Binding Financial Agreements and Consent Orders
When your relationship has broken down and you agree on how your property should be divided, it is possible to do so without any Court intervention. 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, can enter into Binding Financial Agreements “the Agreement”) describing how “matrimonial property” is divided. The Agreement describes the settlement that has been reached, i.e. “who gets what” (including any superannuation interests) after the break down of a marriage or a de facto relationship.
What should you be careful of when signing Financial Agreements?
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.
An Agreement can 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 separated, and you have entered into a legally binding financial agreement, one of the parties will sign a “separation declaration” and the financial agreement will take effect. The assets will then be distributed pursuant to the time frames outlined in the agreement.
What are Consent Orders?
Parties to a marriage or de facto relationship, can also enter Consent Orders. Consent Orders are a variation of financial agreements and also 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.
A Consent Order is a written agreement which is approved by the court. This process differs slightly from Binding Financial Agreements as 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, but in this process 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 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 agreements 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.
At The Legal House we have family lawyers who will be able to help you with your queries regarding Binding Financial Agreements and Consent Orders – please contact us to book a no obligation free call to find out more.