If a relationship breaks down, the best approach the parties can take will include maintaining a 'working relationship' in order to amicably reach an agreement. This will allow the parties to save substantial financial and emotional stress by avoiding the Court system. If the parties are able to reach an agreement on a final basis, it is important that the parties follow the required process to have this agreement finalised.
Options to Formalise
1. Consent Orders
A Consent Order is a written agreement that is sent to the Court to be Sealed. When the Orders (together with an attached Application for Consent Orders) are sent to the Court, the Registrar will consider the orders to ensure that the proposed agreement is "just and equitable" in relation to the range of entitlements of the clients. If the Registrar is satisfied that the orders are fair, they will then make the orders. These orders will then be binding on both parties and the obligations contained within will need to be complied with.
Consent orders can deal with parenting, property, and spousal maintenance matters. Consent orders can only be prepared once the parties have separated. Parties are not required to receive legal advice with respect to the Consent orders prior to having the orders sealed by the court, however it is strongly recommended that you do obtain legal advice. Depending on the circumstances, Consent Orders are generally a more cost-effective option for parties to formalise their agreement.
2. Financial Agreement
A Financial Agreement is a document that can be entered into before, during or after your marriage or de facto relationship. The Financial Agreement will be used to deal with the financial settlement matters however parenting arrangements cannot be documented in a financial agreement.
Both parties are required to obtain independent legal advice prior to executing a Financial Agreement document. One of the reasons for this requirement is that there is no 'fair and equitable' principles applied to the Financial Agreement and the document is not sent to the Court for approval. For this reason, there are very strict legislative requirements for a financial agreement to be binding. If the requirements are not met, or the circumstances for the parties significantly change, the agreement may be at risk of being set aside. Therefore, generally a Financial Agreement will be more expensive due to the complexities to be dealt with by the solicitor when drafting and providing advice.
Benefits of Formalising your Agreement
1. Minimise the risk of future claims by your ex-partner
If you are to reach an agreement and fail to formalise it, you may face the risk that the other party may bring a subsequent claim against your assets or property. If your agreement is formalised using one of the prescribed methods of the Family Law Act as set out above, the risk that the agreement can be varied or set aside will greatly decrease. Formalising your agreement will provide you with the sense of finality in your family law matter, knowing that the agreement has been dealt with and is then binding on both parties.
2. Transfer Duty Exemption
Another benefit of formalising your Family Law agreement is that you don't pay transfer duty on transactions that give effect to a Court order or Financial Agreement made under sections 90, 90L or 90WA of the Family Law Act. This will mean that if one party is keeping the matrimonial home, however requires the other party to transfer their interest, there will be no transfer duty payable on this transfer. Generally, for the transfer to be exempt from the duty the Court order or financial agreement must:
- Be a valid order or agreement;
- Pre-date the transfer of property;
- Specify the property being transferred;
- Clearly state who the property is to be transferred to.
3. Enforce the Agreement
Some parties encounter difficulties when effecting the terms of the agreement. This can include, having the other party sign transfer/release forms, having the other party pay a sum of money or having the other party vacate a property. Once an agreement is formalised by way of Consent Orders or a Financial Agreement, it is binding on both parties and the obligations contained within can be enforced.
If you reach an agreement, and this is formalised with the Court, you are able to apply to the Court in order to enforce an obligation contained in your agreement. Depending on what the obligation is, this may mean that the Court will sign required documents on the other party's behalf or may make further orders enforcing the agreement. Read more about enforcement in this article.