Difference Between Binding Financial Agreements and Consent Orders

A divorce or a separation brings with it not only an emotional turmoil of mammoth proportions but also the legal complexities of property and financial settlements. And if you are feeling emotionally tormented or drained, your judgements can be clouded or driven by the forces of your feelings. Therefore, hiring a legal expert becomes imperative so that you make no mistakes and avoid causing irreparable damage to yourself financially.

To avoid protraction of the legal proceedings in settling properties and finances, it is very important to formalise any and all kinds of financial agreements reached under by way of either a Binding Financial Agreement or a Consent Order. Without a legal binding agreement, either of the parties may come back in the future and reagitate issues and claims against the former partner and their new assets. So, by all means a legal binding instrument by way of a Binding Financial Agreements or Consent Orders is in the best interests of both parties and gives peace of mind to full closure of your matter.

Family Court Consent Orders

When both parties come to an agreement about the division of their assets and finances, which may also include the care and welfare of their children, a Consent Order is issued by the Family Court. Though your presence in the court is not necessary to obtain a Consent Order, presenting your consent to the agreement is essential. To do this, you will need the Application for Consent Orders. The Application of Consent Order is a fundamental piece of document in which you need to disclose all the details of your relationship along with the list of all the assets and debts in either party’s name and their respective values. Also added to the application would be the contributions made by each party towards earning the assets and their respective future needs after the divorce or separation.

When the application is filed, the Consent Order is made which entails details about the settlement. Things like the deadline for making a certain payment and the amount are all specified in a Consent Order which needs to be signed by both involved parties. Thereafter, the documents are sent for review by the Registrar and this process involves a filing fee. The process of review can take somewhere between one to eight weeks. Once the registrar approves, the Consent Orders are stamped and sealed and sent to both parties, thereby making the Consent Order a legally binding agreement. It is noted that the Registrar could determine the Orders as not being “Just and Equitable” and could reject making them.

Advantages of Consent Orders

Being a legally binding document, a Consent Order is advantageous in several ways. Let us see why it is advisable to get one in case of a divorce or separation.

Legally Binding

By nature, a Consent Order is a court document that in itself is very powerful and binding. The involved parties are bound to comply with the terms and conditions mentioned in it. It is also legally accepted proof that a certain agreement has been arrived at about the settlement of property and finances.

Difficult to Revoke

It’s a court order and it’s binding – everything here says that a Consent Order is not so easy to revoke or overturn. Once the parties have come to an agreement about the settlement of the assets and the same is registered with the Family Court, revocation, though not impossible, is certainly a long process to go through and needs to be substantiated by some solid reasoning.

Legal Advice by Choice

Each party has the right to seek legal advice in filing for a Consent Order. While signing the documents, each party is required to check the box denoting that they are aware of their right to legal counsel. Whether to seek independent legal advice or not is entirely up to the parties involved. Filing a Consent Order can be done by the parties themselves without any intervention by legal experts.

Disadvantages of Consent Orders

Like every legal process, obtaining Consent Orders also has two sides to it. While it is certainly touted as beneficial, there are flaws on the flipside. Let us take a look.

Registrar’s Judgement

While reviewing a Consent Order, the Registrar will give the final nod only if he deems fit. If the Registrar confirms that all the terms and conditions mentioned in the Consent Order fall within the purview of the Family Law Act, the Consent Order will be approved. In case of a minor deviation from the Family Law Act, there could be further iterations and notices will be sent to both parties asking for additional information.

Tedious Process

Filing for a Consent Order is a tedious process. There are just too many details to be included in the Application Form and a lot of information to be provided. As an individual, it may be way too cumbersome for you but when a legal expert is involved, things might be a lot easier.

Fee and Time Involved

Filing the Consent Order involves a fee and as of now, this amounts to $180. This could be quite an amount for some from the lower income bracket and pose a disadvantage. Furthermore, there is also a time frame for this process to be completed which can span anywhere between one to eight weeks. How fast the process is carried out totally depends on the workload with the Family Court.

Binding Financial Agreement

A Binding Financial Agreement (BFA) is a contract of sorts between two people who are in a marriage or a de-facto relationship. This agreement defines how the financial assets and liabilities of a couple are going to be divided in case of separation or divorce. When a couple enters a Binding Financial Agreement, it means both the involved parties have come to an agreement about who gets what in case of a separation or a divorce.

A Binding Financial Agreement can be between two people in a relationship be it a marriage or a de facto. The relationship may be between people of the same sex or different. With a Binding Financial Agreement, you can avoid lengthy court proceedings and several hearings about equitable and justified division of assets. A couple can enter into a Binding Financial Agreement before they get married, while they are married, before filing for divorce or after filing for divorce. In the case of a de-facto relationship, the couple may finalise their BFA before they enter into the relationship, while they are in the relationship or during separation.

Irrespective of when the couple signs a Binding Financial Agreement, they have to make sure of one thing and that is to be thoroughly informed of the effect of the agreement and its advantage and disadvantage. Hiring individual legal experts is advisable to get precise information about how your rights might be affected by the said Binding Financial or Pre-Nuptial Agreement. Thereafter, the agreement needs to be signed by both parties and the signed copies need to be retained by them both along with the signed statements from the lawyers. If all these parameters are covered, a Binding Financial Agreement is a legally binding document for both parties involved.

Advantages of a Binding Financial Agreement

Having a pre-nuptial or a Binding Financial Agreement can be beneficial in many ways.

