Many parties who are separating wish to avoid the time and expense of the court process and instead enter into a separation agreement. A separation agreement works like a contract which sets out all of the terms regarding the separation. However, a separation agreement is a special type of contract, so there are certain restrictions as to what type of things maybe be agreed to between the parties.
One area where parties often have a lot of questions is support: both child support and spousal support. For a variety of reasons, the parties may wish to agree to a reduced amount of support compared to what a court might order, or they may wish to waive support entirely. This article looks at the extent to which this is possible.
With regard to child support, the answer is easy. Child support cannot be waived or reduced. This is because child support is the right of the child, so the parents cannot make a contract between themselves that infringes on that right. In most circumstances, child support is determined by looking up the proper amount, based on the income of the party paying support, in the tables created under the Federal Child Support Guidelines. The parties generally should not attempt to agree to a lower amount in a separation agreement.
In contrast to child support, spousal support can be set at any amount to which the parties agree, or even waived entirely. The parties can also agree to set the duration of spousal support for any length of time they wish.
However, while the parties are free to arrange spousal support as they wish, they should make sure that what they are agreeing to is fair to both parties. If not, there is the potential that a court could later choose to disregard the separation agreement and order different terms regarding spousal support. This is especially a concern if the parties are agreeing to a complete waiver of spousal support.
In the case of Miglin v. Miglin, the Supreme Court of Canada set out a test for evaluating whether to disregard the terms of a separation agreement regarding spousal support:
- First, a court must look at whether the agreement was in line with the factors and objectives listed in the Divorce Act, at the time the agreement was made. Without going into too much detail, in essence, the court needs to determine that the agreement was substantially fair, taking into account the economic needs of the parties.
- If the court is satisfied on this point, then the court must also look at whether the agreement continues to be in line with those principles, or whether any unforeseen circumstances have arisen that put the parties in a substantially unfair situation, contrary to the original intentions of the parties.
It is possible that an outright waiver of spousal support would fail the Miglin test. That might be the case if the waiver of spousal support places one spouse in a situation of severe economic hardship. However, it is possible that a waiver of spousal support might still pass the Miglin test. It would largely depend on the circumstances of the particular case.
It is also worth pointing out that, while the Miglin test only applies to married spouses separating under the federal Divorce Act, other provincial family legislation also allows a court to set aside a waiver of spousal support if it is “unconscionable”, meaning significantly unfair to the extent that it shocks the conscience of the court.
The bottom line is that, while parties may waive spousal support if they wish, they should be careful to make sure that this is ultimately a reasonable settlement for both parties, or else there is a risk that the waiver of support will not hold up in the event of a later court challenge.
If you are considering entering into a separation agreement, you should always seek the services of a lawyer to make sure it is drafted properly. Please contact the Miller Thomson family law team for assistance.