Understanding the Need for a Clean Break
After the breakdown of a marriage or de facto relationship, it is important to address the division of assets, property, and financial matters as soon as practicable. Finalising financial settlements not only provides certainty for both parties but also prevents future disputes and financial claims. In Australia, the law is designed to allow parties to achieve a “clean break,” meaning that financial ties between former partners are brought to an end.
The Importance of Formalising Your Financial Settlement
Relying on informal agreements or private arrangements can carry significant legal risks. Unless your property settlement is formalised through legally recognised processes, such as Consent Orders or a Binding Financial Agreement (BFA), either party can make further claims, sometimes years later. Formal documents give legal effect to your agreement, ensuring it is enforceable and providing peace of mind for the future.
Your Main Options: Consent Orders vs. Binding Financial Agreements
There are two main ways to formalise a property settlement in Australia: Consent Orders and Binding Financial Agreements. Each option has distinct features, advantages, and considerations.
Consent Orders
Consent Orders are made via an application to the Federal Circuit and Family Court of Australia. This application will include your financial positions, how you both wish to divide the assets and liabilities, and any supporting documents. Once approved by the Court, the Consent Orders are legally binding and enforceable. The orders can cover property division, superannuation, spousal maintenance, and if appropriate – parenting arrangements.
Key features:
- Recognised and enforceable as Court orders
- The Court will only approve Consent Orders if they consider the agreement to be “just and equitable”
- Provide finality and prevent future claims once made
Binding Financial Agreements (BFAs)
A Binding Financial Agreement (BFA) is a private agreement between partners, including former partners. It allows parties to reach their own agreement about how to divide assets and liabilities, without the need for court involvement.
Key features:
- Do not require court approval or lodgement
- Each party must receive independent legal advice before signing
- Offers greater flexibility
- Must strictly comply with legal requirements to be valid and enforceable
- Provide certainty and can achieve a clean break if properly drafted
Which Option Is Right for You?
The choice between Consent Orders and a BFA will depend on your circumstances, the complexity of your financial arrangements, your level of cooperation, and your preferences regarding cost, and timing. In all cases, it is essential to obtain professional legal advice to ensure your agreement is legally effective and that your interests are protected.
Next Steps
If you have recently separated, consider seeking legal advice as soon as possible to discuss your options and time limits for property settlement. Taking prompt action can safeguard your position and help ensure a smooth transition to your next chapter.
Our team has extensive experience advising on property settlement after separation. We assist clients with Consent Orders, Binding Financial Agreements, and tailored solutions to suit your needs through all family law matters, ensuring every agreement is fully compliant and provides the confidence of a clean financial break.
For more information or to discuss your options, contact our experienced family law team at mail@redhale.com.au or call us on 02 9587 3866.
This article was written by Philip Todorovski, Solicitor, Redmond Hale Simpson.