Free From Judicial Intervention

A Binding Financial Agreement is an agreement between 2 people who are or have been in a relationship. There is no intervention from the Family or Federal Courts to enforce the terms and conditions of the BFA. As long as both the involved parties have been thoroughly advised of the terms and conditions of the BFA by their legal counsel and they are aware of its probable implications on their lives and finances, there is no other pre-requisite to make the agreement binding.

Simple and Swift Process

With any and all kinds of judicial interference excluded, preparing a Binding Financial Agreement becomes a much simple process. Both parties have to be given a thorough understanding of what the BFA is all about, its terms and conditions and all the possible effects it could have on each one’s life. Once the parties understand the BFA inside out and sign the agreement, it is up, done and binding.

Flexible Timelines

A Binding Financial Agreement can be prepared at any stage of your relationship. You could enter into a Binding Financial Agreement before you enter into a marriage or a de-facto relationship, during the marriage or de-facto relationship, when you are contemplating separation but haven’t filed for divorce yet and when you are absolutely separated or divorced.

Disadvantages of a Binding Financial Agreement

Despite the benefits, there are a few unavoidable disadvantages in entering into a Binding Financial Agreement. Read on to learn more about them.

Elaborate and Confusing Legal Advice

As iterated before, the legal advice on the implications of a Binding Financial Agreement is usually quite detailed and contains a lot of information. Hence, the legal advisors send in their advice in written form instead of keeping it verbal. The information contained in the written advice is not only immense but also profound and can overwhelm the reader.

Risk of Unenforceability

A Binding Financial Agreement, if not drafted properly, cannot be enforced. Similarly, if the advice certificates from the solicitors have some issues, the Binding Financial Agreement can be rendered unenforceable. So when signing on the BFA papers, you need to ensure that the advice certificates are in order and the BFA itself is drafted properly.

Cumbersome Legal Process

If for any reason, one of the parties does not fulfil the stipulations mentioned in the Binding Financial Agreement, the other party can apply for intervention by the Court. The court will be requested to enforce the said BFA and this process could take a few weeks, not to mention the other complexities involved in legal procedures.

How Are Consent Orders Different From BFAs?

There are some major differences between a Consent Order and a Binding Financial Agreement.

Involvement of the Court

For a Consent Order to be binding, the Family Court needs to give their approval with a stamp and a seal. However, there is no such requirement for a Binding Financial Agreement. As long as both involved parties have been given thoroughgoing legal advice on the stipulations and implications, a BFA stands binding. Court intervention is not required.

Fairness and Equitability

A Consent Order has to be fair and the division of assets as per the Consent Order should be equitable and justified. The terms and conditions mentioned in a Consent Order should fall under the scope of Family Law. However, for a Binding Financial Agreement, there are no such requisites of equitability and justified division of assets.

Difference in Timelines

The application, filing and final binding of a Consent Order is a protracted process wherein the review stage alone could take up to one to eight weeks. And if there are issues with the information provided in the Consent Order, there could be more iterations and thus, more time taken to finalise the document. However, for a BFA, there are no court proceedings involved and hence can be done sooner.

Coverage

A Consent Order covers parenting rights as well besides containing clauses on the division of assets and finances. However, a Binding Financial Agreement stays strictly financial and does not include parenting or visitation rights after separation or divorce.

Legal Counsel

Preparing a Consent Order , although rather difficult, can be done by the couple themselves and a legal expert need not be involved. However, when preparing a Binding Financial Agreement, it is imperative that each party has an independent legal counsel who can advise them on the stipulations mentioned in the BFA and its effects.

FAQ

Should I go for Consent Orders or a BFA?

A BFA is a better option if you would like to settle your financial matters sooner which would also include your superannuation funds and spousal maintenance. However, if there are children between you and your spouse or partner, a Consent Order is a better option since it includes parenting and visitation rights as well. To get a clear picture, it is better to get professional legal advice before choosing the right path.

When can Consent Orders be revoked?

Like all legal orders and documents, a Consent Order can also be revoked. If one of you can prove in the Family Court that the Consent Order is based on insufficient or false evidence and is unfair by all means, then the Consent Order can be revoked. In case, there has been a change in your situation, financially or otherwise, then you may request for the Consent Order to be amended such that it includes the requirements of your changed circumstances.

When can a Financial Agreement be set aside?

A Financial Agreement can be set aside under the following circumstances:

If the agreement is void or unenforceable due to any reason.

If there is ample proof to show that the agreement was obtained fraudulently.

If there is ample proof to show that a major piece of evidence was withheld.

Plus there are a host of other reasons for financial agreements to be set aside. Hiring a legal expert would help you make clear decisions about choosing financial agreements over Consent Orders and vice versa.

When do BFAs become legally binding, and how are they created?

BFAs become binding on both the involved parties when the BFA is in writing and both parties have been amply advised on it. Both parties are required to hire legal experts who can counsel and advice you on the effects and implications of the BFA. After having a thorough understanding of the financial agreement, both parties are required to sign it which will make a BFA binding on both the involved parties.

To create a BFA, the two parties need to understand the terms and conditions that will form the basis of the BFA. Once signed, the agreement is in place and makes it a binding document without any involvement of the court.

When do Consent Orders become legally binding, and how are they created?

Consent Orders become legally binding when they are approved and stamped by the Family Court. Before approving, the Court determines if all the stipulations mentioned in the Consent Order are in accordance with the Family Law. The Court will also determine if the division of assets and finances is equitable and just. Once the Consent Order checks all these boxes, it is approved, stamped and sealed by the Court, thereby making it a legally binding document for both parties.

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by Chris Van Langenberg • 27 June 2024

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