Everyone hates having to do a sworn financial statement. This is a court form used in Ontario to list your assets, debts, income and expenses. It is long, cumbersome and, frankly, a pain to complete. If your case is in Court in Ontario, you must complete the form. The Rules require you to complete it and the court clerks won't even open your court file without you filing a sworn financial statement.
If you aren't in court, I don't blame you if you don't want to complete it.
As your lawyer, we ask you to do a financial statement to ensure that you are protected. Yes, to protect you! We want you to fully disclose your assets and debts on the date of separation and date of marriage to ensure that your spouse cannot wiggle their wait out of the agreement, claiming that you were hiding assets. The Family Law Act allows the Court to "set aside" (which means not enforce) a separation agreement if there has not been full disclosure.
The financial statement is an easy way to ensure that there has been full disclosure. It is like a checklist for lawyers.
We ask your spouse to provide a sworn financial statement for the same reasons. It is an easy way to ensure we have a complete financial picture from him or her too.
Once we have a complete financial picture, we can advise you as to the range of outcome should the matter proceed to court. In other words, we can give you legal advice. Without complete disclosure, we can't give you advice: we are just guessing.
Lawyers can get into big trouble with the Law Society if we give advice based on guesses or assumptions that turns out to be bad advice. Okay... you got me... we are also covering our own butt when we are asking for sworn financial statements.
Disclosure is Essential
It isn't the financial statement itself that is important - what is important is that there is full disclosure. It's just that the financial statement makes it easy.
A recent case before the Ontario Court of Appeal, known as Ward vs Ward clearly states that the exchange of financial statements is not necessary but full disclosure and knowledge of the other person's financial circumstances is essential. In that case, the parties exchanged some documentation with the assistance of the family's accountant. Financial statements were not completed but there was full disclosure and knowledge of each other’s financial circumstances.
The court describes the disclosure process in that case as follows:
“...neither party filed a financial statement, nor was one required under the terms of the process to which they agreed. While this did not diminish the obligation to disclose, in this case, the parties relied on the collaborative law process and other avenues of disclosure, including net family property statements and information from Mr. Wetstein [the family friend and accountant]”
In the end, the Ontario Court of Appeal determined that the husband's disclosure and the wife's knowledge of financial circumstances of the husband were sufficient even without sworn financial statements exchanged. The Court refused to set aside the agreement reached.
Lawyers often use the financial statement because it is easy. It lists all of the categories of assets and debts so you don't miss disclosing something important. In our law firm, we insist on backup documentation to verify every value in the financial statement. It is the backup documentation that is important and fulfills the obligation to disclose.
In Collaborative cases, the Financial Specialist works with the clients to obtain a complete and accurate representation of the financial circumstances of the parties, usually without the use of a sworn financial statement. The Financial Specialist does a report and attaches the backup documentation for every value. Both lawyers ensure that their client has fully disclosed everything. Equally important, every lawyer must review what the other client has provided to ensure s/he has provided full disclosure.
In Collaborative cases, as lawyers we always carefully review the Financial Specialist's report with our client to ensure it is accurate. Ultimately, the lawyers will ask for a sworn statement from each client stating that they have fully disclosed their assets, debts and income and that the Financial Specialist's report is accurate and complete. Alternatively, the lawyers will add wording to the separation agreement that states both parties are warranting that they have fully disclosed everything and that the Financial Specialist's report is accurate. Either way works.
Full disclosure is essential. If you are trying to hide assets or income, we won't be your lawyer. We don't play those games.
If you don't like having to provide full disclosure, we get it. You are not alone. Complain all you want. We have big shoulders. We want your agreement done right and made to last so just get it done. It’s for your own sake.