Binding Financial Agreement vs Consent Orders

Trying to navigate the legal system when you’re going through a separation or a divorce doesn’t have to be frustrating and confusing. Our Simple Article & Infographic should help clarify a few misconceptions when it comes to binding financial agreement vs consent order.

Whilst the decisions you make at this point in your life will affect your family’s future, it is possible to move forward feeling confident that the agreements you sign will protect your family.  

When you’re ready to divide your property, there are two ways to turn your decisions into a legally binding agreement:

1. Getting Consent Orders
2. Signing a Binding Financial Agreement

On this page, we’ll help you understand the differences between these two courses of action, as well as the advantages and disadvantages of each option – our helpful infographic below should help illustrate the main points you should keep in mind when deciding.

We’ll also be answering some commonly asked questions about creating consent orders and signing a Binding Financial Agreement after separation or divorce.

Or, if you’d prefer to talk to someone about your situation you can reach out to the team at Melbourne Law Studio for family law advice. We offer free 15 minute consultations, simply call (03) 9021 1421 or book online now.

Consent Orders

What are Family Court Consent Orders?

Whether you are in the process of getting a divorce or separating, “consent order” is a phrase you will no doubt become familiar with. A consent order is a written agreement between separated spouses that gets approved by the Family Court. They can address financial matters such as property and superannuation as well as parenting. 

Where parenting is being agreed upon, this agreement contains arrangements for how you will both parent your children moving forward, including how parents will:

• Share responsibilities for their children
• Communicate with their children
• divide time with their children on holidays and important dates
• Effect transportation and cover travel costs
• Be involved in their children’s activities
• Deal with important issues like medical care and religion

You can’t, however,  include anything related to child support in consent orders – those arrangements need to be outlined in a Parenting Plan or assessed by Services Australia.

Where property is concerned, consent orders are used to agree on the deal with the division of assets and liabilities after a relationship has ended.

Consent orders are meant to be an efficient, accessible, and enforceable way for parents from all walks of life to decide on the plan for their future. Even though they are signed off by the Family Court, you won’t have to go to court to get them put in place. 

The key thing to know about consent orders is that both parties have to jointly agree to their terms, and submit the Application for consent orders to the Family Court. You can get a lawyer to help you negotiate the terms you’ll agree to and draft the forms you need to make this application, or you can do it yourself.

Trying to navigate the legal system when you’re going through a separation or a divorce doesn’t have to be frustrating and confusing. Our Simple Article & Infographic should help clarify a few misconceptions…

Whilst the decisions you make at this point in your life will affect your family’s future, it is possible to move forward feeling confident that the agreements you sign will protect your family.  

When you’re ready to divide your property, there are two ways to turn your decisions into a legally binding agreement:

1. Getting Consent Orders
2. Signing a Binding Financial Agreement

On this page, we’ll help you understand the differences between these two courses of action, as well as the advantages and disadvantages of each option – our helpful infographic below should help illustrate the main points you should keep in mind when deciding.

We’ll also be answering some commonly asked questions about creating consent orders and signing a Binding Financial Agreement after separation or divorce.

Or, if you’d prefer to talk to someone about your situation you can reach out to the team at Melbourne Law Studio for family law advice. We offer free 15 minute consultations, simply call (03) 9021 1421 or book online now.

Binding Financial Agreement Vs Consent Orders

What are Family Court Consent Orders?

Whether you are in the process of getting a divorce or separating, “consent order” is a phrase you will no doubt become familiar with. A consent order is a written agreement between separated spouses that gets approved by the Family Court. They can address financial matters such as property and superannuation as well as parenting. 

Where parenting is being agreed upon, this agreement contains arrangements for how you will both parent your children moving forward, including how parents will:

• Share responsibilities for their children
• Communicate with their children
• divide time with their children on holidays and important dates
• Effect transportation and cover travel costs
• Be involved in their children’s activities
• Deal with important issues like medical care and religion

You can’t, however,  include anything related to child support in consent orders – those arrangements need to be outlined in a Parenting Plan or assessed by Services Australia.

Where property is concerned, consent orders are used to agree on the deal with the division of assets and liabilities after a relationship has ended.

The consent order part of binding financial agreement vs consent orders are meant to be an efficient, accessible, and enforceable way for parents from all walks of life to decide on the plan for their future. Even though they are signed off by the Family Court, you won’t have to go to court to get them put in place. 

The key thing to know about consent orders is that both parties have to jointly agree to their terms, and submit the Application for consent orders to the Family Court. You can get a lawyer to help you negotiate the terms you’ll agree to and draft the forms you need to make this application, or you can do it yourself.

Advantages of Consent Orders when separating

If you’re going through a separation and consent orders are a possibility you’re exploring, it helps to know the advantages of these agreements. Usually, the benefits of consent orders (for finances or parenting) after separation include:

1. They’re easy to file: The first step is to download an Application for consent orders from the Family Court’s website. Once that’s completed, you will need to gather and file some other documents relating to your children, property, and superannuation. 
2. There are financial benefits: Consent orders prevent unnecessary and protracted legal battles between couples that can not only be costly but also cause long term stress and delay a resolution. By agreeing to orders by consent, you are saving time and money on legal fees.

