Financial Statements: What are they and why are they so important?
One of the biggest headaches in family law litigation can be when a party fails to make full and timely financial disclosure. This can significantly delay the proceedings and is extremely frustrating for the other party. There are also serious consequences that can result when a party fails to provide their financial disclosure in a timely manner, including getting their pleadings struck. Striking pleadings is a punitive measure available to the courts. It can be used to disallow a party’s entire case, in which case an ex parte trial may result or the entire action can be stayed.
You can protect yourself from the pitfalls of incomplete financial disclosure by understanding the rules pertaining to financial disclosure in family law and the forms that are required.
What is a Financial Statement?
Financial Statements are the forms used to set out each party’s financial information. They are the main documents that the court will use to determine issues of support and division of property. It is, therefore, extremely important that these statements be accurate and complete.
There are two forms of financial statements for family law in Ontario: Form 13 and Form 13.1. These forms can be found online on the Ontario Court Forms website (ontariocourtforms.on.ca) in both PDF and Word format.
The Financial Statements can be a bit overwhelming at first blush but they are actually fairly straight forward. In a nut shell, they set out each party’s income, expenses, assets, and debts. Form 13 is the simpler of the two forms. It is shorter and less complicated than Form 13.1. In addition to the income and expenses set out in Form 13, Form 13.1 also requires a party to complete a statement of net family property together with a statement of assets and liabilities as of marriage and the date the form is completed.
When are Financial Statements required?
A Financial Statement must be completed where child support, spousal support or property claims are at issue. It must be served and filed with the document that makes the claim (e.g. the Application, Answer, Motion to Change). The court filing office will not accept an Application, Answer, or Motion to Change for filing without a Financial Statement, if a Financial Statement is required by the Family Law Rules. Therefore it is important that you complete your Financial Statement and include all of the required supporting documentation.
Form 13 is the appropriate form to use when there is a claim for spousal or child support but no claim for equalization or property or for exclusive possession of the matrimonial home or its contents. Form 13 Financial Statements may also be ordered by the court in cases where the only claim relates to the custody or access of a child.
Form 13.1 must be completed whenever there is an equalization or property claim or a claim for exclusive possession of the matrimonial home or its contents.
It is important to note that Financial Statements are also commonly used in negotiations. So even if you never enter litigation in your family law matter, you will most likely have to complete and exchange Financial Statements in the course of resolving your dispute.
What other documents are required?
Along with your Financial Statement, you must also attach supporting documentation, which includes proof of your current income (usually a recent pay stub) and your last 3 years’ Notice of Assessment. People often run into issues filing their materials when they do not have their last 3 year’s Notice of Assessment. It is wise to start gathering and organizing your financial documents and see to the filing of any outstanding tax returns at the onset of any family law dispute. This way you will not be left scrambling with regard to meeting any financial disclosure requests.
When must Financial Statements be updated?
Before any case conference, motion, settlement conference, or trial, each party must update the information in their Financial Statements, if they are more than 30 days old. The Financial Statements can be updated by swearing, serving and filing a new Financial Statement. Or, where there have not been any significant changes or the changes are minor, you can update them by simply swearing an affidavit saying that the information in the last statement has not changed and is still true or provide details of the minor changes, respectively.
As you can see, Financial Statements are a vital component to resolving most family law disputes. When they are completed accurately and in a timely manner, they can help move your matter along to a quicker resolution, which in turn, helps you move forward with your life.
It is important that you speak to an experienced family law lawyer about your financial disclosure obligations. The lawyers at Radley Family Law can help.