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You have reached a point in your relationship whereby you are now wishing to sever the financial relationship – perhaps the relationship itself has come to an end or circumstances are such that you wish to terminate only the financial aspect of the relationship. Whatever the case it is a good idea to have any agreement reached documented in a contract either a Binding Financial Agreement or a Consent Order. Until you have converted your agreement to a contract either party may still have a claim on the assets of the other party well into the future.
To enter into either of the above you need an agreement about how you will divide your assets - If you are having difficulty reaching an agreement, mediation with Experienced Mediators can assist you.
Once you have reached agreement you will need to decide whether you will enter a Binding Financial Agreement or a Financial Consent Order, following are some of the differences between the two options:
Binding Financial Agreement
This is a private contract between parties, that details how they will divide their assets and debts. Parties are not required to have their contract processed/scrutinised via the family court.
A BFA does not have to be a just and equitable division of assets. It may be agreed that one party leaves with the majority of the property pool. Your lawyer will want to ensure that neither party is under duress when accepting this type of agreement.
To enter into a BFA, parties must receive prior independent legal advice and you will need two independent lawyers (one each) to sign the contract with you.
A BFA will only cover financial settlement matters.
Enforcing a BFA is made via an application to the court.
Consent Order
A Consent Order is granted, once filed with the family court and the court has deemed the agreement is “just and equitable” for both parties.
An application to the Family Court for Orders does not require oversight by an independent lawyer and can be prepared by the parties themselves, However, it is recommended to seek independent legal advice prior to filing a Consent Order.
The Family Court may reject the application for the Order if it does not deem that the application is fair and reasonable for both parties.
A Consent Order application can be made to cover a financial settlement and parenting matters.
Enforcing an order is a straight forward enforcement process via the court.
BFA or Consent Order – Which is Best for You
The first response is always that it is important that you seek some level of independent legal advice – most people have “similar” circumstances though rarely exactly the same. A legal adviser will guide you to the best option. However, you may wish to think about the following in relation to your scenario:
Binding Financial Agreements – might be considered when:
Parties wish to maintain confidentiality and do not wish their financial and personal information to be open to court scrutiny.
When both parties by mutual agreement, absent of any threat pressure or coercion, agree that one party may be retaining significantly more of the property pool for personal reasons only – an arrangement that the Family Court may not be willing to process into Consent Orders.
Parties have a complex matter that sometimes Consent Orders do not allow provision for eg. extended settlement terms on sale of joint property, agreements around payment plans for one party to pay out another.
Consent Orders – might be considered when:
1. When parties are looking to combine parenting and financial matters in one contract.
2. Seeking a more cost-effective contract – parties can make their own application to court at reduced cost – compared to the legal requirement to engage lawyers to advise and oversee the preparation of a BFA.
3. Both parties want a just and equitable settlement, and/or are unsure if their agreement is just and equitable - the family court will review the agreed application and advise if these two criteria have not been met.
4. There is concern that one party may not follow through with the agreement – Consent Orders are sometimes considered more easily enforceable, as having support of the court.
As mentioned, your first step before formalising your financial settlement in a contract is to seek legal advice. Experienced Mediators can offer you legal referrals and assist with working with you and your partner/ex-partner to seek a mutually agreed settlement.
If you or someone you know needs help to navigate through family mediation or would like more information, please contact Latoya Percival or Anna Oxford via our website: www.xpmediators.com
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