“We Already Agree On Our Property Settlement”
After separation or divorce, even if you and your former partner agree on the division of your assets some important steps still remain.
The breakdown of a marriage or de facto relationship is a difficult time, but can be made easier where the parties are able to negotiate a division of their assets and liabilities by agreement without the involvement of the Courts. But what stops one party from “coming back for more” at a later date? How can parties formalise the agreement reached between them for property settlement to protect themselves from the other party being successful in a claim for property settlement at a later date?
It is encouraging and such a good thing that we see so many new clients who have reached agreement with their former husband, wife or de facto partner with respect to how they wish to divide the assets of their relationship. The Court process can be long and drawn out and in many cases people are able to see the advantages in negotiating an outcome that is acceptable to them both rather than having a Court decide “who should keep what”. Parties are able to “own” the property settlement and have a sense that they have both been involved in the ultimate decision made.
We are asked by many clients whether it is sufficient for them to write down the agreement that they have reached and have it witnessed by a Justice of the Peace. The simple answer is no. While such a document could be useful as a record of the intention of the parties, it would not prevent either of them from making an application to the Family Law Courts for a property settlement at a later date. When they make that application, the Court could consider the agreement the parties have written themselves, but may still order that one party pay a lump sum to the other, the transfer of real estate interests, superannuation splitting orders, or such other orders as the Court deems necessary in order to achieve a “just and equitable” division of the property assets and liabilities between the parties taking in to account all of the relevant factors as set out under the Family Law Act.
Unless final orders have been made, or a Binding Financial Agreement which meets the requirements of the Act has been properly executed and exchanged between the parties and their lawyers, then a party to a marriage can make an application for property settlement at any time after separation, up until 12 months after a divorce order is made.
In many cases parties see no urgency to apply for a divorce order (a divorce order does not divide property between parties but only orders that the parties are no longer married). In the case of de facto partners, either party can make an application for property settlement at any time up until the expiration of two years after separation. Even when these time periods have expired, the Court may grant an extension of time if the party applying for property settlement is able to satisfy the Court that the extension of time should be granted.
Where an agreement is reached between husband and wife or de facto parties the agreement can only be made “final” in two ways:
1. Consent Orders sealed by the Court; or
2. A Binding Financial Agreement.
To have Consent Orders sealed by the Court, the parties must prepare an Application for Consent Orders in the approved form providing the Court with necessary information required in order to consider the parties’ application and determine whether the orders that they are asking to be made are “just and equitable”. The Court Registrar will then read through the application and the orders and if approved, the Registrar will date, sign and seal the orders and return them to the parties/their lawyers. If the Court is not satisfied with the way that the orders are drafted, then they will be returned to the parties to make the changes that the Court requires. For this reason and others, it is recommended that parties do not try to draft the consent Minutes of Order themselves but seek the advice of a lawyer with suitable experience in family law who can help to ensure that the orders are correctly drafted and that the application provides the information required by the Court in order for the orders to be made. The lawyer should be instructed by only one of the parties and cannot act for both parties. The other party can obtain their own independent legal advice if they choose they do so, or may elect to be self-represented – there is no requirement for both parties to obtain legal representation for an Application for Consent Orders. Another reason legal advice should be obtained is because the Order should sever financial ties and the expectation that the parties will be financially responsible for each other post separation and post the making of the order.
The law with respect to Binding Financial Agreements is detailed, and there is a reason for this. The Court has the ability to overturn a Binding Financial Agreement or declare that it is not binding where requirements have not been met. The Binding Financial Agreement is drawn by a lawyer representing one party, and both parties must receive advice with respect to the agreement and have a lawyer sign a statement confirming that they have given that advice and that the requirements of the Act have been met.
In particular circumstances as set out under the Act, even where the Binding Financial Agreement has been properly prepared, there are opportunities for a party to apply to the Court for the Binding Financial Agreement to be overturned, for instance where one party has failed to disclose financial interests held by them, where there has been undue influence or coercion leading to the parties signing the Binding Financial Agreement, or where there has been a significant change in circumstances since the signing of the Agreement which means that the Agreement is no longer “just and equitable”. While in some circumstances a Binding Financial Agreement is the preferred option for parties, in most cases it is recommended that the Application for Consent Orders and Minutes of Order are prepared as they provide parties with a strong sense of comfort, as the Court has approved those Orders at the time that they are made.