If you meet an honest lawyer (no, that’s not an oxymoron they do exist, we promise), they’ll tell you that the bulk of their legal fees are spent on trying to negotiate their client’s property settlement.
The legal drafting of the agreement is the easy part. The secret to saving yourself money, therefore, is reaching an “in-principle” agreement with your former partner before involving lawyers.
Now, we understand this is sometimes easier said than done. Typically, not all property settlements are alike and not all separated couple dynamics are the same. It can take a lot of effort to reach a point where you are able to amicably discuss your property settlement with your ex-spouse. This often involves negotiating, compromising, and figuring out which aspects of your settlement are the most important to you.
Is it important to you that you retain the family home, or more important that you keep your prized car and superannuation? Working out what is really important to you is key whilst you negotiate your property settlement with your former partner.
Once you have done the hard part and negotiated your property settlement, the next step is to make it legally binding. But, how exactly do you do that?
The Family Law Act 1975 provides that parties can avoid costly Court litigation by formalising their property settlement agreements in two ways: a Binding Financial Agreement or an Application for Consent Orders. Whilst both options are recognised as legally binding settlements, they do differ in operation.
A Binding Financial Agreement (‘BFA’ for short) is a document which requires both parties to engage separate, independent lawyers who must sign a certificate confirming they have provided you with legal advice. Each lawyer must advise their client of the contents of the BFA, the pros and cons and their legal rights in respect of the property settlement as a whole.
Ultimately, it is always up to the client whether they sign the BFA, but their lawyer must fulfil their duties to advise their client appropriately. Typically, the Family Courts do not become involved unless one party wishes to challenge the BFA at a later date. Generally speaking, most people choose to make their agreement legally binding with Consent Orders.
An Application for Consent Orders (or ‘ACO’ for short) is filed with the Family Courts in order to make the agreement legally binding. The ACO is accompanied by a Consent Minutes of Order (‘CMO’) which outlines the orders both parties are asking the Court to consider and make.
For example, consent orders typically allow for real estate to be transferred into one party’s name, a superannuation splitting order or in some cases, simply outlining that each party retains their assets, liabilities and superannuation entitlements without further division (each party keeps what they already have).
Once the ACO and CMO documents are prepared, you and your former partner will each need to sign both documents in order to confirm that you each agree to the property settlement and the Orders you will be asking the Court to make.
In doing so, each party must declare that the information in the ACO is true and correct and that neither of you have any undeclared assets, liabilities or superannuation entitlements. The ACO and CMO documents are then filed with the Family Court for consideration by a Registrar.
It is ultimately up to the Registrar to determine whether your property settlement meets the Family Law requirements and can be reasonably considered a fair distribution of property between you and your former partner.
Depending on whether you have filed an ACO or BFA, ultimately the end goal is for there to be a legally binding property settlement to sever any and all financial ties between you and your former partner.
While all of this may sound a bit confusing or overwhelming, our Team at FLR are available to make the process as efficient and pain free as possible.
What about a timeframe?
So, when does this all need to happen?
The Family Law Act 1975 (as amended) provides specific time limits for when separated couples must make their property settlement legally binding.
For married couples, parties must either make their agreement legally binding within 12 months of the date of their divorce or commence Court proceedings by this time.
This means that married couples can formalise their settlement at any time following their separation without having to be divorced.
For de facto couples, parties have two years from the date of their separation to formalise their property settlement or commence Court proceedings. It is very important that these time limits are adhered to and that you seek legal advice if you are approaching your own time limit.