Agreements and Financial Disclosure

 One of the more common conversations family law lawyers have to have with clients is about the importance of financial disclosure. Specifically, when they are entering into a Pre-nuptial, Cohabitation or Separation Agreement.

Sometimes the clients would like the agreement simply to say that each spouse will keep his or her assets without any claim by the other. Maybe it will be a little more specific, such as each will keep their own bank accounts, investments, pensions, personal possessions.

Yes, simple can be good. However, the Canadian case law has been evolving to a point where a lack of specific financial disclosure can mean that the entire Agreement can be overturned by one spouse later with substantial financial consequences.

A now-famous case from British Columbia involved a woman who signed a Pre-nuptial Agreement stating that in the event of a separation, she would receive a certain lump sum as her share of the husband's assets, and nothing more. When the couple separated many years later, she challenged the Agreement in court, saying that she did not have any idea as to the extent of the husband's assets at the time she signed the Agreement. She was successful in having the Agreement thrown out with lack of financial disclosure one of the reasons. 

Basically, you cannot waive your right to something unless you understand what exactly you are waiving.

So, to make sure these agreements are as binding as possible, lawyers encourage their clients to at least list the assets (and debts) they have at the time they do the Agreement. Even better, disclose the values of those assets and debts. Best yet, attach actual bank and investment statements, house appraisals, vehicle dealer estimates as to value, pension valuation letters etc.

This is also true of each spouse's income, and any terms of the Agreement relating to spousal support. If you don't know what a potential spousal support claim could be, how can you waive it? Any Agreement should disclose each partner's income, and ideally also have recent income tax returns attached as proof.