What to Include in a Separation Agreement When You Have No Kids

When separating without children, a separation agreement mainly addresses financial and property matters. Here’s a breakdown of essential topics to include:

1. Asset and Property Division

Family Home: The agreement should outline options for the primary residence, such as selling the home and dividing the proceeds, arranging a buyout if one partner wants to keep it, or retaining the property without requiring compensation.

Other Properties: For additional properties, such as vacation homes or rental properties, couples can decide on a sale and division of profits or have one party retain the property and assume related responsibilities.

Financial Assets: Bank accounts, investments, and retirement funds should be clearly divided. Joint bank accounts may be split equally or based on specific contributions, while stocks and retirement savings are typically divided in line with their current value.

2. Debt Division and Financial Responsibilities

Joint Debts: Mortgages, car loans, and credit card debt need explicit assignments in the agreement. For example, if one partner assumes a mortgage to keep the home, they may need to refinance to remove the other from responsibility.

Individual Debts: Personal debts, such as credit card balances and student loans, generally remain with the person who incurred them. The agreement should specify these to prevent disputes.

3. Spousal Support

In Ontario, spousal support may still apply even without child-related considerations. The separation agreement should address factors like income disparity, relationship length, and contributions to each other’s careers. Spousal support terms can include temporary or permanent support and any waivers if both parties agree on financial independence.

4. Retirement Funds and Pensions

Valuation and Division: Each party’s pension and retirement savings need accurate valuations. Couples can divide these by direct transfers, equalization payments, or offsetting retirement assets with other assets, like the family home.

Tax Implications: Taxes on retirement funds, especially RRSPs, must be considered to ensure fair division. Consulting a financial advisor can clarify the tax consequences of these splits.

5. Health and Life Insurance

Health Insurance: If one partner relied on the other’s health benefits, the agreement should address when that coverage ends and whether alternative coverage will be arranged.

Life Insurance: Couples should update beneficiaries and decide on premium responsibilities. If they wish, both can secure new individual policies to reflect their changed circumstances.

6. Division of Personal Belongings and Household Items

For items like furniture, appliances, and sentimental belongings, the agreement should list and assign each item, aiming for an equitable division. High-attachment items may require specific arrangements or financial compensation for the partner not keeping the item.

7. Tax Implications and Financial Transition

After separation, tax filing changes from “married” to “single,” impacting credits and deductions. It’s crucial to agree on how shared tax liabilities or refunds will be handled. A tax professional can help each party understand their new obligations and maximize individual credits.

8. Dispute Resolution

Even without children, a dispute resolution clause can prevent conflicts over financial matters. Options like mediation or arbitration provide efficient and cost-effective ways to resolve disagreements without involving the courts.

9. Finalizing the Agreement

Legal Binding Steps: For a legally enforceable agreement, both parties must sign voluntarily, provide full financial disclosure, and have signatures witnessed.

Independent Legal Advice (ILA): ILA ensures each party understands their rights and obligations, reducing the risk of future challenges.

Filing with Ontario Courts: Although optional, filing the agreement with the courts can add enforcement options, especially for financial matters like spousal support.