What is financial disclosure and why do I need to abide by it?

I get asked this question so often.

According to the “Ontario Family Law Rules” in order to have a viable agreement you must disclose all of your financial information.  

When couples say to me that they aren’t including something my response is that that still need to declare it.

My explanation is this,” you can not agree to exclude something you are not aware of.” Each party must fully understand not just the laws but also the “financial picture” of the other party in order to make the best decision.

If you were to ever end up in court and you have things that were not disclosed your entire agreement may not be deemed legal. That is a lot of wasted time and likely money so why not do it correctly?

The Family Law Rules require”….each party must provide, to the other party the financial disclosure that is necessary to understand each parties’ full financial situation.”   (Rules 13(3.2) and (3.3) of Ontario’s Family Law Rules)

What is included in financial disclosure?

The full list of required documents is extensive, however, it may include some of the following:

• Income tax returns, with all schedules and attachments, and NOA (Notices of Assessment-the document that comes back from the Canada Revenue Agency) for the three most recent years
• Each party’s most recent pay stub
• A statement of incentive related pay (a statement of tips, profit sharing plans, or other incentives)
• If a party has recently lost a job, a copy of the Record of Employment and any severance package
• For self-employed people – three years of their business financial statements or statements of business and professional activities, as well as details of any and all payments made to non-arms length individuals (related to you in any way ie if you have a child on your payroll)
• For people on Employment insurance, Ontario Works, Ontario Disability Support Program or Workplace Safety and Insurance Board Benefits, Canada Pension Plan or a private pension plan, a statement showing the benefits paid or being paid
• The Municipal Property Assessment Corporation assessment for all real estate owned by the party or a market value assessment for the property.
• Copies of all bank, RRSP, and investment accounts for the date of separation and, where available, the date of marriage (if applicable)
• A statement of the number and types of shares owned in any publicly held corporation
• For beneficiaries under a trust, the trust financial statements and trust settlement agreement
• A mortgage statement for any property for the date of separation and, where available, the date of marriage (if applicable)
• Statements for Lines of Credit for the date of separation and, where available, the date of marriage (if applicable).
• Statements for all Credit Cards for the date of separation and, where available, the date of marriage (if applicable)
• Any other private loan documentation
• RESP’s

*Note that the date of marriage is not always applicable in every situation.

Resources taken from the following  www.ontario.ca/laws/regulations/990114) as well as www.ontario.ca/page/dividing-property-when-marriage-or-common-law-relationship-ends