Those free, downloadable online ‘Separation Agreements’ or templates claiming to be ‘Binding Financial Separation Agreements’ should be avoided. Those documents, which might be called a’ Separation Agreement’ or ‘Deed of Separation’, do not comply with the requirements under the Family Law Act 1975 (Cth), which is the relevant law that applies to largely all separated couples in Australia (excluding WA).They are therefore not legally recognised and binding, meaning that they are not enforceable by the Federal Circuit Court of Australia or the Family Court of Australia.
The importance of having your financial agreement being legally binding and enforceable is explained in more detail below.
There are only two ways to formalise your financial agreement that can be legally recognised, binding and enforceable. One of the ways is documenting the agreement in what is called Consent Orders (which is what we specialise in) and the other way which is called a Binding Financial Agreement (“BFA”).
Consent Orders are Court Orders made by the Family Court of Australia. People have an understandable concern about not wanting to go to Court but documenting your agreement this way is really a paperwork exercise only, with the agreement that separated couples have reached together being documented and then lodged at the local Family Court Registry. You receive the sealed Consent Orders in the mail and you don’t have to go to appear before a Judge.
- Consent Orders are really the most cost effective and time efficient way of having your financial agreement documented, with the benefit of the agreement being legally recognised and enforceable.
- You do not have to get independent legal advice in order to sign Consent Orders.
- Consent Orders provide stamp duty exemption on the transfer of for example, property and cars.
- Once made, the Consent Orders are extremely hard to get side aside, meaning that your partner cannot come back for a ‘second bite of the cherry’ so to speak and neither can you. Some of the circumstances in which Consent Orders might be set aside include bankruptcy, duress and fraud.
BFAs are prepared by lawyers and once signed, the BFA remains with one of your lawyers in safe custody. The document is never seen by a Judge or Court before you and your partner sign it.
- Those BFAs formalising a financial agreement after separation are fairly complex, lengthy, time consuming and expensive documents to prepare.
- You and your partner must have independent legal advice about the agreement and the document before you sign it.
- What’s more, agreements formalised this way are at a greater risk of being set aside—meaning that your partner (or you) could try and have the Court undo the agreement even if it is years later down the track.
You want your financial agreement to be binding because it will mean that any future assets that you acquire, inheritances and lotto wins will be yours free and clear of any claim from your partner. You want your financial agreement to be enforceable because a Judge will enforce the agreement. For example, if your partner is to pay to you a cash sum under the agreement, then a Judge will enforce that. See our blog on ‘Why should we formalise our financial agreement?’
Talk to us further about how we can help you to formalise your property settlement after separation.