You’ve reached an agreement for property settlement. You’re ready to document it. Consent Orders or Binding Financial Agreement – what’s the difference?
Both documents set out the agreement reached. Both documents are binding and enforceable (provided the requirements are met – read on). Both documents enable you to benefit from stamp duty exemptions, such as if one partner is transferring their interest in a property to the other. Both documents require financial disclosure and deal with all of the assets, liabilities, superannuation and resources of both partners (often called “the asset pool”).
Consent Orders refers to the document signed by the separating couple along with a document called an “Application for Consent Orders”. Together these documents set out the couple’s assets, liabilities, superannuation and financial resources (and their values), and what is to happen to each of those items in the settlement.
The documents are filed with the Family Court of Australia (a filing fee is charged by the Court) and reviewed by a Registrar. You are not required to attend Court. Provided that the Registrar is satisfied that the Orders are just and equitable, he/she will grant those Orders. This is the day that the Orders become binding and enforceable upon the separating couple, and the clock starts ticking in respect to any time limits in the Orders.
You do not have to get legal advice from a solicitor to prepare/lodge Consent Orders, although we strongly recommend that you do, as once the Orders are made, they are irreversible except in exceptional circumstances. Also, there may be an unexpected or hidden outcome for you in the deal (e.g. tax consequences, stamp duty, a liability, or remaining in the family business when you need out!) and you don’t want to be left with a liability you weren’t expecting in the deal.
Binding Financial Agreements are a different creature. They are essentially a Deed that sets out the asset pool and what is to happen to each item in the settlement. In order to be binding and enforceable, both of you must obtain independent legal advice as to the nature and effect of the Agreement, as well as the advantages and disadvantages to him/her in entering into the Agreement at the time. The solicitor for each partner must provide a statement of independent legal advice, attesting to this advice having been given.
The Agreement does not get filed with the Court, and does not require a Registrar to review and approve the settlement.
In our experience, most property settlements can and should be formalised by way of Consent Orders, for many reasons, including that they are easier to enforce if things go awry, Binding Financial Agreements have very technical requirements and do not require the approval of a Registrar of the Court (who in respect of Consent Orders, needs to be satisfied that the settlement is just and equitable in order to approve the orders).
For these reasons, generally, Binding Financial Agreements are reserved for unusual cases/settlements that may not be approved by a Registrar, if filed with the Court as Consent Orders.
Both Consent Orders and Binding Financial Agreements should be prepared by lawyers with expert knowledge of Family Law. It will give you peace of mind to know that your property settlement does what you think it does, it won’t cause you headaches or have any hidden surprises down the track.
If you’ve reached an agreement with your partner and need help formalising it, call or email us today.