Although consent orders are made by agreement, they do prompt parties to seek independent legal advice before they are lodged with the Court. Not all agreements are automatically accepted by the Court as they have to be just and equitable. It is a great idea to get in touch with a lawyer once you have reached an agreement to get the final tick of approval. If you provide a completed form it may help to reduce the legal fees because the material has already been provided.

Disadvantages of Consent Orders When Separating

There aren’t a great deal of disadvantages to getting consent orders after a separation or divorce, however, they do have two major drawbacks if you aren’t careful or don’t get the right advice:

1. Consent orders require significant preparation time: If you don’t prepare your documents correctly, or make genuine efforts to ensure that they are equitable to both parties, the Registrar will likely reject your application. It takes a fair amount of time and effort to create a satisfactory variation of consent order – divorce notwithstanding! So, while legal input may not be required,  it pays to bring in a lawyer before you submit your application to prevent any issues or rejection from the Court.
2. There are time limitations: If you wait until after you are granted a divorce by the court to address property, you will need to file your Application for consent orders within 12 months of your divorce or within two years of the end of your de facto relationship. Because ‘a divorce’ is a totally different application in the court and not related to property or children, the time to file consent orders starts ticking from the day a court grants you a divorce, not before. It is always best to finalise property and children’s matters as soon as possible after separation. You must also file all the documentation that’s relevant to your Application for consent orders within 90 days of submitting your initial application, otherwise, your orders will not be granted.

Binding Financial Agreement 

What are Financial Agreements?

Binding Financial Agreements are very different to consent orders. They are a civil agreement on the division of your finances, and as such do not cover parenting issues. Instead, Binding Financial Agreements are a way for two people to formally agree on how their property, superannuation, other assets, and liabilities will be divided if separation takes place.

While some people choose to get a Binding Financial Agreement after divorce, these agreements can be made at any stage of the relationship. When couples enter into a BFA before they marry this is often called a “prenup”.

You don’t have to lodge your Binding Financial agreement once it’s made – you only need to get the Family Court involved if you need them to enforce the terms you’ve both agreed to.

The most important thing to know about signing a Binding Financial Agreement is that once you enter into this contract, you may compromise your right to have a family court make decisions that contradict the terms you’ve outlined in your agreement.

Advantages of a Binding Financial Agreement

When you consider getting a Binding Financial Agreement after separation in, it’s important to know whether this type of arrangement will work to your advantage. Typical reasons people get a Binding Financial Agreement include:

1. They’re binding in nature: As the name suggests, Binding Financial Agreements are a legally enforceable contract between yourself and the other party. While they don’t need to be submitted to the Court when they are prepared, the Court can enforce them if one of the parties doesn’t hold up their end of the agreement.
2. There’s no time limit: You can enter into a Binding Financial Agreement at any time before, during, or after your relationship.
3. You’ve got the ability to limit spouse maintenance: Unlike consent orders, Binding Financial Agreements can include provisions that limit your former partner’s ability to seek spouse maintenance from you in the future. 
4. They’re useful for protecting assets when entering a relationship: While it is common to get a Binding Financial Agreement after a separation or divorce, these documents are also useful for protecting the assets you come into a relationship with. Using a Binding Financial Agreement can protect assets you’ve acquired through business interests or investments and future inheritances from a future relationship breakdown. It is paramount to get legal advice before entering into a Binding Financial Agreement.

Disadvantages of a Binding Financial Agreement

As with all legal arrangements, there are disadvantages to choosing to enter into a Binding Financial Agreement. These include:

1. There’s no fairness test: Because the Court does not approve or disapprove of your Binding Financial Agreement, it is up to you to ensure that the terms you are agreeing to are fair. Binding Financial Agreements can contract both parties out of their rights in the Family Law Courts, so it’s crucial that you understand all of the implications of the agreement before signing. 
2. Legal expertise is required: The aforementioned lack of fairness test, the importance of the assets and rights at stake and the Court’s ability to overturn a Binding Financial Agreement that isn’t properly drafted, all result in a legal requirement to get independent legal advice when preparing your Binding Financial Agreement. Our Melbourne divorce Lawyers can help you create a Binding Financial Agreement that is in your best interests and will satisfy the Court.
3. The cost is higher: Because you have to get lawyers with a strong understanding in the area of family law involved when preparing your Binding Financial Agreement, these agreements can be costly if they are complex. It’s a good idea to ask a lawyer about the best option for you.
4. Children aren’t included: Binding Financial Agreements are strictly about money and do not include provisions for any parenting arrangements. You’ll still need to create a parenting plan or get consent orders for child-related matters.

Binding Financial Agreement FAQs

To make your family law consultation as productive and informative as possible, you may want to first get answers to some of the most frequently asked questions about Binding Financial Agreements.