Family Law Binding Financial Agreements or Consent Orders: A little now or a LOT later.
We had a client who separated from his wife in 2005. In order to save money, they hand-drafted and signed an agreement between themselves as to how the assets and liabilities of the marriage, including superannuation, were to be divided. The assets and liabilities of the marriage were then divided in accordance with the agreement. At the time both parties agreed that the outcome was fair and reasonable. They did not file for divorce.
In 2014, the wife ran out of money and decided to make an application at the Federal Circuit Court seeking property orders and spousal maintenance. She argued that the agreement that she and the husband had signed was not binding and wanted the Court to make Orders as to the distribution of the parties’ assets and liabilities 9 years after separation i.e. “take a second bite of the cherry”.
This resulted in expensive litigation for both parties but they settled the matter just before a trial. The husband paid the wife a token sum of money to finalise the matter. The wife spent more money on lawyers than she was paid by the husband and the husband spent money on lawyers to defend the court proceedings and had to pay the wife the settlement sum. All in all, a lose-lose situation for both parties.
Had the parties obtained legal advice and paid lawyers to assist them in entering into a Binding Financial Agreement or Consent Orders in the first instance in 2005 when everything was amicable, each party would have only spent a fraction (approximately 25%) of what they had spent in litigation.
T’was the night before Christmas….
This is an example of parents who separated without a Parenting Agreement or Parenting Orders:
The parents agreed that the children would spend each alternate Christmas with each side of the family. One year, the paternal grandfather was gravely ill – “it’s his last Christmas” she told her former husband. With no formal written agreement in place as to the children’s time with each parent, the Mother took the Children that Christmas, even though it was agreed that the children would spend that Christmas with their Father.
Fast-forward a few years, the paternal grandfather is still alive, and still without a formal written agreement in place, the Mother decides again that she wants the children for Christmas. Again, it’s “not her turn”. She turns up at the former husband’s house on Christmas Eve and takes them away with her. Without a formal written agreement, the Father was not able to enforce the verbal agreement the parties had.
As time passes, circumstances change. And if there are no legal binding documents in writing to protect the arrangements with the children, your rights and the agreement between you and the other party, then you are exposing yourself to the risk of bitter, expensive and long drawn out Court proceedings later.
Here’s what you should do if you separate:
- If you have a property/spousal maintenance matter, collect as many financial documents as you can in relation to the assets and liabilities of the pool, for example, bank statements, superannuation statements, tax returns, share dividend statements, trust documents etc.
- Consult with a solicitor to obtain legal advice in regards to your rights and entitlements under the Family Law Act 1975. Bring the documents above to the appointment.
- Instruct your solicitor to negotiate with the other party after the exchange of documents has taken place (“discovery”). Prior to the issuing of any proceedings for time with the children, the parties must attend upon a registered Family Dispute Resolution Practitioner and attempt Dispute Resolution (there are certain exemptions from this requirement).
- If negotiations are successful and you come to an agreement with the other party, instruct your solicitor to draft a Binding Financial Agreement or an Application for Consent Orders and have both parties execute the document. For an Application for Consent Orders, the Application along with the relevant documents must be filed at the Family Court for approval of the Court.
If you know someone who has recently separated, help them out - and share this article with them, by clicking here!
Speak to us to have a written agreement in place that can protect you, your assets and your family.
This article provides information that is general in nature and is not a substitute for legal advice.