Don’t make a separation agreement with a mentally ill spouse

By Paul Russell, LegalMatters Staff • Couples going through a divorce should not even attempt to reach a separation agreement if one party has mental health issues, advises Toronto lawyer Gene C. Colman.

“You are playing with fire if you go that route,” says Colman, principal of the Gene C. Colman Family Law Centre. “You might be able to make a deal, but if the accusation later arises that one spouse took advantage of the other, that will be enough for a court to throw the agreement out.”

When there is a history of mental health issues, he says the best solution is to seek a court order, stipulating the division of property and custody rights.

 “Court orders are not 100 per cent protection but they are the best you can do in a bad situation,” he tells LegalMattersCanada.ca.

Colman says his office never attempts to draft a separation agreement if one of the parties has mental health issues.

“Other firms might be we won’t take that risk,” he says. “We will still negotiate in good faith with the challenged spouse’s lawyers, but we are not going to finalize a deal without a court order.”

No binding definition of mental illness

Colman acknowledges the lack of a legally binding definition in domestic contract case law of what constitutes mental illness can pose problems.

“If someone is taking antidepressants, I don’t think that is enough to consider them as being mentally ill,” he says. “In fact, they should be commended for taking steps to deal with their personal issues.”

Other cases are much clearer, Colman says, citing an Ontario Court of Justice judgment involving a man diagnosed with schizophrenia. According to court documents, he did not receive independent legal advice and three domestic contract agreements he signed were later found to be unenforceable.

Another Superior Court of Justice case involved a couple who had been married for 24 years. When they divorced, the woman — who suffered from bipolar disorder — signed a separation agreement prepared by her husband’s counsel that did not include any mention of the husband’s pension. That agreement was later ruled invalid.

 “If I were legal counsel in those instances, I would insist on a court order instead of a separation agreement, as I want to protect my clients as much as I can, and get this settled in one fell swoop,” Colman says.

When seeking a court order due to mental health issues, he says he is careful to be respectful to the person in question.

“I don’t want to damage the other party’s pride or take away their dignity,” Colman says. “My firm will certainly not heap abuse on someone who has mental health challenges. But we will seek a court order to protect our clients, as a separation agreement can be much more readily set aside, resulting in more court costs for both sides.”

Even where the financial disclosure is perfect in terms of completeness and accuracy, separation agreements that are overly generous to one side, in terms of reasonableness under the applicable legislation and case law, may get overturned, he says.

“People are free to make their own deals, even if it is not exactly what the law states, but if there is a mentally challenged spouse, whatever is decided could be characterized as being too good of a deal,” Colman says.

‘Why expose yourself to unnecessary risk?’

He notes that fellow lawyer Philip M. Epstein, who has published and lectured extensively on family law, has warned that crafting agreements that are overly generous to oneself could in the future expose them to a very real potential challenge by the mentally ill spouse.

“Epstein has opined that one should be careful ‘that you do not make too good of a deal,’ says Colman. “Why expose yourself to unnecessary risk in the future?”

For example, he says a spouse may say, “Give me $10,000 for a settlement,” even though she could ask for much, much more.

“In that instance, it may be a good idea to give more than $10,000, so that a court in the future doesn’t rule that you took advantage of her,” Colman says. “If you make too good of a deal, it may come back to bite you later, so what’s the point of doing a lopsided separation agreement if it means you wind up back in court later?”

Whenever a separation agreement is being drawn up, he says he insists clients provide him with full financial disclosure and transparency, so he can come up with an agreement that will hold up in court and at the lowest cost possible.

“Disclosures have to be pristine and completely accurate, and then documented by your lawyer,” Colman says. “Anything less exposes the client to further litigation down the road.”