If you have separated from your partner, it is time to think about how your property will be divided. To settle property matters, you have two options: Consent Orders or a Financial Agreement (also known as a Binding Financial Agreement). Both documents reflect a formal agreement on how your property will be divided but differ on how they are drafted and enforced.
It is important that you understand the difference between these documents to make a decision about what will be suitable to your situation.
What are Consent Orders?
Consent Orders comprise of two documents that are both filed with the Family Court: an application for consent orders and a minute of order. It is a written agreement that details both parties’ assets, liabilities, superannuation entitlements and contributions made to the relationship (both financial and non-financial). The proposed orders will outline the orders you wish the Court to make in respect of the division of property between you.
To approve the orders, the Court must be satisfied that the proposed orders are just and equitable to the parties, meaning, the orders must be fair to you both. Once approved by the Court, the orders are binding on both parties and cannot be altered. There are serious consequences for breaching a Court order.
A crucial factor for you to be mindful of is that you must file the application for consent orders within 12 months of your divorce (or 2 years since the end of your de facto relationship).
What is a Financial Agreement?
On the other hand, a Financial Agreement is never filed with the Family Court and is a private agreement between the parties, so it is not subject to the Court’s review. Unlike Consent Orders, Financial Agreements can be a lot more complex and costly to prepare.
The Financial Agreement contains the background to the relationship, what assets currently exist and what each party is to retain. The Financial Agreement does not have to meet the threshold test of being ‘just and equitable’ so there is a risk that the agreement may significantly benefit one party over the other. Consequently, there is a greater risk that the document may be challenged by the other party later if they decide that they no longer wish to be bound by it.
Given that a Financial Agreement may not be fair and reasonable to both parties, each party must obtain independent legal advice on the effect of the Financial Agreement and the Solicitor that gives that advice must sign a certificate that they have given the requisite advice.
How do I know which document to choose?
There are advantages and disadvantages to both options and we recommend that you consider your current relationship with your ex-partner and evaluate what option would be best for your situation. Regardless of the document you choose, it is important that you are advised appropriately as to whether the agreement is favourable to you.