Consent Orders vs a Binding Financial Agreement?
If you are considering separation or have recently separated, there are important financial matters to address. Once you reach a financial agreement, documenting it properly can prevent any future disputes. So, what are the options? Should you consider Consent Orders or a Binding Financial Agreement (BFA). Our blog outlines the differences between the two to help you decide what is best for your situation.
What are Consent Orders?
Consent Orders are legally binding agreements in family law matters, reached through mutual consent. After both parties sign the agreement, it is lodged with the Court. A Court registrar reviews the application to ensure it’s fair and equitable. If approved, the orders are stamped with the Court’s seal, making them enforceable.
What is a Binding Financial Agreement (BFA)?
A Binding Financial Agreement (BFA) sometimes referred to as a ‘prenuptial or postnuptial agreement’ is a legally binding contract made between parties in a de facto relationship, a marriage, or a same-sex relationship in Australia. Its primary purpose is to set out the financial arrangements prior to entering a new relationship or in the event of a breakdown in the relationship, including property division, spousal maintenance, and other financial matters. Essentially, it allows couples to make their own financial arrangements outside the court system, providing a level of autonomy and control over their financial futures.
The key differences between Consent Orders and a Binding Financial Agreement:
Court Approval and Fairness
Consent Orders: Are filed with the Court, which will only approve the orders if they are “just and equitable.” The Court considers both financial and non-financial contributions made during the relationship.
Binding Financial Agreement: A private contract between the parties, not subject to Court review, meaning the Court does not assess its fairness and one party could have a more advantageous settlement.
Disclosure of Financial Information
Consent Orders: Require full and frank financial disclosure, as the Court reviews all relevant financial information to determine if the agreement is fair and reasonable.
Binding Financial Agreement: Full and frank financial disclosure of each party’s financial situation is required. But this is an area of risk with a BFA, as despite the agreement being “binding” if there was any concealment or misrepresentation of assets, the BFA could be vulnerable to being overturned or set aside.
Legal Advice & Fees
Consent Orders: Generally, more straightforward and can be more cost-effective if both parties are in agreement. You can approach a Solicitor to draft the application and both sign if you mutually agree. If minimising legal fees is a priority, Consent Orders, especially if the parties are amicable, can be more cost-effective.
Binding Financial Agreement: Each party must obtain independent legal advice, which is essential for compliance with the Family Law Act, this may involve higher legal fees due to the time it will take to review and give advice to each party.
Parenting Matters
Consent Orders: Can address both financial/property and parenting matters, allowing all aspects to be resolved at the same time.
Binding Financial Agreement: Only covers financial matters, so a separate agreement would be needed for parenting issues.
Enforcement and Compliance
Consent Orders: Provide legal protection, making it easier to enforce compliance and manage breaches through the Court. This is done via an application to the court.
Binding Financial Agreement: A BFA must meet strict legal requirements in order to be enforceable. This includes obtaining a Certificate of Independent Legal Advice. Without this certificate the BFA would be unenforceable. However, if you have met all legal requirements and one party fails to comply with the agreement, you can file an application to the court.
Choosing the Right Option for You
At Orman Solicitors, we strongly recommend formalising any agreements through consent orders as they offer strong legal protection in case of future disagreements. However, what is best for you depends on the unique circumstances of your situation. For confidential advice tailored to your situation, we invite you to schedule a complimentary 15-minute call with one of our experienced family law team members.
Disclaimer: The content presented in this article is offered for informational purposes and should not be construed as legal advice or a substitute for professional guidance. If you have questions or require legal assistance, we strongly recommend consulting with a Solicitor to address your individual circumstances.