This is the scenario: you and your former partner have spent months going backwards and forwards on email, on the phone, or over coffee negotiating and deciding how you will divide the property you have accumulated together throughout your relationship. You achieved this without a formal legal process, and you are confident that you can practically carry out the steps necessary to give effect to your agreement. So why should you consider engaging a lawyer?
If you do not properly document your agreement in a binding and enforceable way, you could be vulnerable to your former partner making a further claim against you in the future, notwithstanding the informal agreement that you have reached and which you may have carried out. There are also other financial benefits to formalising your property settlement in a legally enforceable way, including access to relevant tax exemptions.
There are two legally enforceable ways to finalise your agreement in relation to property settlement and/or maintenance matters following separation. These are:
- by consent order;
- by financial agreement.
A consent order is sought by completing the relevant application, preparing a minute of order and lodging this in the Court for approval. The proposed order is subject to approval by a judicial officer of the Court who must be satisfied that any property settlement is just and equitable before granting the order. The judicial officer must also be satisfied that any maintenance order is adequate. There is no need for an appearance at Court, and an order will be issued in due course if your application is successful.
It is important to note that a consent order is not immediately binding when signed. The orders must be filed in the Court and it is not until the orders are granted that they will become binding.
A financial agreement is a contract that can be made before, during, or after matrimonial and de facto relationships.
A financial agreement is binding from the time that it is signed and certified and can be used to extinguish a party’s right to claim for maintenance. It therefore can be quicker to enter into a financial agreement rather than incur the delay associated with having consent orders considered and made by the Court.
There is no external review of a financial agreement and the terms of the agreement do not have to be “just and equitable”.
Whilst a financial agreement does not require the Court’s approval, each party to the agreement is required to obtain independent legal advice before the agreement can be executed.
A combination of these can also be used, that is, to use consent orders in relation to property settlement and a financial agreement in relation to maintenance.
Your family lawyer can assist you to determine which method of settlement is best for you and provides you with the best protection.
What if I do not formalise my agreement? Does the risk exist forever?
Applications for property settlement and/or maintenance must be made within 12 months of a divorce order becoming effective or within 2 years of the date of separation if you were in a de facto relationship. If property matters are not finalised in a legally enforceable way within this period, then both parties will, prima facie, be statute barred from applying to the Court for property settlement and/or maintenance. However, parties can apply to the Court for leave to institute proceedings out of time in limited circumstances.
It is therefore advisable to finalise financial issues in a legally enforceable way sooner rather than later.