Why is Financial Disclosure Important in Divorce?
The exchange of financial disclosure with your spouse is the most important step in resolving all the financial issues during a divorce. When a person is going through the breakdown of their marriage or marital relationship, disclosing details of their personal finances is the last thing they want to do.
What are the consequences of failing to provide financial disclosure to your spouse in a separation or divorce?
First, from a practical point of view, there is no way to calculate your entitlement, if any, to support or property division without having the information necessary to calculate the numbers. The only way to determine your entitlement is to review documents showing your income and your spouse’s income for the past three years; the value of all assets owned by you and your spouse individually, jointly with you, or with someone else; and the value of all debts and liabilities held by you and your spouse individually, jointly with you, or with someone else. You cannot know what you’re entitled to without reviewing the numbers and you cannot review the numbers without full and complete financial disclosure from both you and your spouse.
Second, if your matter is in Court, your failure to provide your spouse with financial disclosure can result in your pleadings being “struck”. This means that the Court will ignore materials you filed in your family Court matter. In some cases, if the failure to provide financial disclosure has been long-standing and deliberate, the Court may award the other side some, or all, of the relief they are seeking from the Court.
Lastly, section 56(4) of the Family Law Act (Ontario) allows a Court to set aside an Agreement reached without the benefit of financial disclosure. As such, even if you and your spouse agreed on support and property division, a Court may still set your Agreement aside if one party later decides to dispute the Agreement. The rationale behind the law is that a person must have had all the necessary and pertinent information necessary to understand what they are agreeing to. One cannot be deemed to have agreed to something if they agreed without having all the facts necessary to make an informed decision.
Providing financial disclosure to your spouse and ensuring that he or she provides you with their disclosure may be a daunting, time-consuming exercise; however, it is a necessary step in most family law matters. Financial disclosure also includes the exchange of sworn Financial Statements, which summarize all of your financial disclosure. An experienced family law lawyer can assist you with gathering your financial documents, preparing your Financial Statement, and preparing the calculations to determine your entitlements, if any.
If you want to discuss your separation, contact Bortolussi Family Law.