An Ounce of Prevention Is Worth a Pound of Cure: The Six Most Common Mistakes When Drafting Financial Statements and How to Avoid Them

  • December 05, 2018
  • Robert Shawyer, M.A., LL.B., lawyer, collaborative practitioner, OAFM certified mediator; and Andrew Sudano, LL.B.

Introduction

With the most basic obligation in a family law proceeding being the duty to disclose and produce financial information, the importance of an accurate Financial Statement cannot be overstated. Unfortunately, the Form 13: Financial Statement is anything but a straightforward document. Counsel should give careful thought and consideration when drafting their client's Financial Statement as a few slight errors can create big headaches for you and your client. This paper will explore the six most common pitfalls that counsel make when drafting Financial Statements and provide guidance on what you can do to make sure your Statement is as accurate as possible for best results.

1.  Ignoring The Proposed Budget

Unfortunately, many counsel stop filling out Financial Statements at the signing page and do not proceed to the Proposed Budget section of the Financial Statement. This is a grave mistake particularly if there are claims relating to child support, s. 7 expenses not yet incurred, spousal support, a shared custody situation and/or if a party's expenses will be changing in the future (i.e. after the matrimonial home is sold).

Any changes or notes that need to be added to the proposed budget section of the Financial Statement for clarification will likely be helpful to allow your client to explain any increases or discrepancies from their current budget. Most importantly, any shortfalls in disclosure or unexplained increases in expenses or the absence of expenses can cause problems for your client. For example, in Lawrence v. Lawrence, 2017 ONSC 431 (CanLII), the Court noted that the Wife claiming spousal support did not present an updated Financial Statement, a proposed budget or any evidence as to where she proposed to reside following the sale of the parties' matrimonial home. Absent any evidence as to the Respondent Wife's future financial situation, the Court therefore made an order for spousal support, lower than the amount in the Spousal Support Advisory Guidelines, which is what the Applicant Husband proposed, and set a date for the amount of spousal support awarded to be reviewed in the future once the matrimonial home was sold.