If you are married or in a de facto relationship, you can agree on how your property should be divided without attending a court hearing. This can be achieved by entering into a Binding Financial Agreement or a Consent Order.
Binding Financial Agreements
A Binding Financial Agreement is a binding legal agreement that can be entered before, during or after a marriage or de facto relationship. They are often referred to as ‘prenuptial agreements’ however the correct legal term is a Binding Financial Agreement. Financial Agreements are not filed with the Family Law Courts, however the agreement must be carefully constructed to ensure it complies with the strict statutory requirements, as it is in effect a contract where the parties agree to contract out of the Family Law Act 1975 (Cth).
Advantages of a Financial Agreement
- Financial Agreements are binding and enforceable from the time it is signed by both parties and certificates of independent legal advice are provided by each party’s lawyer.
- Financial Agreements can be prepared quickly if there is no dispute between the parties, and they are not subject to any waiting period for the Court to consider the agreement.
- They are scrutinised by the legal practitioners providing independent legal advice, but they are not examined on justice and equity required for documents sealed by the Court.
- Disputes may arise in the future if the agreement is less favourable to one party, however a “bad deal” will not automatically set aside a Financial Agreement.
Disadvantages of a Financial Agreement
- Financial Agreements cannot deal with parenting arrangements.
- The law requires that both parties receive independent legal advice for any Financial Agreement to be valid. For this reason, it can be more expensive to prepare a financial agreement than Consent Orders as both parties will pay legal fees.
- If there is any dispute as to the legitimacy of the agreement, parties may be subject to litigation which could be costly.
- If one party wishes to seek a property settlement after a Financial Agreement, they will first need the Financial Agreement to be set aside by the Court. This can be a costly and lengthy process.
- A Binding Financial Agreement can be challenged and set aside by the Court if the agreement has been drafted without proper regard to the law, or if either or both parties have entered into the Agreement under fraud, duress, undue influence, or various other legal factors.
- A change in circumstances of the parties may give rise to a party seeking to set the Agreement aside, but this will not always be the case.
Consent Orders
A consent order is a written agreement between two parties that is tested by the Court before being sealed as a Court Order. It is legally binding and enforceable by the Court. A Consent Order can include parenting arrangements and/or property division following the breakdown of a relationship.
Advantages of a Consent Order
- The court must be satisfied that the Orders sought are just and equitable which ensures the agreement is fair for both parties.
- As the agreement is tested before the Orders are made, it is more unlikely that those Orders will be set aside in the future (except for some circumstances as set out in section 79A of the Family Law Act 1975 (Cth)).
- The process to apply to the Court is intended to be user friendly. The Court has an electronic filing system which allows parties to submit their application online with ease.
- Consent Orders can include parenting and property arrangements.
- You do not need to obtain legal advice, however it is highly recommended that the parties do obtain independent legal advice prior to signing any agreement.
Disadvantages of a Consent Order
- There may be delays with the Court and the return of the sealed Orders.
- If the Court is not satisfied that the Orders sought are just and equitable, the Consent Orders will not be made, and parties will need to resubmit their application.
- There is a Court filing fee associated with the Application.
The cost of Binding Financial Agreements and Consent Orders will vary depending on the complexity of the matter. It is generally, but not always, more expensive to prepare a Binding Financial Agreement.
Consent Orders and Binding Financial Agreements are helpful documents that, if prepared correctly, can assist parties to resolve disputes without the need for costly litigation. If you need any advice relating to Binding Financial Agreements or applying for a Consent Order, you can contact our experienced team here at Kydon Segal Lawyers and we will be happy to be of assistance!