By Daniella Marchand, Legal Coach, Alberta
Financial disclosure is the exchange of financial documents by both parties in a family law matter where the issues between the parties have to do with child support, spousal support, or property division. Financial disclosure is a requirement in family law cases and is not something that can be avoided. As it is a requirement, it is beneficial to provide disclosure early on in your matter to avoid delay and unnecessary costs.
Why is financial disclosure important?
Although we see on TV the dramatic pauses where a lawyer reveals a never-before-seen document to the other side, this rarely (if ever) happens in family law. This is because there should seldom be surprises between the parties, especially when it comes to financial disclosure. Both the Family Law Act, SA 2003, c F-4.5, and the Family Property Act, RSA 2000, c F-4.7 outline disclosure requirements. Disclosure is typically one of the first steps in a family action to move the matter forward. This is to ensure fair resolutions for the matters between the parties.
The court does not look kindly on those who refuse to provide their financial disclosure or continue to delay a matter because they have refused to provide their disclosure. As such, there are several penalties or tools the courts have at their disposal to encourage parties to disclosure or discourage withholding financial disclosure from the other side. Stay tuned for my next blog on the potential risks and penalties of non-disclosure.
Disclosure is important for several reasons:
- In cases involving child support, the disclosure provided helps to determine the appropriate amount of child support payable between the parties;
- In matters involving spousal support, disclosure also helps to determine the amount of support that may be payable between the parties; and
- In matters involving property division, having a clear understanding of the property and assets owned between the parties as well as financial liabilities and debts allows the parties to understand what needs to be divided between them. It can help with negotiations for property division plus it provides the court with information about what needs to be divided in a final property order.
How does disclosure work with prenuptial agreements, cohabitation agreements and separation agreements?
Financial disclosure is especially important if you are about to enter into a family law agreement with your significant other, or if you are separating from your partner. These types of agreements should only be entered into when the parties have complete knowledge of the financial situation between the two parties. If parties do not provide disclosure before entering into these agreements, the agreement is at risk of being overturned or put aside by the court for this very reason. Although parties are able to waive the requirement to provide disclosure and can put a clause stating this specifically in the agreement, by not providing disclosure you are still putting your agreement at risk of being challenged later on.
Before entering into these agreements, typically parties are required or recommended to receive independent legal advice before signing. If the parties have not exchanged financial disclosure, a lawyer will recommend against signing the agreement, and perhaps even refuse to sign off on the agreement until disclosure has been provided. To learn about independent legal advice as it relates to family law agreements, you can read more about it on the Crossroads Law website, our sister family law firm.
What form do I need to fill out?
If your matter is in the Court of King’s Bench, you will likely be responding to a “Notice to Disclose” Application. If your matter is in the Provincial Court of Alberta, you will likely be responding to a “Request for Financial Information”.
What do I need to disclose?
Typically, what you need to disclose can be found in the “Notice to Disclose” or “Request for Financial Information” application on the court’s website. Even if neither party has filed a court action, and requests only voluntary disclosure, this list is a useful guide for what is required to be disclosed between the parties.
1. A copy of every personal income tax return you have filed for each of the 3 most recent taxation years. If you have not filed a tax return for the previous year, you must provide copies of your T4, T4A, and all other relevant tax slips and statements disclosing any and all sources of income for the previous year.
2. A copy of every notice of assessment and reassessment issued to you for each of the 3 most recent taxation years, or a copy of the Canada Revenue Agency printout of your last 3 years’ income tax returns.
3. If you are an employee, a copy of each of your 3 most recent statements of earnings indicating your total earnings paid in the year to date, including overtime, or where such a statement is not provided by your employer, a letter from your employer setting out that information, including your rate of annual salary or remuneration.
4. If you receive income from employment insurance, social assistance, a pension, workers’ compensation, disability payments, dividends or any other source, the most recent statement of income indicating the total amount of income from the applicable source during the current year or, if such a statement is not provided, a letter from the appropriate authority stating the required information.
5. If you are a student, a statement indicating the total amount of student funding you have received during the current academic year, including loans, grants, bursaries, scholarships and living allowances.
6. If you are self-employed in an unincorporated business:
(a) particulars or copies of every cheque issued to you during the last 6 weeks from any business or corporation in which you have an interest, or to which you have rendered a service;
(b) the financial statements of your business or professional practice for the 3 most recent taxation years; and
(c) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom you do not deal at arm’s length, for the 3 most recent taxation years.
7. If you are a partner in a partnership, confirmation of your income and draws from, and capital in, the partnership for its 3 most recent taxation years.
8. If you have a 1% or more interest in a privately held corporation:
(a) the financial statements of the corporation and its subsidiaries for its 3 most recent taxation years;
(b) a statement showing a breakdown of all salaries, wages, management fees or other payments or benefits paid to yourself, or to persons or corporations with whom the corporation, and every related corporation, does not deal at arm’s length for the corporation’s 3 most recent taxation years; and
(c) a record showing your shareholder’s loan transactions for the past 12 months.
