Navigating Financial Disclosure in Family Law Part 2

As mentioned in Part 1 of this series, complete financial disclosure is the foundation for settling any family law case. Depending on your unique situation, the Ontario Court requires you to complete either Form 13.1 (support and property claims) or Form 13 (support claims only). The following article will deep dive into the Form 13.1 Financial Statement and feature tips for providing accurate financial disclosure. 

Part 2: Understanding the Form 13.1 Financial Statement

Excerpt from Form 13.1 Financial Statement

The Form 13.1 Financial Statement is used in family law matters when both support and property claims are involved. Throughout the form, you will be asked to provide information reflecting your financial situation on three main dates: 

• Date of Marriage: In order for the Court to understand what assets you brought into your marriage, you will include financial information for the date you married or just prior. This may include the market value of a car, a student loan, RRSPs, etc. 
• Valuation Date: In family law, the valuation date is also known as the date of separation. This is a very important date in the calculation of your Net Family Property as it shows the value of your assets at the end of your marriage. 
• Today: As your financial situation may fluctuate from the valuation date, the Court also wants to see the current/fair market value of your assets on the day you are signing the Form 13.1 Financial Statement.

The court is looking for a “snapshot” of your financial circumstances on each relevant date, or as close as possible thereto. You will be asked to provide supporting disclosure for the balances you swear to on your financial statement. If you are not sure of the exact date of any of the above, please discuss with your lawyer.

Excerpt from Form 13.1 Financial Statement

Form 13.1 Tips for Accurate Financial Disclosure

Financial disclosure in family law can feel daunting. Here are some expert tips based on specific sections of the Form 13.1 Financial Statement to ensure you provide accurate financial disclosure:

1. Income: income should reflect your current income. The preferred way to disclose income is based on what you are currently receiving and any anticipated changes in the next twelve months. For any item that is an estimate (such as commissions) you should note this and explain why it is estimated.
2. Other benefits: do you have use of a company car, dental or life insurance, extended health benefits, cell phone, stock options, etc.? Make sure to mention any extras from your overall compensation package and or “perks.”
3. Expenses: Expenses are your current expenses or best estimate of them over the last twelve-month period. Some things to note include:
   (1) If your children live with you, include their expenses in with yours if appropriate such as groceries.
   (2) Some expenses are irregular, like car repairs. Do your best to provide an accurate estimate and always specify when a value is estimated.
   (3) Never inflate your expenses; be accurate and truthful.
   (4) If you are running a deficit between your income and expenses, you will need to provide an explanation to the court about how this is being financed (i.e. Borrowing money, spending savings, etc.).
4. This is your statement, so only include what you own or have a financial interest in. If you are a joint owner, specify your 50% share on the statement.
5. It is the market value of assets that should be listed, not the purchase price or replacement value. Certain items depreciate significantly after purchase so remember it is what you could reasonably expect to receive if you sold the item, not what you paid for it and not its insured value.
6. Bank accounts: this includes ALL bank accounts (RRSPs, RRIFs, RPPs, LIRAs, TFSA, Canada Savings Bonds, GICs, chequing, savings, shares, stock options, mutual funds and any other investments). Even if you are not actively using an account, you still must disclose its existence.
   Note: If you hold assets outside of Canada, the amounts will be converted to Canadian dollars and included.
7. Life insurance: while you are required to disclose the existence of both term policies and whole life policies; only whole life policies have a cash surrender value (CSV). Therefore, for term policies you will leave the CSV column blank. 
   
8. When disclosing business interests, you must include sole proprietorships!
9. If someone has borrowed money from you and it remains outstanding on the relevant dates, remember to include it. You can also include any forthcoming income tax return refunds, shareholder loans, etc.
10. Other property can include things like intellectual property, air miles or credit card rewards points, and valuable animals (i.e. horses)
11. Debts: includes things like mortgages, personal loans, lines of credit, taxes payable, overdrafts, outstanding bills and credit card balances. However, credit cards are only included if you are the principal cardholder. If you are supplementary cardholder you would not include the balance – just the existence of the card.
    Note: Personal debts (like loans from family members) will be closely scrutinized. Be prepared to provide disclosure like a promissory note, or history of repayment. If no payments or demand for payment has been made, the court will likely treat the loan as a gift.
12. Excluded property: some property is not required to be included in the calculation of your Net Family Property. Your lawyer will help you figure out if you have any property that should be excluded.
13. Disposed of property: this section can be helpful to determine if assets sold or disposed of received an appropriate value in the last two years.

Keep in mind, it is possible for one asset or debt to have three different values in three different columns. It is also possible that items do not carry though all three dates. For example, a vehicle you owned on the date of marriage was traded in during the marriage for a newer car; RRSPs were used to purchase a home, etc.

If necessary, you can include notes on your financial statement to explain necessary details to the court. For example, you are a joint account holder on your elderly parent’s bank account. This is for estate planning purposes and the funds are not yours; they solely belong to your parent. You must still disclose the existence of the account on the Financial Statement but include a note so the money is not attributed as your asset.

What about those schedules at the end?

At the end of the Form 13.1 Financial Statement, you will find a page featuring Schedule A: Additional Sources of Income and Schedule B: Special or Extraordinary Expenses for the Children. 

• Complete Schedule A if: you have income that is not shown in Part I of the financial statement (for example, partnership income, dividends, rental income, capital gains or RRSP income)
• Complete Schedule B if:  you or the other party has sought a contribution towards special or extraordinary expenses for the child(ren)

Completing your Financial Statement and compiling the supporting disclosure can be an overwhelming piece of the family law puzzle. Keep following this series for further tips and tricks to help you navigate financial disclosure in family law. If you want more hands-on help, our team at Shulman and Partners is here for you!