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05 November 2021

Spot the difference

Family Law
Federal

Asked

Family law - Consent orders and binding financial agreements 

What are the differences between consent orders and a binding financial agreement in property settlement matters?

What are some common mistakes when drafting a binding financial agreement?

 

Answered

Thank you for the question.

Some differences between binding financial agreements and consent orders when used for documenting a property settlement include:

  • Consent orders do not require both parties to be legally represented. Therefore, where one party does not want to obtain legal advice, the settlement can proceed via consent orders prepared by the other party’s practitioner.
  • Financial agreements are not required to be reviewed by a court to be effective, whereas consent orders are and settlement terms that appear unjust or inequitable are likely to be requisitioned and potentially dismissed.
  • Financial agreements can provide a release from spousal maintenance, in accordance with s 71A of the Family Law Act 1975, whereas consent orders cannot. However, in circumstances where the effect of the agreement renders a party unable to support themself without an income tested pension, allowance or benefit, the provisions contained in the agreement excluding the court from making maintenance orders will be of no effect: s 90F.
  • The grounds under which a financial agreement can be set aside differ to those applying to consent orders: ss 79A and 90K.

Some common mistakes made when drafting a binding financial agreement include:

  • not understanding the requirements of the Family Law Act relating to financial agreements;
  • inadequate discovery in relation to defining the asset pool;
  • not giving due consideration to whether the settlement would be considered just and equitable if brought before a court.

The By Lawyers Financial Agreements guide and the Property Settlement guide provide comprehensive guidance to practitioners when preparing or advising on financial agreements and consent orders. See also 101 Family Law Answers for a more in-depth treatment of these topics, including relevant case law.

Regards,

Mentor