Changes to the Family Law Rules – NEW Financial Disclosure Requirements
On May 2, 2015 a number of important changes to the Family Law Rules came into force. One of the most significant changes relates financial disclosure that every party in a family law case is now automatically required to produce.
Since financial disclosure issues often slow down family law proceedings when property rights or child and spousal support claims are in dispute, the changes to the Family Law Rules are aimed at expediting the production of financial disclosure from the very outset of the court process.
Parties must now to serve a number of additional documents with their Financial Statements that were not previously required. In addition, the documents that must be served vary depending on whether the court proceeding involves support claims or property claims.
It is important for litigants in family law proceedings to be aware of the new requirements, as failing to comply with the new financial disclosure obligations will have serious consequences for them during the court process.
I. DOCUMENTS REQUIRED IN SUPPORT CLAIMS
In proceedings that have either a child or spousal support claim, when you complete your Financial Statement you must now also serve the following documents with it:
(a) a copy of every personal income tax return filed including any materials that were filed with the return for the last three years;
(b) a copy of every notice of assessment and reassessment issued for the last three years;
(c) if you are an employee, the most recent statement of earnings indicating the total earnings paid in the year to date, including overtime, or, a letter from your employer setting out that information including and including your annual salary;
(d) if you are self-employed, then for the last three years you must provide,
(i) the financial statements of your business or professional practice, other than a partnership, and
(ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to, or on behalf of, persons or corporations with whom you do not deal at arm’s length;
(e) if you are a partner in a partnership, you must provide confirmation your income drawn from, and capital in, the partnership for the last three years;
(f) if you control a corporation, then for the last three years you must provide,
(i) the financial statements of the corporation and its subsidiaries, and
(ii) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to you, or on your behalf, to any persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length;
(g) if you are a beneficiary under a trust, you must provide a copy of the trust settlement agreement and copies of the trust’s three most recent financial statements; and
(h) in addition to any information that must be included under paragraphs (c) to (g), if you receive income from employment insurance, social assistance, a pension, workers compensation, disability payments or any other source, you must provide the most recent statement of income indicating the total amount of income from that source during the current year or, if such a statement is not provided, a letter from the appropriate authority stating the required information.
In addition, if you became unemployed during the last three years you must also provide:
(a) a complete copy of your Record of Employment, or other evidence of termination,
(b) a statement of any benefits or income that you are still entitled to receive from your employer as a result of the termination,
If you are also making a claim for section 7 expenses you must also provide proof of any section 7 or extraordinary expenses along with your Financial Statement.
When does all of this information need to be provided?
Rule 13(3.2) provides that if there is only a support claim in the proceeding and no property claims, then all of the above information must be served at the same time that you serve your Financial Statement.
However, if both a support claim and a property claim are being made then the above documents must be served within 30 days of the filing of your Financial Statement, along with the additional documents that are required in property claims.
II. DOCUMENTS REQUIRED IN PROPERTY CLAIMS
If the court proceeding includes a property claim then you must serve the following documents on the opposing party within 30 days of filing your Financial Statement:
(a) a statement for each bank account, pension, RRSP or other savings plan, and any other savings or investments as of the separation date,
(b) a copy of an application or request made by you to obtain a valuation of your pension,
(c) a copy of the MPAC assessment for any real estate that you own for the year in which the separation occurred,
(d) a statement for your life insurance policy indicating the cash surrender value on the date of separation,
(e) if you were self-employed or had an interest in a sole proprietorship you must also provide the following information for the last 3 years:
i. the financial statements of your business
ii. a copy of every personal income tax return filed by you,
(f) if you are a partner in a partnership on the valuation date, a copy of the partnership agreement and, for the three years before the separation date,
i. a copy of every personal income tax return filed by you, and
ii. the financial statements of the partnership.
(g) if you had an interest in a corporation on the date of separation, documentation showing the number and types of shares of the corporation and any other interests in the corporation that you owned.
(h) if the corporation that you had an interest was privately held, then for the three years before the separation date you must provide,
i. the financial statements for the corporation and its subsidiaries, and
ii. if your interest was a majority interest, a copy of every income tax return filed by the corporation.
(i) if you were a beneficiary under a trust on the separation date, you must provide a copy of the trust settlement agreement and the trust’s financial statements for each of the three years preceding that date.
(j) documentation showing the value, on the date of separation, of property not referred to above in which you had an interest.
(k) documentation that supports a claim, if any, for any excluded property under section 4(2) of the Family Law Act.
(l) the statements or invoices issued closest to the separation date in relation to any mortgage, line of credit, credit card balance or other debt owed by you.
(m) Any available documentation showing the value, on the date of marriage, of property that you owned or in which you had an interest, and the amount of any debts owed by you on that date.
III. CERTIFICATE OF FINANCIAL DISCLOSURE
Along, with the new disclosure requirements that have been introduced in the Family Law Rules, a new form called “Form 13A: Certificate of Financial Disclosure” has also been created.
This new form must now be completed, served on the other party and filed with the court at least seven days before a case conference or motion (if you are the applicant or the party bringing the motion).
If you are the respondent or the party responding to the motion then you must complete, serve and file the form at least four days before the case conference or motion.
The changes to the Family Law Rules have created significant new disclosure obligations. If you are currently involved, or will be involved, in a family law court proceeding, it is important that are familiar with the new disclosure obligations set out in Rule 13 of the Family Law Rules.
CHRIS STANKIEWICZ is an associate lawyer at BOOKMAN LAW PC, a boutique family and estate law firm located in central Toronto at Yonge & Davisville. Chris is a very experienced and extremely competent lawyer who fights for his clients and defends their rights. You can reach Chris at [email protected] or by calling 416 – 488-2243.