The process of separating from your partner can be a stressful, confusing, and emotional time, particularly when you are deciding how to divide your assets and become financially independent. If you and your partner are able to come to an agreement about property matters between yourselves, formalising your agreement through a Binding Financial Agreement or Consent Orders can be a cost-effective alternative to what otherwise can be lengthy and expensive court proceedings.
Whether you and your partner should enter into a Binding Financial Agreement or Consent Orders will depend on your agreement, the circumstances of your relationship, and whether or not your agreement is ‘just and equitable’. Before you make such decision, we recommend that you discuss your options with an appropriately qualified family lawyer.
As property matters involve the division of assets, it is important to have lawyers prepare the Binding Financial Agreement or Consent Orders, as they are complex and technical documents.
This article seeks to provide an overview of what Binding Financial Agreements and Consent Orders are, what effect they have, and sets out circumstances where one document may be more suitable than the other.
What do they do?
Binding Financial Agreements and Consent Orders are written documents which will formalise a property settlement with your partner and can contain provisions on a range of matters concerning the division of assets and liabilities of the relationship, including but not limited to:
Consent Orders
Consent Orders are a written agreement approved by the Family Court and Federal Circuit Court of Australia (“the Court”), upon the filing of an Application for Consent Orders.
Parties to an Application for Consent Orders do not usually attend the Court for the Consent Orders to be approved by a Judicial Registrar. However, once Consent Orders are approved by the Judicial Registrar in Chambers, they are legally binding and have the same effect as Final Orders made by a Judge during proceedings, even though you and your partner never set foot in a courtroom.
It is important to note that the Court will only approve an Application for Consent Orders if they believe that your agreement is ‘just and equitable’ to both parties in the circumstances. This means that the Consent Orders will not be approved if the Court does not believe they contain a ‘just and equitable’ agreement.
Once Consent Orders have been made, they will become ‘sealed’. This means that the Court has approved, stamped and dated the Consent Orders, and made them available for the parties to download on the online Court system.
The agreement will become binding on you and your partner on the date in which the Consent Orders were sealed, and you are both bound by the terms of the agreement from that date.
Consent Orders can be a cost-effective and straightforward way of settling your matter without engaging in contested property proceedings at Court.
Binding Financial Agreements
A Binding Financial Agreement is essentially a private contract between you and your partner which can be made at several stages of your relationship, including:
The Binding Financial Agreement sets out how the assets of the relationship are to be divided and provides each party with certain rights and responsibilities in relation to the division of those assets.
Parties undertaking this pathway are effectively contracting out of the protections provided by family law legislation, and there is no involvement or intervention from the Court during this process.
It is important to note that although Binding Financial Agreements are not reviewed or approved by the Court, they are still enforceable (provided that the content and execution of the Agreement is compliant with legislation). Parties must therefore comply with their obligations under the Binding Financial Agreement or they risk the possibility of facing enforcement proceedings in Court at a later date.
Which one do I need?
There is no better option when it comes to Binding Financial Agreements and Consent Orders, and it is likely that the individual circumstances of your matter will determine which document best suits the needs of you and your partner.
However, lawyers will generally recommend entering into Consent Orders rather than a Binding Financial Agreement where appropriate, as they are Court approved, have fewer technical requirements, and can be inexpensive.
It is therefore important to be aware of the below considerations (non-exhaustive) and discussing these with your lawyer when considering which document you should enter into:
Binding Financial Agreements (Property Only):
Can be beneficial in formalising an agreement that may appear less favourable to one party, as there is no ‘just and equitable’ requirement as with Consent Orders;
Consent Orders:
Conclusion
If you and your partner have reached an agreement about the division of assets from your relationship, it is always advisable to seek independent legal advice and formalise the agreement properly through a Binding Financial Agreement, or Consent Orders filed with the Federal Circuit and Family Court of Australia. There are significant risks with leaving your agreement as an informal agreement or trying to document it in some other way.
If you or someone you know wants more information or needs help or advice with a property settlement, please contact our Intake team on (03) 8415 5600 or email us at reception@hartleyslawyers.com.au.
This article is intended to provide general information only. You should obtain professional advice before you undertake any course of action.