If you're going through a separation or divorce, resolving financial and property matters is an essential step. In Australia, you can formalise your financial settlement in one of two main ways: Consent Orders or Binding Financial Agreements (BFA). Both are legally binding but differ in how they are processed and enforced. Knowing which option is right for you is crucial in ensuring a fair and stress-free outcome.
What are consent orders?
Consent Orders are legally binding agreements that both parties in a separation submit to the Federal Circuit and Family Court of Australia (FCFCOA) for approval. They cover property division, financial matters, and even parenting arrangements if needed. Once the court approves the Consent Order, it becomes legally enforceable, meaning it has the same power as a court ruling.
Key Features of Consent Orders:
- Court Approval: Consent Orders must be reviewed and approved by the court, ensuring the agreement is ‘just and equitable’.
- Enforceability: Once granted, Consent Orders are legally enforceable by the court.
- Finality: A Consent Order finalises financial and property matters, preventing future claims by either party.
- Parenting Arrangements: These orders can also settle custody and visitation agreements, offering a legally binding solution for parenting after separation.
What is a binding financial agreement(BFA)?
A Binding Financial Agreement (BFA) is a private contract between separating parties that outlines how assets and liabilities will be divided. Unlike Consent Orders, BFAs do not require court approval. Instead, each party must receive independent legal advice for the BFA to be legally binding.
Key Features of Binding Financial Agreements:
- No Court Involvement: BFAs do not need to be filed with the court, keeping the process private.
- Independent Legal Advice: Both parties must receive independent legal advice before signing the agreement.
- Flexibility: BFAs offer more flexibility in the terms of the agreement, as they are not subject to court scrutiny.
- Pre-Nuptial and Post-Separation: BFAs can be entered into at any stage of a relationship, including before marriage (as a ‘pre-nup’) or after separation.
The main differences between consent orders and BFAs
- Court Approval: Consent Orders require Family Court approval, while BFAs do not.
- Legal Advice: Independent legal advice is mandatory for BFAs but optional for Consent Orders.
- Certainty vs Flexibility: Consent Orders provide greater certainty and are legally enforceable by the court, whereas BFAs offer more flexibility but carry the risk of being contested.
- Enforcement: Consent Orders are easier to enforce through the court system if one party does not comply. BFAs can also be enforceable, but they may be overturned on grounds such as undue influence or fraud.
Consent orders or BFA: Which is right for you?
The choice between a Consent Order and a Binding Financial Agreement depends on your specific needs. If you want a court-approved, legally enforceable agreement that finalises financial matters, a Consent Order is likely the best option. However, if you prefer a private and flexible agreement, a Binding Financial Agreement may be more suitable.
Regardless of the option you choose, it’s essential to get legal advice to ensure the agreement is fair and legally sound. At Eliza Legal, we help our clients navigate Consent Orders and Binding Financial Agreements in family law matters.
If you're located on the Mornington Peninsula or Bayside regions of Melbourne, Victoria, our team can provide expert legal guidance tailored to your situation. Contact us today and let’s see if we’re a good fit! We’d love to help you.
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