When navigating a separation or divorce, financial disclosure plays a critical role in ensuring fairness and transparency. In Ontario family law, disclosure is more than a formality; it is extremely important for negotiating property division, support, separation agreements, and more. Without complete and accurate disclosure, neither lawyers nor the courts can make informed decisions, leaving both parties vulnerable to disputes and unfair outcomes.
Below, we break down what financial disclosure means, why it matters, and how family lawyers can help you navigate the often complex process. If you have questions about financial disclosure, schedule a consultation with our legal team at Gelman & Associates today.
Family Law & Financial Disclosure: Key Takeaways
- Financial disclosure is a fundamental part of many Ontario family law matters involving property division, spousal support and child support.
- Where a court case includes a support or property claim, Ontario’s Family Law Rules generally require the parties to provide financial information and supporting documentation.
- Form 13 is generally used for support claims that do not include a property claim, while Form 13.1 is generally used where property division or exclusive possession of the matrimonial home is in issue.
- Financial disclosure can include tax information, proof of current income, bank and investment statements, pension information, real estate documents and evidence of debts.
- Complete disclosure helps spouses and their lawyers properly assess issues such as equalization of property, spousal support and child support.
- Financial disclosure is an ongoing process. Information may need to be updated as a family law proceeding continues.
- Incomplete or inaccurate disclosure can lead to delays, additional legal costs, incorrect settlement calculations and challenges to agreements reached using incomplete information.
What is Financial Disclosure in Ontario Family Law?
Financial disclosure is essential to any family law proceeding that involves claims for property and/or support. Without it, no lawyer can properly advise you of your rights or entitlements under Ontario law.
Making a complete and accurate financial disclosure is the very first step in most family law matters. It typically begins with filling out a Form 13 or 13.1 financial statement, which outlines all assets and liabilities in your name.
- Unmarried individuals or those making only support claims must disclose their current assets and liabilities, provide income tax information for the preceding three years, and supply current income details.
- Married individuals who are seeking property claims must disclose their assets and liabilities at three points in time: their date of marriage, their date of separation, and the present day. They must also provide income tax information for the preceding three years and current income details.
In addition, parties must put together a supporting disclosure brief with backup documents to confirm that all the figures they have provided in their financial statement are accurate. Income disclosure and a list of current expenses are also generally required.
While the process of financial disclosure can take a considerable amount of time, it is necessary to make informed, legally binding decisions about property division, spousal support, and other important family law matters.
Your Legal Obligations and the Impact of Financial Disclosure on Divorce Settlements
Financial disclosure is not an optional process. It is a legal requirement in Ontario family law cases.
- For Agreements Negotiated Outside of Court: Lawyers often attach each party’s financial disclosures to their finalized Agreement. It is important that complete, accurate statements are made, as this will ensure that any Agreements entered into are legally binding and cannot be challenged later.
- For Litigated Agreements: Complete and accurate financial disclosure is required to commence with any proceeding that deals with claims for property and/or support. The court also requires that litigants keep their financial statements up to date by filing updated disclosures before each court appearance. If you do not complete the financial disclosure process, your materials may be rejected by the court, and your case may be delayed.
Accurate disclosure can have a direct impact on settlement outcomes during divorces. During the equalization of property, it may determine who owes whom an equalization payment. In cases of child support and spousal support, it informs both the amount and, in spousal support matters, the duration of payments.
As a result, full and honest disclosure gives both parties the confidence that their settlement is fair and legally sound.
What Are the Risks of Incomplete or False Financial Disclosure?
If the financial disclosure process is not properly completed, the outcome of the case is likely to be significantly impacted. Some serious consequences include:
- Incorrect Outcomes: Incomplete or incorrect financial statements may lead to inaccurate support calculations or property division.
- Overturned Agreements: In cases where the parties have entered into an Agreement relying on false financial statements, there will be grounds to argue that the Agreement should be set aside. This is because financial disclosure is a critical component in negotiating settlement terms.
- Delays and Added Costs: Courts can reject incomplete or inaccurate materials, which can prolong your legal matter and increase the amount of legal fees you accumulate over time.
Because disclosure is the foundation of the entire family law process, even small omissions can create significant legal and financial problems down the road. Intentional and repeated failure to complete full and accurate financial disclosure may also be a sign of financial abuse. If you have questions about the financial disclosure process, you should contact a family law lawyer as soon as possible.
How to Ensure Full and Accurate Financial Disclosure in Ontario
To ensure that you are making a full and accurate financial disclosure, you must engage in proper planning and diligence. Some key steps include:
- Gathering Financial Records: It may be best to start by visiting all banking institutions that you deal with and requesting your banking portfolio for all accounts that existed at the relevant dates. This portfolio will show all existing accounts on one sheet of paper and may make it easier to ensure that you’re not missing anything important.
- Including all Property and Valuables: Your financial statement will also ask you to disclose your holdings in real estate, vehicles, pensions, and other items of value.
- Disclosing International Assets: Complete financial disclosure does not only refer to your assets and liabilities in Canada. If you have property, bank accounts, or other items of worth outside of the country, you have an obligation to disclose their value.
