In family law proceedings, the accurate completion of the Financial Statement, particularly Form 13, is crucial, considering its role as a primary disclosure document. This paper aims to shed light on six common pitfalls encountered when drafting Financial Statements, offering guidance to ensure accuracy and favorable outcomes.
- IGNORING THE PROPOSED BUDGET
Filling out Financial Statements only up to the signing page is a critical oversight. Neglecting the Proposed Budget section can lead to issues, especially in cases involving child support, spousal support, shared custody, or changing expenses. Not providing this information may result in unfavorable decisions, as illustrated in Lawrence v. Lawrence and Pothier v. Taillefer. Counsel should emphasize the importance of a detailed budget to avoid complications.
- INCLUDING RESP’S AS NET FAMILY PROPERTY
Inaccurately including Registered Education Savings Plans (RESPs) as Net Family Property is a common mistake. RESPs, as recognized in McConnell v. McConnell, do not form part of spousal property and should be clearly marked on the Financial Statement. Understanding the trust relationship inherent in RESPs, as explained in Henry v. Henry and Elias v. Elias, is crucial to prevent unintended equalization.
- ESTIMATING AND CLAIMING DISPOSITION COSTS WITHOUT EVIDENCE
Automatic inclusion of notional disposition costs without evidence is an error. Satisfactory evidence of a likely disposition date is essential, as emphasized in Sengmueller v. Sengmueller. Courts consider fairness, individual circumstances, and the timing of asset disposition. Counsel must present evidence supporting the proposed deduction to avoid disputes over notional disposition costs.
- MONTHLY EXPENSES NOT ADDING UP OR MISSING KEY INFORMATION
Incomplete or inflated monthly budgets create complications, as seen in E.K. v. N.B. Consistent, reasonable disclosure of expenses is crucial, especially for self-employed parties. Failure to provide meaningful evidence may result in adverse inferences by the court, impacting support determinations. Counsel should thoroughly vet clients’ business expenses to ensure accurate financial representation.
- OTHER BENEFITS
Clients must disclose all non-taxable benefits in box 14 of the Financial Statement. This includes health benefits, allowances, and stock options. Failure to provide accurate information may impact income calculations. Counsel should press clients, opposing counsel, and self-represented parties to ensure comprehensive disclosure of all benefits and assess whether grossing up for income tax purposes is necessary.
- INCOME SOURCES AND THE AMOUNT RECEIVED PER MONTH
Complete and accurate disclosure of all income sources, including gifts and rental income, is mandatory. The responsibility lies with the support payor to satisfy the court of their income. Section 18 and 19 of the Child Support Guidelines provide guidance on imputing income for shareholders and determining a fair representation of income. Counsel should ensure a thorough and accurate representation of clients’ income sources.
Justice Turnbull’s wisdom in Rosati v. Reggimenti highlights the simplicity of settling support claims promptly and preparedly. The formula for success involves being prompt, prepared, and producing necessary information. Conversely, disguising, delaying, and denying information can lead to destruction. Counsel must take extra care when drafting Financial Statements, aiming to avoid future complications and present clients in the best possible light.