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Binding Financial Agreements and Consent Orders
Your relationship has broken down and like many couples you have accumulated assets during that relationship. You can agree on how your property should be divided without any court intervention and the most effective way to distribute the matrimonial assets is through one of the following legal agreements:-
- consent orders (where you ask the court to make orders ratifying your agreement); or
- a binding financial agreement
What are Financial Agreements?
Parties to a marriage or de facto relationship, which has broken down can enter into binding financial agreements. The financial agreements describe the financial settlement that has been agreed between the parties, i.e. “who gets what” (including any superannuation interests) after the break down of a marriage or a de facto relationship.
For a financial agreement to be legally binding both of the parties to the agreement must have received independent legal advice and after receiving that advice signed the agreement.
The agreement can also be set aside by a Court if it was achieved through deceit, via unconscionable conduct (one of the parties signing cannot read or write English and no interpreter used), or non disclosure of relevant financial information. The agreement can be declared void, voidable or unenforceable, if it is impracticable, or has been frustrated (e.g. bankruptcy and no property to divide), or there has been a material change in circumstances (e.g. birth of a child). The Court can also set aside an agreement entered into for the purpose of defeating creditors (e.g. transferring your property to your spouse, to avoid creditors attempting to sell the property for payment of a debt).
Assuming you have entered into a binding financial agreement and you have now separated, one of the parties will need to sign a “separation declaration” in order for the financial agreement to take effect. Provided the agreement is enforceable, the assets will be distributed pursuant to the time frames outlined in the agreement.
What are Consent Orders?
Parties to a marriage or de facto relationship, which has broken down can also enter into consent orders. Consent orders are a variation of financial agreements and also describe the financial settlement that has been agreed to between the parties, i.e. “who gets what” (including any superannuation interests) after the break down of a marriage or a de facto relationship.
A consent order is a written agreement which is approved by the court. In this process it is possible for only one of the parties to be legally represented, although it is a good idea for both to be independently represented. In a similar manner to the financial agreements, the parties agree on a financial settlement and ask the court to issue the orders, agreeing to follow the terms stated in the document. Once the consent order is made, it is a court order and contravening a court orders comes with consequences. The court has the authority to issue fines, transfer property to give effect to orders, and in extreme circumstances sentence people to terms of imprisonment.
The common theme in financial agreement and consent orders is that both parties agree as to how to divide the matrimonial assets and simply want to formalise their arrangement. These documents are not appropriate for separated couples who do not agree as to how to divide the matrimonial assets.