Leaving out assets, whether intentional or not, can compromise your family law case and any Agreements you reach. It is important that you don’t leave anything out.
By taking the steps outlined above, you can help ensure that the disclosure process is complete, accurate, and less likely to be challenged at a later date.
Frequently Asked Questions About Financial Disclosure in Ontario Family Law
What Financial Information Do I Have to Disclose During a Divorce?
The documents required will depend on the issues in your case. Where support or property is involved, disclosure may include information about your income, tax returns and notices of assessment, bank accounts, investments, pensions, real estate, debts and other assets or liabilities.
For property claims under Part I of Ontario’s Family Law Act, the Family Law Rules require specified supporting documentation, including statements relating to bank accounts, investments, pensions, real property and debts around the relevant valuation date.
What Is the Difference Between Form 13 and Form 13.1?
Form 13 is generally used where the family court case includes a claim for support but no property claim or claim for exclusive possession of the matrimonial home.
Form 13.1 is generally required where the case includes a property claim or a claim for exclusive possession of the matrimonial home, whether or not support is also being claimed.
The correct form depends on the claims being made, so it can be helpful to speak with a family lawyer before preparing court materials.
Do I Have to Disclose Assets That Are Outside Canada?
Yes. Financial disclosure is not generally limited to property located in Ontario or Canada.
If you have foreign real estate, overseas bank accounts, investments or other assets, those interests may need to be disclosed when determining property and support issues. Leaving an asset out because it is located in another jurisdiction can create significant problems later.
Do I Have to Disclose an Asset If I Think It Belongs Only to Me?
Generally, you should not assume that an asset can simply be omitted because you believe it will ultimately be excluded from division.
The purpose of disclosure is to identify the relevant financial information so the parties can determine how Ontario family law applies to it. For example, questions about excluded property, inheritances or assets owned before marriage should generally be addressed as part of the legal analysis rather than by leaving the asset off the disclosure.
How Far Back Does Financial Disclosure Go?
The required period depends on the issue.
For support claims, Ontario’s Family Law Rules generally require proof of current income and income information for the three previous taxation years.
Property claims can require records connected with additional dates, particularly the date of marriage and the valuation date used for determining net family property.
Does Financial Disclosure Have to Be Updated?
Yes, in many family court proceedings disclosure is not a one-time exercise.
Financial circumstances can change while a case is ongoing. Ontario’s Family Law Rules contain requirements for updated financial information and updated certificates of financial disclosure at various stages of a proceeding.
Keeping information current helps ensure that negotiations and court decisions are based on an accurate financial picture.
What Happens If My Spouse Refuses to Provide Financial Disclosure?
A refusal to provide required financial information does not necessarily prevent the case from moving forward.
Depending on the circumstances, a lawyer may request the missing documentation and court remedies may be available where disclosure obligations are not being met. Failure to provide disclosure can also contribute to delays, added costs and other consequences within the proceeding.
If you believe your spouse is withholding assets or financial information, you may also want to review our article about finding hidden assets during a divorce and speak with an Ontario family lawyer about the appropriate next steps.
Can a Separation Agreement Be Challenged Because of Missing Financial Disclosure?
Potentially. Accurate financial disclosure is important when spouses negotiate a separation agreement because each party should understand the financial circumstances underlying the settlement.
Where significant assets, debts or liabilities were not disclosed when a domestic contract was made, Ontario family law can provide grounds to ask a court to set aside some or all of the agreement depending on the circumstances.
This is one reason spouses should take disclosure seriously even when they are negotiating outside of court.
Does Financial Disclosure Apply If We Agree on Everything?
Financial disclosure can still be important even when spouses are cooperative and believe they have reached an agreement.
Without accurate financial information, it may be difficult to determine whether proposed terms relating to property or support properly reflect each spouse’s rights and obligations. Disclosure can also help reduce the risk that an agreement will later be challenged because relevant financial information was missing.
Can I Hide an Account If It Has Very Little Money in It?
You should provide complete and accurate disclosure rather than deciding that an account or asset is too small to mention.
Ontario’s disclosure process is designed to give both parties an accurate financial picture. Omitting accounts or property, even where the value appears relatively small, can create questions about the reliability of the rest of the disclosure and make negotiations more difficult.
Contact Gelman & Associates Today For Assistance With The Financial Disclosure Process
Filling in your financial statement accurately is more than just an exercise in paperwork–it is a safeguard for your future. If the disclosure process is not properly executed, you run the risk of your Agreement being set aside or making decisions based on incomplete information.
At Gelman & Associates, our family lawyers spend time working with clients to confirm that the disclosure process is completed thoroughly and carefully. From identifying what needs to be disclosed to reviewing supporting documentation, we help ensure that your statement is accurate, complete, and legally sound. With our support, you can make decisions with confidence and enter into Agreements that are binding.
If you are facing separation or divorce, contact Gelman & Associates today to schedule a confidential consultation and find out how we can assist with the financial disclosure process. We serve clients across Ontario.
