The Moral and Legal Obligation of Financial Disclosure in Family Law
A Beneficial Starting Point
Financial disclosure is one of the very first things a good family lawyer will discuss with their client if money is in any way at issue. For one thing, it is a good faith responsibility to provide full and frank disclosure; one of the very first steps in a typical intake process is to prepare a draft financial statement with the intention to exchange it with the other party.
Financial disclosure is also critical in order for your lawyer to provide the best possible advice. With a full picture of your finances, your lawyer can advise you on where you stand with respect to the support or distribution of family assets and debts. For example, if you are in a position where you will have to pay or receive support, it is important to establish that early in the process, so that you are neither seeking or paying retroactively. Seeking retroactive support can often be an uphill battle, and withholding support where it is obviously appropriate can lead to harsher treatment by the courts.
A Statutory Requirement
Aside from getting the best possible advice and acting in good faith, financial disclosure is also a strict requirement of the family law regime here in British Columbia. Make no mistake: it will have to happen at some point.
Part 5 of the BC Supreme Court Family Rules mandates disclosure and specifies which documents must be provided. There is also a corresponding section in the BC Provincial Court Family Rules. If you are undertaking action in court in British Columbia, disclosure is not optional.
Section 21 of the Federal Child Support Guidelines makes it an obligation of both parties to disclose income information, and Section 22 makes it possible for the court to draw an “adverse inference” against parties who do not comply.
A Continuing Obligation
A financial statement is a snapshot, but things change. You may lose your job or get a new one. You may incur new expenses as you commit to a new family. You may open a new company, or suffer a life-changing injury. All of these scenarios can change your financial standing, which is why it’s important to provide continuing disclosure.
When a major and permanent financial change happens in your life, it is your responsibility both to let the other party know there is a change and prove that change with the appropriate documents. Colucci v. Colucci 2021 SCC 24 a case recently decided in the Supreme Court of Canada, has made it clearer than ever that a party must fully prove a material change in their circumstances (i.e., do more than just state that a change has occurred), and that they must do it in a timely fashion.
Each party needs to put their cards on the table when finances are at issue in a separation: it’s both a moral and a statutory obligation. Talk to a family lawyer to guide you through this uncomfortable but critical step in a fair and beneficial resolution.
© Linley Welwood LLP. The contents of this article do not constitute legal advice. Readers should seek legal advice in relation to their own specific circumstances.