Consent Orders vs. Financial Agreements in Family Law

Consent Orders vs. Financial Agreements in Family Law

By Ezra Sarajinsky

· Read time: 5 minutes

Two common methods for resolving property and financial matters are Consent Orders and Financial Agreements.

Financial Agreements are also known as BFAs (Binding Financial Agreements).

Consent Orders and BFAs are both legal instruments that provide a structured approach to finalising the way assets, finances and property are distributed between people at the end of a relationship. The alternative is to bring the issues in dispute before the Court, where the appointed Judge will decide on the issues and give Court Orders.

What are Consent Orders?

Consent Orders are legally binding agreements made between parties in a family law matter. These orders are approved and issued by the court and have the same effect as if they were made after a court hearing. The key distinction here is that they are not reached through litigation, but rather by mutual consent between the parties involved.

This is usually a more cost-effective and efficient option compared to going through litigation.

What are Financial Agreements in Family Law?

Binding Financial Agreements (BFAs), are legally binding documents that set out how a couple’s property and financial resources will be divided either before or after separation or divorce.

Unlike Consent Orders, Financial Agreements do not require approval from the court.

Example of a Consent Order

Here is a basic example of the Consent Order process.

Meet Rivka and Abe, a married couple who have decided to separate after nine years of marriage. They want to divide their property and financial assets amicably without going to court.

Rivka and Abe agree on how they will split their assets. They decide that Abe will keep their family home, and in return, he will transfer half of his superannuation to Rivka. Additionally, they agree on child care arrangements and a payment schedule.

To formalise their agreement, they consult their respective lawyers, who draft Consent Orders based on their agreed terms. Once the Consent Orders are ready, they are submitted to the Family Court (FCFCOA) for approval. The court ensures that the proposed arrangements are “just and equitable” before approving the Consent Orders.

In this scenario, Rivka and Abe avoided the stress and expense of a court trial by reaching a mutual agreement and obtaining Consent Orders.

The Need for Consent Orders to be Just and Equitable

In family law, the principle of achieving a just and equitable outcome is paramount. Consent Orders play a significant role in upholding this principle by ensuring that the terms of the agreement are reasonable and fair to both parties. The court reviews the proposed Consent Orders to ensure that they meet the legal requirements and that neither party is disadvantaged or taken advantage of in the settlement.

In contrast, a financial agreement does not require the Court to consider the terms agreed to. This means that the agreement can be made on a basis that may not be “just and equitable.”

This can serve as a warning to those entering BFAs. However in many scenarios the parties are aware of this and understand that the agreement is appropriate for their circumstances.

Independent Legal Advice

Obtaining independent legal advice is crucial when considering Consent Orders or Financial Agreements. Each party should seek advice from their own family lawyer to fully understand their rights, obligations, and the implications of the proposed arrangements. This helps prevent any potential conflicts of interest and ensures that the parties enter into the agreement knowingly and willingly.

However with BFAs there is a mandated requirement for each party to formally acknowledge that they have received their own legal advice.

No such requirement exists with Consent Orders.

Consent Orders vs BFAs in a nutshell

IssueConsent OrdersFinancial Agreement
Involvement of the CourtFiled in CourtNot filed in Court
Need to meet a threshold of being “fair and reasonable”Court will only make orders they think are “just and equitable.”No need to meet this requirement. Parties can enter an agreement that may one-sided
Parenting IssuesCan include parenting as well as financial mattersCannot include parenting matters
Need for LawyersParties can be self represented in Court, and do not require a lawyer to witness the OrdersEach party needs to obtain independent legal advice before signing a BFA
Legal standingA Consent Order becomes a Court issued order. A BFA acts as a contract between the parties.
Spousal MaintenanceIssues can be included in consent ordersThey can be addressed in a BFA but future claims can also be extinguished in a BFA 

FAQs

What is a Property Settlement?

A property settlement is the process of dividing assets, finances, and liabilities between separating or divorcing parties. It aims to achieve a fair and equitable distribution of property following the breakdown of a relationship.

What are the Four Steps in Deciding Property Division?

The Family Law Act outlines four steps to determine property division:

  1. Identifying and valuing the assets
  2. Assessing the financial and non-financial contributions of each party
  3. Considering future needs, and
  4. Evaluating whether the proposed division is just and equitable.

What is a BFA?

A BFA (Binding Financial Agreement) is a legally binding document that sets out how a couple’s property and finances will be divided in case of separation or divorce. Unlike Consent Orders, BFAs do not require court approval.

What is the Difference Between a Consent Order and a Court Order?

In essence, a court order is issued solely by a judge and typically does not involve negotiations between the parties. On the other hand, a Consent Order is essentially a court order that contains specific terms to which the parties have mutually agreed or consented.

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