Going through a divorce or separation is undoubtedly a difficult time, and making decisions about how to divide assets and finances can add to the emotional and legal complexities. In Western Australia, two primary legal pathways are available to formalise a property settlement after a relationship breakdown: consent orders and Binding Financial Agreements. Understanding the differences between these options can help you make informed choices that protect your financial future and ensure a fair settlement.
What is a consent order?
A consent order is a formalised agreement between two parties, approved by the Family Court of Western Australia, that legally binds both parties to a specific arrangement regarding property, finances, and, if applicable, children’s matters. Both parties can use this agreement when they amicably agree on dividing their assets and want to have it legally recognised without going through a Court hearing.
Key features of a consent order:
- Court approval: You must submit a consent order to the Family Court for approval. The Court ensures that the terms of the agreement are just and equitable for both parties. You apply to the Court, which reviews the agreement without requiring either party to appear unless further clarification is necessary.
- Legally binding: Once approved by the Court, a consent order becomes legally binding and enforceable. If either party fails to comply with the terms of the order, the other party can take legal action to enforce it through the Court system.
- Low-conflict resolution: Consent orders are particularly suited for couples who have reached a mutual agreement on their property settlement and are looking for a straightforward and formal way to finalise their arrangements.
The consent order process in Western Australia
In WA, you must finalise property settlements within 12 months of a divorce or two years from the end of a de facto relationship. To apply for a consent order, both parties complete an Application for Consent Orders (Form 11) and sign a written agreement. You then file this application with the Family Court of Western Australia.
The Court reviews the agreement to ensure it is fair and reasonable under the circumstances. If satisfied, the Court approves the consent order and provides it to both parties. From that point onward, the agreement becomes legally enforceable, giving both parties the security and finality they need to move forward.
What is a Binding Financial Agreement?
A Binding Financial Agreement (BFA) outlines how two parties will divide assets, liabilities, and financial resources in the event of a separation or divorce. Unlike consent orders, BFAs do not require Court approval, but they must meet strict legal requirements to be enforceable.
You can enter into a BFA at any stage of a relationship – before, during, or after marriage or a de facto relationship – providing flexibility for those who want to protect their financial interests at different points in their relationship.
Key features of a Binding Financial Agreement:
- Private agreement: A BFA allows parties to reach a private agreement without the need for Court involvement. This can be particularly beneficial for couples who wish to maintain control over their settlement terms without Court intervention.
- Tailored solutions: BFAs provide flexibility to tailor the agreement to suit the unique financial circumstances of the parties involved. For example, a BFA can include specific provisions to protect inherited assets, business interests, or other complex financial arrangements.
- Legal requirements: For a BFA to be legally binding, both parties must receive independent legal advice before signing the agreement. Additionally, the agreement must be in writing, and both parties must sign a statement acknowledging that they understand the implications of the agreement.
The Binding Financial Agreement process in Western Australia
A BFA offers significant advantages in flexibility and privacy, but you must draft the agreement correctly and ensure it meets legal requirements. If challenged, the Court may set aside a poorly drafted BFA in the future.
To establish a valid BFA in WA, both parties must seek independent legal advice and clearly outline the agreement in writing. The role of legal professionals is critical in ensuring that the BFA is comprehensive, legally sound, and enforceable, providing both parties with the protection they need.
The differences between consent orders vs Binding Financial Agreements
Both consent orders and BFAs offer ways to formalise property settlements, but there are important differences that can make one option more suitable than the other depending on your situation:
- Court involvement: Consent orders require approval from the Family Court, which reviews the agreement to ensure fairness. BFAs, on the other hand, are private agreements that do not need Court approval but must meet legal requirements to be enforceable.
- Cost considerations: Consent orders may involve fewer legal fees compared to BFAs because the Court reviews the agreement, and further legal processes are generally unnecessary unless disputes arise. BFAs, while offering more flexibility, may involve higher upfront legal costs due to the requirement for independent legal advice and the complexity of drafting the agreement.
- Enforceability: Consent orders, once approved by the Court, are enforceable as Court orders, providing a high level of security. BFAs are enforceable as private contracts, but the Court may challenge or set them aside if they don’t meet certain legal standards or if there is evidence of fraud, undue influence, or significant unfairness.
When to choose a consent order
Couples who have reached an amicable agreement generally prefer consent orders to ensure that the Court recognises their settlement. This option offers a streamlined, lower-cost solution that provides the peace of mind that comes with a legally binding Court order.
When to choose a Binding Financial Agreement
BFAs may be more suitable for couples with complex financial arrangements or those seeking to protect specific assets. This option provides greater flexibility to tailor the agreement to unique circumstances. Individuals with high-net-worth assets, business interests, or specific financial concerns find this option attractive for addressing their needs privately.
The importance of seeking legal advice
Navigating the legal complexities of property settlements requires careful consideration, and it is essential to seek professional legal advice to ensure that your agreement is fair, enforceable, and legally sound. A family lawyer experienced in Western Australian law can guide you through the process, help you choose the right option for your circumstances, and draft the necessary documents to protect your financial future.
Get the right legal advice with Loukas Law
At Loukas Law, we understand that divorce and separation can be overwhelming, especially when it comes to property settlements. By understanding the differences between a consent order vs Binding Financial Agreements, you can make informed decisions that bring you peace of mind.
If you’re navigating separation in Perth or anywhere in WA, we’re here to guide you through the process with care and expertise. Our experienced family lawyers protect your rights and ensure your settlement proceeds smoothly. Contact us today to discuss your options and secure your future.