- Property Settlement
Agreement & Separation
• July 25, 2023
So, you and your ex have reached an agreement about who is keeping what now that you’ve separated? Firstly, congratulations! You’ve managed to overcome one of the biggest hurdles that people face, and achieve something others cannot!
Given what it has taken for you to get to this point, it important that you take matters that one step further. The final step is to formalise the agreement.
Formalising the agreement means that you may be able to avail yourself of certain tax exemptions. For example, an exemption from paying stamp duty on the transfer of property between the two of you.
When it comes to property matters, there are two ways to formalise an agreement: Consent Orders or a Binding Financial Agreement.
If there is already an agreement in place, the process of obtaining Consent Orders is relatively straight forward – an application will be submitted to the Court and, if the Court considers it “fair” then Orders will be made.
The process is administrative only. This means that the Court will consider the application without you ever having to step foot in a court room.
Orders are legally binding and enforceable by the Court and there are limited circumstances they can be set aside.
So what is fair? There are a number of factors that the Court will consider as part of your application. These include:
- the property that is available for distribution;
- financial and non-financial contributions to the relationship; and
- future needs.
It is important to get advice in relation to these factors prior to agreeing on any settlement. Orders will not be made if the Court does not consider the division to be “fair”.
Binding Financial Agreement
A Binding Financial Agreement is a legally binding agreement between parties who have elected to forego the rights they may otherwise have under the Family Law Act.
Binding Financial Agreements can be entered into at any stage of a relationship. Agreements entered into before or during the relationship act as a “pre-nup”. Agreements entered into after separation deal with division of property.
The benefit of these Agreements is they enable parties’ to “contract out” of the provisions of the Family Law Act that may apply to them.
Which agreement option is right for you?
Consent Orders and Binding Financial Agreements both have the effect of formalising an agreement but both have their disadvantages.
For example, whilst Court Orders provide parties with finality, the Court does need to satisfy itself that the agreement reached is “fair”. The Court may not agree despite both parties reaching consensus.
If your agreement falls outside what a Court may consider “fair” but both you and your partner are wanting to finalise matters on that basis, a Binding Financial Agreement may be preferable. Similarly, if there is a significant disparity in income earning capacity, a Binding Financial Agreement avoid any claims for spousal maintenance. However, this does mean that matters would be finalised without the protection offered by Court Orders.
It is important to make sure that you have obtained advice before making any decisions. Every property settlement may look different as every person’s situation is different. The Court provides more information that helps can help you to clarify your options.
Get in touch with one of our lawyers to discuss what would work best for you, today!