A Canadian Separation Agreement (also called a Divorce Settlement Agreement) is a legally binding domestic contract between two spouses who have decided to end their marriage or common-law relationship. It is the primary legal instrument used in Canada to resolve property division, spousal support, child custody and support, and debt allocation without requiring a contested court proceeding. In Ontario, the Family Law Act (R.S.O. 1990, c. F.3) defines a separation agreement in section 54 as an agreement between persons who cohabited and are living separate and apart, in which they agree on their respective rights and obligations.

The legal framework governing separation agreements in Canada involves a complex interplay of federal and provincial legislation. The Divorce Act (R.S.C. 1985, c. 3 (2nd Supp.)), as amended by Bill C-78 (in force March 1, 2021), governs divorce, child support, and spousal support for married couples. Provincial family law legislation governs property division: in Ontario, Part I of the Family Law Act establishes the equalization of net family property regime, under which each married spouse calculates their net family property (assets minus debts, valued at separation date minus value at marriage date) and the spouse with the higher net family property pays half the difference to the other. The matrimonial home receives special treatment in Ontario — it cannot be excluded from equalization regardless of when it was acquired, meaning a home owned by one spouse before the marriage is still subject to equalization.

In British Columbia, the Family Law Act (S.B.C. 2011, c. 25) provides for equal division of 'family property' (all property acquired during the relationship) and 'family debt.' Notably, BC treats common-law partners who have lived together for two or more years identically to married spouses for property division purposes — a sharp contrast to Ontario, where common-law partners have no automatic statutory right to property division and must rely on equitable remedies such as constructive trust or unjust enrichment (as established by the Supreme Court of Canada in Kerr v. Baranow, 2011 SCC 10).

The enforceability of separation agreements is governed by the landmark Supreme Court of Canada decision in Miglin v. Miglin (2003 SCC 24), which established a two-stage test. At the first stage, the court examines the circumstances of negotiation — whether the agreement was reached in an 'unimpeachable' manner, with full financial disclosure, without coercion, and with both parties having had the opportunity for independent legal advice. At the second stage, the court examines whether the agreement still reflects the parties' intentions at the time of the application and whether it continues to comply with the objectives of the Divorce Act. If the agreement was negotiated fairly and still reflects the parties' original intentions, courts will generally uphold it.

A separation agreement can be incorporated into a divorce judgment under section 15.2(4) of the Divorce Act, giving the incorporated provisions the enforceability of a court order. However, incorporation does not merge the agreement into the court order — the agreement continues to exist as an independent contract.

A Canadian Separation Agreement is needed whenever a married couple or common-law partners have decided to separate and need to resolve the legal and financial consequences of the end of their relationship. This agreement is the standard method for resolving separation in Canada without a contested court proceeding, and family courts generally encourage parties to reach their own agreements rather than litigating.

The agreement is required when married spouses intend to divorce. Under section 11(1)(b) of the Divorce Act, the court must be satisfied that reasonable arrangements have been made for the support of the children before granting a divorce judgment. A separation agreement that addresses child support in accordance with the Federal Child Support Guidelines satisfies this requirement and allows the divorce to proceed on consent.

Separating spouses who own a matrimonial home need this agreement to determine what happens to the home — whether it will be sold with proceeds divided, whether one spouse will buy out the other, or whether one spouse will retain exclusive possession for a period. In Ontario, both spouses have equal rights to possession of the matrimonial home under section 24 of the Family Law Act, regardless of whose name is on title, until a separation agreement or court order provides otherwise.

This agreement is critical when there is a significant income disparity between the spouses, as spousal support obligations may arise under sections 15.2 and 17 of the Divorce Act. The Spousal Support Advisory Guidelines (SSAG), while not legally binding, provide widely used formulas: the 'without child support' formula provides the lower-income spouse with 1.5% to 2% of the gross income difference per year of marriage, with duration ranging from 0.5 to 1 year per year of marriage. For marriages of 25 years or more, or where the recipient's age plus years of marriage equals 65 or more (the 'rule of 65'), support may be indefinite.

Common-law partners in British Columbia must address property division promptly after separation, as the two-year limitation period for property claims begins on the date of separation. Common-law partners in Ontario, while not entitled to statutory property division, may need a separation agreement to resolve claims based on constructive trust, resulting trust, or unjust enrichment.

The agreement is also necessary when the spouses have employer pensions, RRSPs, TFSAs, or other registered investments that accumulated during the marriage. CPP credit splitting is available through Service Canada for the period of cohabitation, but employer pension division typically requires either an agreement or a court order under the applicable provincial pension legislation.

A valid and enforceable Canadian Separation Agreement must include specific elements to satisfy both statutory requirements and the Miglin enforceability test.

The agreement must identify both spouses with full legal names, dates of birth, and current addresses. The date and place of marriage (or commencement of cohabitation for common-law partners) must be stated, along with the date of separation. Under the Divorce Act, married spouses must be separated for at least one year before a no-fault divorce can be granted, though a separation agreement can be signed at any time during or after this period.

Full financial disclosure is the single most important element for enforceability. Each spouse must disclose all income, assets, debts, and liabilities. In Ontario, sworn Financial Statements (Form 13.1) are the standard for court proceedings, and while not required for a private agreement, completing them significantly strengthens enforceability. Under section 56(4) of Ontario's Family Law Act, a court may set aside a domestic contract if a party failed to disclose significant assets or debts that existed when the domestic contract was made. The Supreme Court of Canada in Miglin emphasized that full disclosure is essential to the 'unimpeachable' negotiation standard.

Property division provisions must address the matrimonial home (with its special treatment in Ontario), personal property, vehicles, bank accounts, RRSPs, TFSAs, pensions, investments, and any business interests. The equalization payment (Ontario) or property adjustment payment (BC) should be stated clearly with a specific amount and payment deadline. Each spouse's retained assets should be listed in detail.

Spousal support provisions must address whether support is payable, and if so, the amount, duration (time-limited, indefinite, or lump-sum), commencement date, and conditions for review or termination. The agreement should reference the SSAG formulas and demonstrate that the agreed amount falls within or near the SSAG ranges, or explain why a deviation is appropriate. A mutual waiver of spousal support must be made with full understanding of its consequences — courts under Miglin retain jurisdiction to override an unconscionable waiver.

Child support provisions must comply with the Federal Child Support Guidelines. The agreement should state the table amount, the payor's income, the number of children, and the applicable provincial table. Section 7 expenses should be addressed. Child support cannot be permanently waived — courts always retain jurisdiction to review child support because it is the right of the child.

Debt allocation must specify which spouse assumes responsibility for each debt and include mutual indemnification provisions. A release of claims should address property rights, estate rights, and all statutory entitlements. Independent legal advice should be obtained by both spouses and documented in the agreement. In Ontario, the agreement must be in writing, signed by both parties, and witnessed under section 55(1) of the FLA.