Top 5 Mistakes in Homemade Separation AgreementsJul 17 2023
A separation agreement is a contract, like any other, that two consenting adults can create and sign on their own. So, do you need a professional? The answer is “no but”. You are able to make your own separation agreement to settle the family law issues arising from the breakdown of your relationship, BUT there are a number of pitfalls you can run into that warrant the need to think twice about it. Below we go through the 5 most common mistakes our Family Law Team see in homemade separation agreements.
1. Lack of Enforceability:
You unfortunately may not be protecting what you are wanting to protect if certain clauses of the contract turn out to not be enforceable. This means that if one party decides to challenge the separation agreement, or go against it, the other party who wants to enforce it in court may find out that what was agreed upon is not actually enforceable. In other words, a judge will not support or uphold certain clauses.
For example, child support clauses. A clause agreeing to pay less than the Child Support Guidelines’ table amount, or to not pay child support at all, is able to be overturned by a judge such that the other party may be able to seek child support in court anyway.
It is important for you to be aware of what rights or obligations cannot be negotiated away. Other clauses may not be enforceable because they go against public interest or it could be that the language of the clause is simply unclear.
2. Lack of Financial Disclosure:
Proper financial disclosure shows that each side knew the income, assets and debts of the other party before agreeing to settlements regarding property and bank accounts.
If prepared with the involvement of a lawyer, it is likely you will fill out a court financial statement disclosing information regarding bank accounts, properties and other assets belonging to you. It is also typical to include the past three years of your income tax documents.
Without this level of full and frank disclosure from one party, the other party could apply to set that part of the separation agreement aside for lack of disclosure. The argument would be that they would not have entered into the agreement or accepted that particular amount of property and money in the settlement had they known about the other party’s full financial situation. For example, if you were not involved in the finances and thought your spouse’s savings account only had $4,000 in it but it turns out they amassed $400,000 this may change what you were prepared to accept as a settlement of property division.
Courts heavily frown upon the concealment of assets. Failure to disclose significant assets can result in fines and is a common reason for a separation agreement being set aside.
3. lack Of Professional Valuations:
We have all watched how the real estate market can fluctuate. When dividing assets, such as real estate, it is important to obtain a professional appraisal of the value of the property at the time of signing your separation agreement so that the value cannot later be challenged. Like with failure to provide financial disclosure, if you thought a property was worth $100,000 and it turns out it is worth $350,000 that could change what is fair as property division.
This also goes for business interests and ownership. Does your spouse own a business or have shares in a company or enterprise? A professional business valuation can help determine the value of this asset as well, to help achieve a fair division of the family assets.
It is also advantageous to obtain legal and financial advice when dividing employment pensions, as this can be a complex area with rights that need to be defined carefully or they could be lost.
4. Lack of Independent Legal Advice:
Not having lawyers provide each spouse with independent legal advice can be problematic. Courts are more inclined to set aside an unfair separation agreement where no independent legal advice was obtained.
This appointment for advice helps ensure that both parties know what they are giving up and committing to, in the hopes that neither party unintentionally enters into an unfair agreement. When drafting a separation agreement at home, parties can still attend a consult with a family law lawyer to obtain advice before signing.
Lawyers typically will not simply “sign off” on a homemade separation agreement. At RDM, we require that you first attend a consult so that we can ensure you have a good understanding of your rights and obligations prior to witnessing your signature. If the agreement was prepared by a lawyer, we will set up an “ILA” appointment where we may sign the agreement with you depending on the content.
5. Lack of Waiver Language:
In the event that you or your spouse does not obtain professional valuations of assets, provide full financial disclosure, or obtain legal advice on a separation agreement, for it to withstand a court challenge it would be important for waiver language to be included. This is language showing that both parties have contemplated the possibilities around lack of disclosure, etc., and knowingly chose not to pursue them regardless of the consequence.
Agreements that waive spousal support, property rights, or pensions, etc. will also benefit from strong waiver language demonstrating that the person had the opportunity to seek legal advice but waives their rights regardless of future changes in circumstances.
- Note that either party can register their separation agreement with the court to pursue enforcement of the agreed-upon rights. Making a separation agreement at home does not forever keep it within the home.
- It is a good idea for you to sign more than one copy of the separation agreement so that both parties can keep an original for their own use.
- While it is possible to make a homemade separation agreement, it is strongly recommended that you first get legal advice. Having a properly drafted separation agreement with a professional may cost more at the outset but it could save you a lot of money and stress in the long run if a party later wants to challenge it.
To find out more about the law on overturning separation agreements or to have our team draft your separation agreement, you can reach our Family Law Team by calling our office at 604-853-0774 to request a consult today.