Binding Financial Agreements v Consent Orders – What do I choose for my property settlement?
Separating from your partner is a stressful, confusing and emotional time, especially with the added stress of deciding on how to separate your assets and making arrangements for the care of your children. Binding Financial Agreements (BFAs) and Consent Orders are an alternative to lengthy and expensive court action and both options support the concept of an amicable separation and are available to formalise a property settlement in Western Australia for both married and de facto couples.
Binding Financial Agreements
A Binding Financial Agreement (BFA) can be made at three separate points of a relationship, including both marriages and de facto relationships. These include before the commencement of the relationship (pre-nuptial agreement), during the relationship (cohabitation agreement) and after the relationship has ended (post-nuptial agreement). BFAs are essentially a private contract between parties and do not require a court to view or approve them. BFAs can reduce the financial stress of a separation and support the couple with an amicable split, eliminating the need for stressful, costly and time-consuming court action.
How is a BFA made and what makes it legally binding?
BFAs are governed under the Family Law Act 1975 and the Family Court Act 1997 (WA) and there are strict requirements that must be adhered to in order for the BFA to be binding. One of the requirements is that both parties must obtain independent legal advice prior to signing the BFA. BFAs are automatically binding, provided that they have been drafted correctly.
What Can a BFA include?
A BFA can include the financial settlement, including superannuation entitlements, spousal maintenance and any other issues relating to financial matters between the parties (except child support).
Want to know more? View our fact sheet on binding financial agreements, and read our publication on Six Things To Know About Binding Financial Agreements.
Consent Orders are made by a Court when both parties agree to the orders being made. Consent orders are uncomplicated, inexpensive and the most common form of settling a matter without engaging in contested proceedings.
How is a Consent Order Made?
A consent order is made when both parties have separated and come to an agreement about their financial matters. Often, a couple will attend mediation to come to an agreement if there are issues in dispute. (Learn about some benefits of mediation here.)
The parties then file a Form 11 Application for Consent Orders attaching a Minute of Consent Orders which outlines the specifics of the orders. The Court then makes a final determination of whether the Consent Orders are “just and equitable” pursuant to s79 or s90SM of the Family Law Act 1975 (or the Family Court Act 1997 equivalents). Once the order is made, it has the same effect as an order made by a judicial officer when parties cannot come to an agreement.
Additionally, should there be a breach of the order, parties are able to apply directly to the Court for enforcement of the Consent Order.
The downside to a Consent Order is that once final orders are made, there are very limited circumstances where the orders can be varied or set aside.
Benefits of Consent Orders
Why would you choose Consent Orders over a Binding Financial Agreement?
- Court orders are readily and easily enforceable;
- Parties do not require legal advice;
- Can DIY; and
- Usually more affordable than BFA.
Benefits of Binding Financial Agreements
Why would you choose a BFA over Consent Orders?
- Want to enter into an agreement that the Court may not consider to be fair and equitable;
- Want to make an agreement as to matters not usually covered by Court Orders; and
- Want to make unusual Orders.
Which one is better: BFA or Consent Orders?
There is no ‘better option’ when comparing BFAs and Consent Orders. The ultimate question when deciding what the best option for you and your family is, depends on your personal situation and circumstances. If you want guidance or advice for your family law issue, please do not hesitate to contact Lynn & Brown Lawyers to discuss booking an appointment.