Can Family Property Replace Spousal Support in a Separation Agreement?

Divorce proceedings can often involve a lot of uncertainty over what will happen regarding the children and the assets held by one or both parties. If the parties are proceeding through the court system, the matters can take a long time to resolve. In some cases, where the parties might be more willing to agree, a separation agreement can be a good way to introduce more certainty over the settlement of various matters like spousal support, family property, and parenting arrangements. Through a separation agreement, the parties may also come to a resolution faster than proceeding with court. A separation also offers a degree of flexibility for parties to determine how they want to settle their family law matters, including agreeing to terms that differ from the default regime.

In this post, we will discuss the principles that apply to separation agreements in family law, which are essentially contracts that may be interpreted slightly differently than a commercial contract, given the dynamic between the parties in a divorce proceeding. We will also discuss how family property division and spousal support can be addressed in separation agreements instead of the default regime if the parties proceed with the court. This post will also discuss a case example, Zibell v Zibell, 2024 ABCA 145, in which the court found that one of the parties’ spousal support claim was waived upon receiving certain family property, per the separation agreement’s terms and provide key takeaways for parties considering a separation agreement during a divorce. 

Separation Agreements in Family Law 

Separation agreements can be a good way for parties to settle on family law issues as they involve a degree of certainty in clearly setting out how the parties will resolve issues like spousal support, property division, child support, and parenting issues. Parties can also decide how they want to settle matters, including adding terms more suited to how they want to divide property or handle spousal support. This gives the parties more control over the outcome of their divorce, as the court may decide that a different remedy is appropriate in the circumstances.

To be an effective separation agreement, the terms of the agreement should be clear, as the court may need to interpret it as a contract if there is a dispute later on. The court will also consider the facts surrounding the matter for contract interpretation. Family law separation agreements are interpreted using the same principles as other types of contracts. However, it is important to note that in a family law context, contract principles may not be as rigidly applied. This is because the context of family law tends to involve unequal bargaining power between parties. Given this dynamic, a party could be more vulnerable to unfairness. While there is general respect for parties and their autonomy to create a contract as they so desire, the court will still determine if the separation agreement is fair overall in a family law context.

Family Property Division in Separation Agreements 

Knowing what might occur by default is important to creating an effective separation agreement. For family property, parties are expected to divide the property equally between one or more of the parties at the time of separation. However, some parties may want to separate their property after separation. In other cases, a party may want to keep a particular property. Separation agreements allow parties to divide their property to their mutual liking if it is fair. 

Spousal Support in Separation Agreements 

In some cases, family property division can also be considered in light of spousal support entitlements. There are three forms of spousal support entitlement: compensatory, non-compensatory, and contractual. For the last category, parties can agree on a certain amount or duration of spousal support to be set. Parties can also waive their right to spousal support if they receive certain family property as a substitute. Separation agreements can also contain terms specifying how a party will receive spousal support, such as through periodic payments or a lump sum. 

Spousal Support Waived After Receiving Family Property in Separation Agreement 

In the Zibell case, the parties were married for 24 years before separating. In 2019, they signed a separation agreement that outlined terms for property division and spousal support. 

The agreement stated that the wife was to receive a lump sum of $93,000 in spousal support. It also specified that this entitlement could be satisfied if the wife received an interest in the matrimonial home and part of the husband’s pension. 

However, the wife claimed that her spousal support entitlement was not waived because she did not receive some family property. In particular, the husband still needs to provide the $90,000 RRSP rollover that was set out in the agreement. The husband claimed that while he did not provide the RRSP rollover, spousal support was still waived because he transferred the matrimonial property and part of his pension. 

The application judge decided that spousal support was not waived because the husband had not provided the RRSP rollover amount. The husband appealed. 

The Court of Appeal reviewed the contract again, paying attention to the wording of the paragraph that would waive the wife’s right to spousal support. The waiver specifically stated that it would be triggered if she received the family property outlined in paragraph 20, which only described the matrimonial home and the pension. This paragraph did not speak to the rest of the family property, such as the RRSP rollover. Therefore, even though the husband failed to transfer all of the family property available to the wife under the agreement, spousal support was sufficiently waived when he transferred the property outlined in paragraph 20, namely the matrimonial home and the pension. As a result, the husband was not required to pay the $93,000 as spousal support, which was waived.

Key Takeaways 

It is important to carefully consider the terms of a separation agreement with a lawyer, especially if some entitlements, such as spousal support, may be waived upon receiving certain family property. The contract terms will be upheld by the court unless they are unfair.

Calgary Family Lawyers Advising Clients On Separation Agreements

It may be prudent for the parties to enter into a separation agreement to provide certainty and prevent the need to go to court. After a separation agreement is signed, parties must meet their contractual obligations or face costly consequences. You should speak with one of our family law lawyers at Mincher Koeman, who is experienced in assisting parties with issues involving separation agreements. Our Calgary family law lawyers are dedicated to finding the best resolution for you after your divorce.

To book a consultation, please get in touch with us online or by phone at 403-910-3000.