Traditional Consent Order vs Financial Agreement
In the Federal Circuit and Family Court of Australia, a Consent order and a Financial Agreement are two ways of formalising a financial settlement. Both are legally binding and enforceable but there are some key differences.
A consent order is a written agreement that is approved by the Court and is required to meet the Courts requirement that it is “Just an equitable in the circumstance of the case.” They also require financial finality between the separating couple.
When entering into a Financial Agreement (aka BFA) a separating couple is contracting out of the provisions of the Family Law act that allow the Court to make an order for a property division of the couples assets. There is one clause that the parties cannot contract out of and that is the ability for the court to overturn an agreement in certain circumstances. For this reason, and perhaps because a consent order provides more enforceability if either party does not comply with the order. Traditionally lawyers prefer consent orders than Financial agreements.
However, The Federal Circuit Court and Family Court of Australia will only overtuen a financial agreement if the agreement does not meet the legal requirements or if there is a compelling reason to do so that falls within their jurisdiction and Financial Agreements can provide back up provisions for non-compliance. Provided that the couple has engaged a competent provider to draft the agreement, ensuring it meets the legal requirements, has adequate back up provisions and the parties have obtained adequate legal advice on their position, a Financial Agreement may provide a couple with more flexibility to give effect to what they are hoping to achieve and therefore may provide a more suitable arrangement in their particular circumstance.
For example:
01
Financial agreements can be more lenient with regard to ending financial arrangements between the couple so couples may choose to remain the joint owners of a property or properties for longer periods of time, which can be beneficial:
(a) in a falling property market,
(b) when borrowing capacity is reduced through the financial providers changed criteria,and
(c) to better suit the individual needs of the couple’s children
02
Financial agreements do not need to be reviewed by the Court which usually speeds up the process. In the current market this can be the difference between obtaining loan approval or not.
03
Financial agreements can be made in contemplation of a de-facto relationship or a marriage (essentially a pre-nup), which may provide more certainty for couples that come to relationships with assets or children of a previous relationship.
04
Financial agreements can have more flexibility in regard to tax implications and superannuation splitting procedures.
05
Financial agreements do not need to meet the courts “just an equitable’ requirement provided that they comply with the approved form and the parties have received adequate legal advice to achieve their agreed asset division.
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