9. A detailed list of any special or extraordinary expenses claimed (where child support is an issue) as well as copies of receipts or other documentation providing the amount of those expenses, namely:
(a) childcare costs;
(b) health care and extended medical and dental insurance premiums attributable to the child;
(c) uninsured health care and dental expenses;
(d) extraordinary educational expenses;
(e) post-secondary educational expenses; and
(f) extraordinary expenses for extracurricular activities.
10. If you are a beneficiary under a trust, a copy of the trust settlement agreement and copies of the trust’s 3 most recent financial statements.
11. Copies of all statements and cancelled cheques for all bank accounts held solely or jointly in your name for the most recent 6 months.
12. Copies of credit card statements for all credit cards solely or jointly in your name for the most recent 6 months.
13. Your monthly budget of expenses (where spousal or adult interdependent partner support is an issue).
14. A sworn itemized list of your income, assets and liabilities (in the form attached as Schedule A).
15. Copies of the most recent statement for all RRSPs, pensions, term deposit certificates, guaranteed investment certificates, stock accounts and other investments in your name or in which you have an interest.
16. A list of any exemptions claimed (where the action involves the division of family property or, in a case to which rule 12.121 applies, matrimonial property).
Do I need to disclose all the items listed in the Notice to Disclose?
Typically, yes. For family law cases to move forward efficiently and fairly, disclosure should be fulsome and complete. This usually means including all the items listed in the Notice to Disclose.
However, you are only required to respond to and provide the disclosure that has been marked off on the application or requested by the other side. Further, the opposing party can only ask you to provide disclosure that is materially relevant to your issue. For example, if your matter does not involve the division of property, you may not have to include item 16, “a list of exemptions claimed”.
In certain circumstances, such as where you already have a final order for child support, but are still required to disclose each year, you only need to disclose items 1-9, rather than the full 16 items. Once you have all your disclosure items gathered up, do your best to organize them based on the items in the list or try and put a package together that contains all the required documents. Having these documents organized helps you move your case forward, but also helps the other side easily go through your documents, meaning that you avoid unnecessary delay by requiring them to organize and sort through the documents.
Once you have put your disclosure package together, and if you are responding to a court application, you will need to have your disclosure statement sworn. You can do this by bringing the complete package to a Commissioner for Oaths or Notary Public, who will swear or affirm the document with you. If you are providing disclosure voluntarily, you may not need to swear or commission your Disclosure Statement. If you are providing disclosure because you have been served with a court application, and after the Disclosure Statement and Schedule A have been sworn, file your disclosure package at the courthouse. Once it has been filed, serve the package on the other party (for more information and to learn about how to serve someone, check out our blog on the rules of service in Alberta). Once your disclosure package has been served, you will also need to complete an “affidavit of service” swearing that you served the documents on the other side.
If you have further questions about how to put together a disclosure package, and what is required, you can read more about it through Resolution Services here. What if the opposing party requests items for disclosure that does not apply to me?
If a disclosure item does not apply to you (ex. you are not a beneficiary of a trust), you can include a “not applicable” in your response, which will indicate to the other party you do not have any information to provide relating to that particular tab.
However, if an item at one time does not apply to you but during your family law matter it does become applicable, you will want to provide this information to the other side as soon as possible to prevent any delays. This may happen if you were unemployed when the matter started but began working halfway through (ex. Providing your pay stubs under Tab 3). This would be especially important if your matter involves child support.
Do I need to continue to disclose after my matter is complete?
If your family case is still ongoing, even after you have already provided your disclosure information, in most cases, you will likely be obligated to continue to provide disclosure until your matter has been completed through the courts, mediation, arbitration or settlement. However, in some cases, you will need to continue to provide disclosure even after you have received a final order.
In cases where ongoing child support is payable, you will be required to disclose every year until the child(ren) are no longer considered a child of the marriage. This is because child support is based off the incomes of both parents so if the incomes of the parents change, the amount of child support payable will also change. If you fail to provide ongoing disclosure when child support is payable, you are putting yourself at risk of a retroactive child support claim.
Financial disclosure is a very important part of your family law dispute. It is required in almost all family law matters. You can save time and money by providing your full financial disclosure early on to the other side (or to their lawyer) which will allow your matter to move forward in a timely manner. However, it can be difficult sometimes to know what documents you need to include in your financial disclosure.
Not receiving disclosure can be a frustrating aspect of a family law case and it can be difficult to know how to proceed when the other side will not cooperate. If you are unsure of what you may need to disclose to the other side, you can consult with a Coach My Case legal coach or paralegal navigator to help you determine which documents you should be providing. Or if you are having difficulty receiving disclosure from the other party, the team at Coach My Case can help you understand what your options are. Book your free 20-minute consultation today!