On separation couples are often left with not only the difficulty of dividing up the matrimonial assets but of making formal arrangements to document any agreement reached between them. How do you reach an agreement, which type of formal agreement is best for you and what happens if you do nothing?
You can agree the split of the assets on separation with your partner. This can be done in various ways:
- Sitting together and discussing the asset pool and agreeing who will retain which assets;
- Attending a professional mediator who will try to assist you in reaching an agreement;
- Negotiating issues through Solicitors; and/or
- Through Court proceedings.
If you are able to agree issues between you the agreement should be formalised by way of a legally binding document in order to avoid either party making any claims against the other in the future. The agreement can be formalised in two ways:
Consent Orders are a written agreement approved by the Court which are legally binding. Although Court Orders are approved by the Court neither you nor your partner need attend Court. The Orders are approved administratively.
Consent Orders can deal with the following:
- The transfer or sale of property;
- Superannuation split;
- Spousal maintenance.
In order to approve the Consent Orders the Court must be satisfied that the Orders are properly drafted and that the agreement is just and equitable.
If necessary, Consent Orders may include Parenting Orders.
Binding Financial Agreement
A Binding Financial Agreement is a written agreement between two parties which covers the following:
- Division of property, finances and debts after a marriage break down;
- Superannuation split;
- Spousal maintenance;
- Any other incidental issues (i.e. school fees, adult child maintenance).
In order to ensure that financial agreements are legally binding both parties must sign the agreement and receive independent legal advice before signing.
A Binding Financial Agreement does not necessarily need to be entered into after Divorce but can be entered into in contemplation of a marriage/defacto relationship (sometimes known as a pre-nuptial agreement), during a marriage/defacto relationship (sometimes referred to as a mid-nuptial agreement) or after Divorce or the breakdown of a defacto relationship (sometimes known as a post nuptial agreement). Binding Financial Agreements are intended to avoid the need for the parties to go to Court in respect of property matters however it should be noted that Binding Financial Agreements may be contested in Court and do not in themselves prevent either party making an application for property settlement in the future.
A Binding Financial Agreement may also set out the parties agreements on issues such as spousal maintenance, claims on the other party’s estate after death and adult child maintenance. It cannot however deal with parenting issues.
If you do nothing
In the event that you do not do anything either party may apply to the Court in the future. You both have a period of 24 months from the date of separation to make an application to the Court without requiring the Court’s permission. Either party may at any time after that date make an application but will require the Court’s permission to do so. The longer it takes to make a claim the more difficult it will be to do so.