If you and your former-spouse or de facto partner have reached an agreement in relation to the division of your property following separation, it is important that you formally document your agreement for a number of reasons, including:
1. To provided finality and certainty in relation to the separation of your financial relationship;
2. To obtain stamp duty exemptions or roll over relief from paying capital gains tax if a property is being transferred as a result of the separation agreement; and
3. To avoid the possibility of your former-spouse or de facto partner reneging of the agreement or wanting a share of any of your financial success following the agreement.
There are two options which the Family Law Act recognises as formal ways to document a separated parties’ property agreement, Consent Orders or a Financial Agreement.
Consent Orders
This refers to Court Orders made by the consent of both parties. It requires two documents, an Application for Consent Orders and the proposed Orders, to be signed by both parties and filed with the Federal Circuit and Family Court of Australia (“The Court”). There is a filing fee to pay when filing the Application, which as of April 2023 is $180. The filing fees are reviewed at the commencement of each financial year.
The Application for Consent Orders is a form recording both parties’ details and financial positions. When considering the Application, the Court applies the relevant law to the circumstances and for the Orders to be approved the Court must be satisfied that the agreement is just and equitable.
The Orders that are submitted to the Court need to be drafted with a specific level of formality to ensure that they are binding and enforceable and that the settlement is assessed by the court to be “just and equitable”. Accordingly, we recommend that you engage a family lawyer to prepare the documents to ensure they are accepted by the Court.
Financial Agreement
A financial agreement, also commonly referred to as a binding financial agreement or “BFA”, is a private agreement between parties recorded in a document, similar to a contract. To be considered binding, the financial agreement needs to comply with a number of requirements set out in the Family Law Act. One of the requirements is that both parties receive independent legal advice from an Australian Legal Practitioner (“lawyer”) and that the lawyer providing the advice signs a certificate annexed to the agreement that prior to the agreement being signed by the client they provided the independent advice.
Financial agreements do not require the approval of the Court and therefore do not need to considered just and equitable.
Comparison
To summarise, the similarities and differences are highlighted in the below table:
| Consent Orders | Financial Agreement | |
| Legally recognised way to document a property settlement agreement? | Yes | Yes |
| Submitted to and approved by the Court | Yes | No, unless either party seeks to enforece the agreement |
| Both parties require independent legal advice before signing? | No | Yes |
| Must be considered ‘just and equitable’ | Yes | No |
| Costs | $180 filing fee plus optional legal fees to prepare | Both parties pay for lawyers to review and provide advice |
| Can extinguish future claims by the other party for spousal maintenance | No | Yes |
If you are seeking to formalise a property settlement with your former-spouse or de facto partner, please contact Honan Family Law to arrange for a fixed fee initial consultation to discuss your matter and how to best document your agreement.
