Consent Orders and Financial Agreements

THE BENEFITS OF FORMALISING YOUR AGREEMENT

In many cases parties to a marriage or a de facto relationship are able to reach an agreement in relation to the care of their children or the division of their property after they separate. This is particularly so when the separation has been amicable, and the parties remain on good terms. In these circumstances, parties often ask ‘if we have reached an agreement between ourselves, do we really need a lawyer?’

Whilst the temptation in these circumstances may be to try and avoid legal costs and rely on a ‘handshake agreement’, or even a document that the parties have prepared themselves and signed, the reality is that unless the parties properly formalise their agreement, there are significant risks on relying on this type of arrangement.

Perhaps the most significant risk parties face by not formalising their agreement is that they leave the door open for their partner or spouse to make a further claim for property or spousal maintenance in the future. That risk potentially increases in circumstances where one party to the relationship receives an inheritance or a lottery win after they have separated.



The Family Law Act 1975 (Cth) stipulates that an application for a property settlement must usually be made within 12 months of a divorce order taking effect or within 24 months of de facto parties separating. There are, however, exceptions to these general rules and in certain circumstances the Court can give permission to a spouse or partner to bring an application long after those time limits have expired.  That risk can be significantly reduced where parties have formalised their agreement.

In addition to the risk of future claims being brought by one of the parties, when parties rely on an informal agreement that they have reached there is no way to enforce the agreement if one party fails to comply with their obligations under it or they otherwise renege on it.

Where the distribution of property following separation includes the transfer of real estate or other property from joint names or between names, then an obligation to pay stamp duty or other transfer costs may arise. However, where that distribution takes place pursuant to an agreement that has been properly formalised, the parties may be entitled to an exemption in relation to the payment of that duty or the transfer costs. In many cases, the amount of the stamp duty or transfer costs payable on those transactions can far exceed the legal costs that would have been charged to formalise the parties’ agreement.

Parties can formalise arrangements after they separate by way of a Binding Financial Agreement (BFA) or a Consent Order.

Binding Financial Agreements

Whilst a BFA can include the terms of an agreement in relation to the level of child support that one party will pay or receive for the parties’ children, including for example the payment of expenses such as private school fees, extracurricular activities, or private health insurance, it cannot formalise an agreement in relation to the future care of the parties’ children. Any agreement in relation to the care of the parties’ children would have to be detailed in an application for Consent Orders, which would only be sanctioned by the Court if the Court was satisfied that the proposed arrangements were in the ‘best interests’ of the children.

A BFA can otherwise be used to formalise the terms of an agreement in relation to the parties’ financial affairs. Unlike a Consent Order, it does not require a Court to review and/or sanction the terms of the agreement, and as such, in certain circumstances a BFA can provide significantly more flexibility as to how the parties divide their property.

It is important to note, however, that as a BFA has the effect of ousting the jurisdiction of the Court to determine the distribution of property from a marriage or a de facto relationship, there are strict requirements that have to be complied with to ensure that a BFA is actually binding on the parties. A more detailed consideration of those requirements can be found here: ‘Binding Financial Agreements ’

Consent Orders

Where an agreement has been reached in relation to the future care of children following separation, it may be possible to formalise that agreement by way of an application to the Court for a Consent Order. Before making an order in relation to the care of a child or children, the parties will have to demonstrate to the Court that what is being proposed is in the best interests of the child or children.

Parties may also apply for Consent Orders in relation to the distribution of the property from their relationship. Where such an application is made, the parties will have to demonstrate to the Court that what is being proposed by way of property settlement is ‘just and equitable’ or fair. A more detailed consideration of how a court determines what is ‘just and equitable’ can be found here: ‘Family Law Property Settlement’

The prospect of saving on legal costs may, at first glance, appear to be appealing. However, the reality is that by not properly formalising your agreement you expose yourself to the risk of significantly higher legal costs if one party reneges on an informal agreement or perhaps makes a further claim for property or spousal maintenance and/or may result in you missing out on stamp duty or transfer costs.

At Frigo james Legal Group our focus is on helping you achieve the best possible outcome without resorting to litigation by providing you with expert family law advice that is tailored for your individual circumstances.

For an assessment of your family law matter, contact our experienced lawyer Mr Andrew James to arrange your consultation on 07 5621 3799 or info@fjlegal.com.au.