What is the difference between a Binding Financial Agreement (BFA) and Consent Orders?
In this article we give more details about BFA's and Consent Orders and you need to read the whole article, but a brief note as to the differences between the two things is:
- A BFA cannot deal with splitting of superannuation property now (as opposed to in the future), whereas Consent Orders can do this
- A BFA cannot include orders in relation to who the children spend time with, but Consent Orders can
- Consent Orders are more secure and harder for someone to have set aside in the future
- the paperwork, the procedures and the legal costs for a BFA are less than for Consent Orders
Choosing between the two alternatives involves considering your individual circumstances and needs. You can discuss this with us during your initial, free of charge interview.
What are Consent Orders?
If your matter can be settled then we could prepare an Application for Consent Orders for both parties and their lawyers to sign, and submit to the Court.
The advantage of Consent Orders is that once they are made, they have the certainty of a court order, but without the legal expenses incurred in such a hearing.
A splitting order for either party’s superannuation trustee can only be dealt with by way of Consent Orders or a hearing (i.e. they cannot be dealt with by way of a Financial Agreement). Also parenting orders cannot be covered by Financial Agreements. They can be included in a ‘parenting plan’ which is an informal document, or they can be included in Consent Orders which can be enforced by the court.
The court must be satisfied that the property orders are just and equitable before the court will sign off on those orders, and if there are children of the relationship the court must satisfy itself that the arrangements are in the best interests of the children.
An application form with a series of questions must be lodged with the proposed orders. The advantage of Consent Orders when compared to a Financial Agreement is increased certainty, and also the ability to deal with some issues such as superannuation splitting. The disadvantage is that there are more forms involved, which makes the process longer and more expensive, and you will need to wait for a Registrar to sign off on the Orders, which ordinarily takes about a month after the orders are filed.
What is a Financial Agreement?
Parties can make Financial Agreements before, during or after a marriage under the Family Law Act. For a financial agreement to be binding, the lawyers need to make sure certain steps are taken, the agreement must not be set aside by a Court, and the parties must provide full and frank disclosure of the financial position, and after the agreement is signed each party must retain a copy.
A Financial Agreement continues to operate despite the death of a party to the agreement.
These agreements cannot deal with children’s issues or child support. No maintenance provision in a financial agreement excludes or limits the power of a court to make a maintenance order if the court is satisfied that
when the agreement was made, the circumstances were such that, taking into account the terms and effect of the agreement, the party would have been unable to support himself or herself without an income tested
pension, allowance or benefit.
If one or the other party is reliant upon a Centrelink pension there is also a risk that the Court will be more likely to set aside the Agreement, if for instance that party is still wholly reliant upon a Centrelink pension after settlement.
If a superannuation split is part of the settlement then a splitting order cannot be sought, rather a 'flag' will be put on the superannuation so that when the superannuation becomes payable to the person who currently holds the superannuation, the part of it that has been flagged will at that point be distributed to the other party. That is, the superannuation will not be in an account in your name now, but rather, in the other parties name until that party reaches retirement age. If the two parties are a similar age and wish to avoid the delay of Consent Orders this can be an appropriate course.
The advantage of Financial Agreements is that they tend to be quicker to prepare, agree to and execute, and as they do not need to be filed at court, they commence operation from the day that both parties have signed it, and so the matter is typically finalised more quickly.
Is a Financial Agreement Safe?
The Court can declare the agreement invalid if the above mentioned conditions are not met, there is fraud, the agreement was entered into to defeat a creditor, or circumstances have changed making it impracticable to carry out the agreement.
A court can also set aside a financial agreement if a party has engaged in unconscionable conduct in the process of developing the financial agreement, such as asking the other party to sign the agreement on or shortly before the wedding day. There has been a recent trend of financial agreements being set aside by the Court, however, we note that these are generally in fairly extreme circumstances, such as confusion regarding what the agreement is (and therefore, whether or not there is any agreement at all), a failure to obtain legal advice on all of the agreement, or circumstances of clear duress.
While there isn’t a similar trend of cases where Consents Orders are set aside, it would seem that these sorts of factual situations would probably result in Consent Orders also being set aside. However the simple fact remains that there has not been a spate of Consent Orders set aside by the Courts recently.
Can't we just agree and distribute the assets?
The other question we get asked a bit is, can't we just agree and distribute the assets without a Financial Agreement or Consent Orders? This is an entirely different problem, and is therefore the subject of a separate article that you can read by clicking on this link.
Hamish Williams and Jacinta Watkins are experienced in family law matters and ready to help you to settle your property matter in a way that provides certainty for all involved.
They are not only more than qualified to understand and investigate your family law property matters, but they also understand that family breakdown is an emotional time. They will try and make the process as manageable and easy to understand as possible. They are also well versed in the risks and benefits to children of certain orders or situations, and ready to advise and assist you to either settle your custody disputes with your ex-spouse, or assist you to urgently litigate your matter if orders are needed to protect your children.