The Perils of Drafting Separation Agreements – Knowing What You Don’t Know
Last week I talked about a case called Sabo v. Sabo, 2013 ONCJ 545 (Ont. C.J.), which involved spouses who had gone to court to try to have their separation agreement changed – the wife to have the spousal support she received from the husband increased, and the husband to have the support he paid eliminated entirely. They were both unsuccessful, primarily because the court applied an established legal test for when an agreement could be changed.
Although the separation agreement in that case had been drafted with the assistance of lawyers, the court took pains to point out that it contained a large number of omissions, and failed to cover off a large array of potential scenarios and changes that might arise for the spouses in the future.
In particular, the court pointed out that the separation agreement was missing:
- a specified “terminating event”;
- a time limit for how long spousal support was to be paid;
- an indication of what the parties agreed would be a “material change in circumstances” (which would allow a change in support to be made);
- a provision allowing for a review of spousal support obligations;
- a cost of living clause;
- a provision obliging the wife to earn income, or one that confirms that she has no such obligation;
- a term to indicate that if the wife earns more than a stated amount, that the spousal support she received from the husband will be reduced;
- a provision specifying that if the wife lives with someone else in a spousal relationship, then her support would be terminated;
- a statement of the husband’s and wife’s respective incomes at the time the separation agreement was signed;
- a statement of the husband’s income, being the basis on which the spousal support he owed was calculated;
- financial statements or income tax returns, which were normally attached to a signed agreement of this nature;
- a provision indicating that spousal support would be life-insured.
In short, the court felt the agreement as drafted left much to be desired. Nonetheless, this itemization of the gaps in this particular agreement is instructive: for other spouses considering a separation, it serves as a good laundry-list of items for discussion between them, not to mention a helpful landmark indicator of what any good, comprehensive separation agreement should entail (at a very minimum).
Are you considering a separation? Do you need help with identifying those points that should be covered? Contact us for a free consultation.