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How to Prepare a Financial Statement under the Family Law Rules

Updated June 2012

This How-To Brief outlines the steps to take when preparing a financial statement under the Family Law Rules, made under the Courts of Justice Act.

1Determine which financial statement form is required

  • Family Law Rules Forms
    • Form 13, Financial Statement (Support Claims)
      • Use this form when making or responding to a claim for support, but not making or responding to a claim for property or exclusive possession of the matrimonial home or its contents.
      • This is always used in the Ontario Court of Justice.
    • Form 13.1, Financial Statement (Property and Support Claims):
      • Use this form when making or responding to a claim for property or exclusive possession of the matrimonial home and its contents, whether or not a claim for support is included.
      • This is always in the Superior Court of Justice.
      • Divorcemate offers a blank Form 13.1 with instructions that can be sent to the client for the client’s initial draft.
  • (See the link to these Family Law Rules forms in the Resources section of this How-To Brief.)

2Calculate income and expenses — Parts 1–3

  • Income and benefits
    • Set out income for a specific (current) time period.
    • If self-employed, it may be appropriate to use last year's income with an explanation.
    • If a wage earner, use the present or future income.
    • Include every source of income whether taxable or non-taxable (e.g., gifts, lottery winnings, investment income (interest, dividends or capital gains), employment insurance, pension, CPP, OAS and RRSP withdrawals).
    • If necessary, note and complete "Schedule A, Additional Income Sources" to the financial statement form.
    • Note: For hybrid income (e.g., assets that are both income and capital such as stock options), treat this as income as the Canada Revenue Agency would.
    • Other benefits are to be included in income, such as a company car, health/life/disability insurance benefits and sports/gym/club memberships.
  • Expenses
    • Set out expenses for a specific period.
    • It’s ideal to use the last 12 months of cohabitation if it’s reflective of the current situation.
    • You may have to use two expense calculations: one for the intact family and one for the family since separation (you can use the “Proposed Budget” area of form).
    • Note any expenses that the other party still pays (include it and then provide an explanation).
    • Do not exaggerate the expenses. Strive for accuracy and completeness.
    • List expenses that are not separately described/categorized on the form in the appropriate column.
    • Retain receipts in an orderly fashion for questioning and proof.
    • See the sample document in the Resources section of this How-To Brief, which lists examples of specific expenses.
  • Other income earners in the home
    • This must be completed in full if making or responding to a claim for spousal support or "undue hardship."

3Calculate property and debts — Parts 4–5

  • Review Part I of the Family Law Act and in particular, s. 4.
  • Gather and compile in a disclosure brief the supporting documents for as many of the listed assets and debts as possible.
  • Part 4 — Property
    • Note the dates set out in the financial statement:
      • date of marriage
      • valuation date—most often the date of separation)
      • statement date—the date the financial statement is being completed
       
    • Clarify each of these dates in the statement; ensure consistency with the pleading (application or answer, as the case may be).
    • List only the property owned (as opposed to "used" or "possessed") by the client on the applicable dates.
    • Show 50% interest and value for jointly-owned assets as "joint @50%."
    • Note whether the joint tenancy for jointly-owned assets is intended to be severed.
    • Use market value, not the purchase price or replacement value.
     
  • Part 5 — Debts and other liabilities
    • List only debts owed by client on the applicable dates.
    • List one-half value of the debts owed jointly as "joint @50%."
    • Include contingent or future debts, such as deferred personal taxes, capital gains tax and costs of disposition.
    • Consider appropriate discounts, e.g., net present value and minority share.
    • Include debts to parents, friends and other relatives.
     

4Calculate property and debts at date of marriage — Part 6

  • List all property owned and debts owed on the date of marriage.
  • Gather and compile in a disclosure brief the corresponding supporting documents  and evidence.
  • Note: A home owned on the date of marriage, which is a matrimonial home on the valuation date, does not entitle the owner to a "deduction" from net family property on the date of marriage. Any associated mortgage debt is omitted, too. Review s. 5 of the Family Law Act.

5Calculate excluded property — Part 7

  • Review s. 4(2) of the Family Law Act.
  • Include inheritances and gifts acquired after the date of marriage from third parties.
  • Also include insurance proceeds and damages for personal injuries.
  • List property that can be traced clearly.
  • Note: Excluded property is included elsewhere in the financial statement and in this category as well. The values would be the same in each.

6Calculate property that has been disposed of — Part 8

  • Disclose all property by category that was disposed of in the two years prior to the making of the financial statement or during the marriage (whichever is shorter).

7Calculate the child's budget

  • There may be some situations where a child expense budget is required. For example, where the child is over 18 years of age, in "shared custody" situations under s. 9 of the Child Support Guidelines, made under the Family Law Act, or in relation to claims for special or extraordinary "s. 7" expenses.
  • List the expenses that are clearly child-related.
  • List the differences in those expenses where higher amounts are directly attributable to the children.

8Include attachments to the financial statement

  • The financial statement will not be accepted for filing in the court office (Family Law Rules, r. 13(7)) unless
    • copies of the client's notices of assessment for the previous three taxation years are attached, or
    • the financial statement contains a sworn statement that the client is not required to file an income tax return pursuant to the Indian Act, or
    • if a client did not file tax returns and/or does not have notices of assessment for the last three years, a copy of an "income and deduction" printout—contact the Canada Revenue Agency at 1-800-959-8281.
  • A recent pay stub, pension stub, employment insurance stub, worker's compensation stub or proof of any other sources of income (Family Law Rules, r. 13(6)) should be attached.
  • Income tax returns attached to the financial statement must be served on the other party(ies), but need not be filed in the continuing record unless the court orders otherwise (Family Law Rules, r. 13(7.1)).

9Update the financial statement — Ongoing financial disclosure

  • The Family Law Rules require the financial statement to be updated and corrected from time to time (see the chart in "Guide to Procedures in Family Court," in the Resources section of this How-To Brief).
  • If the financial statement is more than 30 days old, you must serve a new financial statement or affidavit (Form 14A) indicating that there is no change in the financial statement or that the change is minor and detail the change. (See the link to this Family Law Rules form in the Resources section of this How-To Brief.)
  • If correcting information, you must also serve a new financial statement to correct or complete information, or serve an affidavit (Form 14A) if changes are minor.

Resources

Statutes and Rules

Case law

  • Bhoi v. Bhoi (2001), 23 R.F.L. (5th) 255 (Ont. S.C.J.): A lawyer representing a family law client must ask the client pertinent questions, identify ambiguities and seek clarification of financial information and then relay the information to the court.
  • Buttrum v. Buttrum (2001), 15 R.F.L. (5th) 250 (Ont. S.C.J.): A family lawyer must supervise the client’s completion of the financial statement. The lawyer must ask the client pertinent questions so as to ensure that the disclosure is accurate and complete.