When a couple separates, spousal support is often the most complicated and contentious issue to be resolved. Spousal support is not an automatic right — but you or your ex could be entitled to support payments if, for example, one of you earns much less than the other.
However, if you and your partner can agree on the terms of spousal support — or decide to waive any support claims entirely — you can put it in your separation agreement and avoid going to court.
Sounds simple, right? The reality is that your former spouse can challenge the agreement later. Courts have struggled for decades to create a reliable standard, and family law judges have been all over the map when upholding a support release or setting it aside.
When it comes to interpreting agreements, hindsight can be 20/20. Frequently, it’s only after the agreement is signed that parties discover that they disagree on interpreting and applying the terms.
Family law agreements are not governed by the subjective views of the parties after the fact. Instead, the court must look at the language and the circumstances in which the agreement was signed. Fun fact — when I was an articling student, I accompanied my boss to the Supreme Court of Canada on the seminal family law case regarding spousal support review, called Miglin v. Miglin.
This 2003 decision sets out a two-stage test to determine whether a separation agreement can be relied upon and is the reason the standard spousal support waiver that goes into every separation agreement in Canada is informally referred to as a Miglin release.
The Miglin test is difficult to apply and requires a contextual balancing of multiple factors, including considerations of fairness, respect for the agreement and the desire for finality. When I’m helping clients put together a separation agreement or waiving spousal support, here are some aspects I look at to best ensure your agreement is binding and remains enforceable.
Complete financial disclosure is essential. If a client says they don’t require full financial disclosure, the lawyer risks a negligence claim. Some clients waive full disclosure, some offer partial disclosure — which most spouses will say is “good enough” — or there’s full financial disclosure.
It’s crucial to stipulate in a separation agreement which option was agreed on as lawyers must be vigilant that the words in the agreement reflect the actual process. When you get divorced without full financial disclosure, you risk leaving yourself open to a claim in the future.
While you can draft an informal separation agreement without a lawyer, I strongly recommend you don’t. Most agreements entered into with the help of competent legal counsel will be upheld — particularly where the spouse seeking to avoid the settlement was the one who proposed the terms in question. In addition, if you both obtain independent legal advice (ILA) to review your agreement, it’s much harder to challenge later. A judge will likely order you and your spouse to do what you agreed to do.
By obtaining ILA, you should have a clear picture of what claims you can make after you separate or divorce, your rights and responsibilities toward your children and your spouse, and how your rights change once you sign the agreement.
You and your spouse need to retain different lawyers to review your separation agreement. It’s understandable to be concerned over the cost of additional legal service, but if you skip this step, one spouse is potentially leaving themselves open to the claim by the other that they didn’t understand their rights when they signed the agreement.
A judge may set a separation agreement aside if a party can prove that it was not created fairly. If there was emotional and psychological abuse, for example, throughout the relationship and during negotiations, one party could argue they signed the agreement under duress.
Sometimes this is compounded with a failure to make proper financial disclosure. For example, did one party hide their finances and attempt to fool their former spouse into thinking that they were in worse financial shape than they were?
If the terms of the agreement can’t be regarded as a genuine expression of the parties’ intentions, you’re heading into a problematic area when it comes to enforceability.
Your agreement and any release clauses must align with the objectives of the Divorce Act, which primarily focuses on fairness. So, couples are entitled to enter any arrangement they wish, but the clauses cannot contradict the statute-based protections for either party. If a clause is deemed inequitable under the Act, a judge can set it aside.
It’s important to understand the objective of spousal support, which is to promote the economic self-sufficiency of each spouse within a reasonable period. So, releasing any spousal support obligation assumes that each person would be self-sufficient when the relationship ended — or at least capable of achieving self-sufficiency within a reasonably short time.
If one spouse stayed at home for 10 years to look after the kids, their income and work experience would be substantially lower than the spouse who worked, and the stay-at-home parent would have difficulty becoming self-sufficient. Thus, in this example, the objectives have not been met to release a support obligation.
When upholding or setting aside a separation agreement or clause, the court will determine if there was “a material change of circumstances” during the time between when the contract was signed and the date one party wants to change the terms.
Suppose your agreement is impeccably negotiated, with full financial disclosure, lots of opportunity for ILA, and it complies with the objective of the Divorce Act. In that case, you can define a Miglin challenge by whether a change in the parties’ circumstances was reasonably foreseeable.
Let’s say one party becomes injured in a car accident and, as a result, works reduced hours for lower pay. That constitutes an unforeseeable circumstance under which support obligations in the separation agreement may be reduced or set aside. On the other hand, if the change in circumstances could have been reasonably foreseen at the time of execution, the court will likely uphold the agreement.
Lastly, did the parties intend for the agreement to be final? Often, separation agreements have a review clause, allowing the courts to walk away from complicated analysis. It almost goes without saying that if you want your agreement to be final, it should not contain a review clause.
If you are facing separation and divorce and would like to understand your legal right and obligations, give us a call at Morgan and Phillips LLP.