We’ve Agreed On Our Property Settlement, How Do We Now Make It Legal?

The end of a marriage or de facto relationship is often a stressful and emotionally hard time for people. Reaching an agreement on the division of assets and liabilities between yourselves can help reduce the financial and emotional costs involved with legal proceedings, whilst also giving you both the authority of making your own decision on how your things are split.

However, even if you and your former partner agree on the division of your assets and liabilities some important steps still remain to ensure your agreement is finalised. It is important to understand that an informal agreement is not legally binding on either party, and as such neither party is protected from the other party being successful in a claim for property settlement at a later date.

There are two ways to formalise your property settlement:

1. Consent Orders sealed by the Court; or

2. A Binding Financial Agreement.

Consent Order

A Consent Order is a written agreement that is approved by a court and is usually the most common way to formalise an property settlement agreement.

Consent Orders are court orders entered into by mutual agreement.

Consent Orders about property and finance may deal with:

• Transfer or sale of property,
• Splitting of superannuation,
• Child Maintenance and spouse maintenance.

Consent Orders are filed with the Family Court, together with an Application for Consent Orders, which sets out relevant information the court requires in order to assess whether the proposed orders are ‘just and equitable’. The Court will only make the proposed orders if satisfied that the orders are just and equitable for both parties.

Parties are not required to use lawyers to enter into Consent Orders, although the Consent Order does need to be drafted in a way that makes them enforceable, for this reason it is highly recommended that a lawyer is used to draft a Consent Order.

Once Consent Orders are made, they are enforceable and there are very limited grounds upon which Consent Orders can be appealed, set aside, varied or discharged.

For this reason, Consent Orders are often preferred over financial agreements, where a potential future breach of the terms of the agreement by one party is sensed as a serious likelihood by the other party. It is easier and less expensive to enforce compliance with consent orders than it is with financial agreements.

Binding Financial Agreement

A Binding Financial Agreement can be entered into before, during or after a marriage or de facto relationship. These agreements can cover:

• financial settlement (including superannuation entitlements) after the breakdown of a marriage or a de facto relationship
• financial support (maintenance) of one spouse by the other after the breakdown of a marriage or a de facto relationship,
• any incidental issues.

Related Article: Prenups For Lovers: Why Prenuptial Agreements Are Actually Romantic

To be binding the financial agreement:

• Must be in writing;
• Must specify which section of the Act it is made in accordance with;
• Must be signed by both of you;
• There must be a Statement of Independent Legal Advice for each of you from a qualified legal practitioner setting out the matters referred to in the Family Law Act (“the Act”), and confirming that the advice was given to you each before you signed the financial agreement;
• The Statements of Independent Legal Advice must be exchanged;
• One party will retain the original financial agreement and the other will be given a copy;
• There should have been full and frank disclosure of all financial matters between both of you (however this is not strictly necessary under the Act); and
• All of the technical requirements set out in the Act must be complied with.

A Binding Financial Agreement is a complex document, as such it is prudent that you engage a lawyer to execute this document. Your former partner will also need legal advice on the financial agreement and sign a certificate of advice, otherwise the Financial Agreement will not be binding.

Note: This is general information advice only and does not constitute specific legal advice. If you would like further information in relation to this matter or other legal matters, please contact us on 03 9620 0088 or email info@resolveconflict.com.au