child support will continue until your children are 18 years old or until they have completed their post-secondary education.

In Ontario, the government has created an office called the Family Responsibility Office (FRO), which enforces support payments if necessary. The FRO will require paying parents to make all support payments to the FRO who will, in turn, send the payment to the other parent.

If any payments are missed, the Family Responsibility Office will take action to enforce the order or agreement which can include the garnishing of wages, registering a lien against a property, taking money from a bank account, ordering a collection, cancelling a passport or suspending a driver’s license

The Common Sense Divorce Negotiated Settlement Solution will help you to calculate the proper child support, deal with other financial parenting issues such as extraordinary and extra-curricular expenses as well as register your formal Separation Agreement with the Family Responsibility Office as necessary.

The FREE Ontario Divorce Guide offers CHILD and SPOUSAL Support Calculations: CLICK HERE

Spousal Support

In Ontario, the law views marriage as a financial partnership. When that partnership breaks down, the spouse with more income or assets may have to pay spousal support to the other spouse in order to equalize the financial situation as arrived at the break-up of that partnership.

Your Separation Agreement will specify if any spousal support will be paid from one spouse to the other and if so, how much, when, and for how long. The law considers a number of factors when deciding how much spousal support and the length of time that it should be paid, including how much support the asking person requires in order to meet their needs, and how much the other spouse can afford to pay. A person may claim spousal support long term as equalization payments that will keep them from ending up in serious financial difficulty or short term to help them become financially self-sufficient.

If spousal support claims are waived, it is very important that your Separation Agreement is prepared properly in order to ensure that this waiver is binding and remains enforceable in the future. The Common Sense Divorce Negotiated Settlement Solution will not only capture such waivers with the proper legal verbiage, but it will also indicate why this waiver is included (for example, in exchange for a larger share of the matrimonial home, or some other asset in property division).  The Common Sense Divorce Negotiated Settlement Solution will clarify how Spousal support is changed, terminated or adjusted.

The FREE Ontario Divorce Guide offers SPOUSAL and CHILD Support Calculations: CLICK HERE

Formal Valuation of Pensions

A work pension does not belong to one spouse or the other. It is considered a matrimonial asset that must go into the divorce negotiations for fair and equitable distribution. It is therefore part of the division of assets that will be included in your Separation Agreement.

One of the biggest mistakes people make is to assume that they know the value of a pension based on a Pension Statement. There is a huge difference between a ‘Pension Statement’ and a ‘Pension Valuation.’ A regular annual pension statement does not include the valuation of a pension as an asset for the purposes of family law. You should never make decisions about pensions without first receiving professional financial and legal advice.

How you negotiate the terms of pensions will have tax implications and notable ramifications on your personal retirement planning. The Common Sense Divorce Negotiated Settlement Solution will value pensions, help you understand whether you are entitled to a portion of your spouse’s pension, determine the exact amount that you may be entitled to receive and how to best to apportion a pension.

Separation of the Matrimonial Home

If you intend to buy out your spouse’s share of the matrimonial home, you will have to pay land transfer tax on your spouse share, unless you have a formal separation agreement in place.

When couples separate, typically the family home is sold – either to you, to your spouse or to a third-party buyer. You should always have a formal Separation Agreement in place that outlines all financial terms before attempting to change anything pertaining to home ownership.

A formal Separation Agreement is required to instruct your real estate lawyer how to disperse assets upon the sale of your home. Equity funds will sit in your real estate lawyer’s trust account until a Separation Agreement instructs the lawyer how to disperse the funds.

ALL Canadian Banks will require your legal Separation Agreement before they will approve you for a new mortgage. You will be required to qualify for a new mortgage based on your income and your debts alone regardless of what is outlined in that Agreement. Support payments will be considered as part of your total debt load when banks review your application.

If both parties are still on an existing mortgage then from the Bank’s perspective both are responsible for the payment of the mortgage and all taxes until one of them is removed.

Common Sense Divorce Mortgages - Keep Your Home

Dispute Resolution Clause

Family settlements that are created through a Negotiated Settlement Solution and settled out of court are statistically shown to minimize future conflict.

Your Separation Agreement and specifically the elements pertaining to support and the parenting plan will include a clause describing the dispute resolution process by which potential future disagreements will be dealt with.

It is an important clause that ensures you the option to pursue any number of potential dispute resolution avenues instead of only being able to resolve issues with lawyers or court. Typically negotiations that were originally resolved out of court through Negotiated Settlement Solutions will include a similar family dispute resolution process to deal with any potential future agreements.

Independent Legal Advice

The Family Law Act grants the court the power to set aside or nullify a Separation Agreement or any clause in that contract if:

  1. a spouse failed to disclose to the other significant assets, significant debts or other liabilities that existed when the Separation Agreement was made;
  2. if a spouse signs an agreement while being forced, coerced or under duress
  3. if a spouse did not understand the nature or consequences of the Separation Agreement; or
  4. if the Separation Agreement was not prepared in accordance with the law of contract.
If you wish to ensure that your Separation Agreement will be upheld by a judge should your spouse ever try to set aside the contract or a provision in it, then first you must both obtain ILA on the Separation Agreement before it is signed.

It is for this reason that The Common Sense Divorce Negotiated Settlement Solution includes independent legal advice (ILA) to ensure that everyone understands their rights responsibilities and obligations before they sign their final Separation Agreement. A lawyer providing ILA will also review the financial disclosures, and explain if the contract is fair, valid and enforceable.

Remember, it is also in each person’s best interest to ensure sure that your spouse receives independent legal advice. Ensuring that your spouse receives ILA before they sign a Separation Agreement will nullify any future claims that they did not understand what they were signing or that they were signing under duress. When both spouses receive ILA, a Separation Agreement is presumed to be binding on both you and your spouse.

A lawyer cannot give legal advice to both spouses. Also, some people believe that it is sufficient to simply hire a Notary to witness an Agreement. A Notary does not provide ILA but rather only witnesses the signatures. Only a family Lawyer can give legal advice on a Separation Agreement.