A separation agreement is a legally enforceable instrument that formalizes the distribution of your assets upon your divorce. Considering that a separation agreement is legally enforceable, each party to such an agreement must carefully analyze their choices and choose whether or not signing a separation agreement is in their best interests before proceeding.

What are Separation Agreements and How Do They Work?

In the case of a financial separation between two people, such as a divorce, a separation agreement (also known as a “deed of separation” or “property settlement agreement”) serves as a legally binding document that specifies the terms of the financial separation, such as who gets what in the event that the couple, regardless of their married or in a de facto relationship, break-up.

Under the Family Law Act, a separation agreement is more correctly referred to as a ‘Binding Financial Agreement,’ sometimes known as a BFA, which is a more formal term. A separation agreement can be entered into at any moment during the course of the relationship. Obviously, most do such an agreement prior to marriage.

With help from family lawyers and mediators, separated spouses are able to come to terms on how they intend to divide their assets after they have separated. In the vast majority of cases, it is in the best interests of both parties to formally document the agreement that has been struck. Formalizing an agreement is simply the process of taking steps to guarantee that the agreement is legally binding and enforceable. The parties will be able to “draw a line in the sand” when it comes to their financial connection if the process is carried out correctly. It makes it impossible for either side to come back and demand more money or assets from the other in the future.

In the absence of such a legally-binding agreement, there are inherent risks that any agreement that isn’t legally binding can be breached and you’re unable to do anything about it.

What about Consent Orders?

As mentioned, it is possible to formalize your arrangements under the Family Law Act by entering into a financial agreement or the other alternative available to you is by seeking consent orders if you can come to an agreement on how your property and finances should be distributed between you and your spouse.

If you and your spouse are unable to reach an agreement on the partition of your property, you can file a financial order with the Federal Circuit and Family Court of Australia (FCFCA). It is in your best interests to seek legal counsel in order to ensure that you fully understand your legal rights and obligations before signing any agreements or court orders.

Parties should generally agree to Consent Orders that will be filed with the Family Law Courts rather than going through a formal court process. This entails the creation of two documents that will be submitted to the Family Court. The documents will be reviewed by a Registrar of the Court after they have been filed. The parties are not required to appear in court. Assuming that the Registrar finds the agreement to be reasonable and suitable in light of the unique circumstances of the relationship, the Registrar will issue enforceable Court Orders in accordance with the provisions of the agreement.

Consent Orders are preferred in the vast majority of instances. They are often less expensive and less difficult to prepare. It is critical that parties get legal advice on the appropriate course of action to take in their specific situation.

Consent Orders or Binding Financial Agreements?

In order for a court to utilize its discretion to issue consent orders, it must be convinced that doing so is reasonable and equitable. Once this is accomplished, the court must be convinced that the proposed orders are reasonable and equitable. A court’s decision of what is “just and equitable” means that the orders must be fair to all parties and fall within the range of conceivable outcomes that may have resulted had a judicial judgment been made.

Given the Binding Financial Agreements are not sanctioned by a court, there is no legal obligation that they be just and equitable in accordance with the criteria employed by the Family Court in making its determination. The parties may come to an agreement that the provisions of the agreement represent a suitable conclusion in light of the current situation. Parties may agree on the terms of a contract for reasons other than fairness. For example, parties may agree on the terms of an agreement because of practical factors. As a result, parties are able to engage in agreements that are manifestly unjust if they so want.

What is the Objective of Separation Agreements?

The purpose of this document is to formalize your property settlement and to give both parties legal clarity on the split of your relationship’s assets and debts.

What are the Advantages of Entering into a Separation Agreement with your Spouse?

A separation agreement will save you both a great deal of time, money and worry by doing the following:

• It may be possible to avoid paying stamp duty and capital gains tax on the transfer of property if the relationship is kept friendly and out of court;
• and it may be possible to avoid future disagreements (less stressful, greater certainty).

When Do Separation Agreements Become Legally Enforceable and Binding on the Parties?

All sorts of Financial Agreements must adhere to stringent legal criteria stated in the Family Law Act, which include the following:

• Those agreements must be in writing and signed by all of the persons involved.
• Prior to executing the Financial Agreement, each party must have obtained independent legal counsel from a qualified family lawyer. At Australia Lawyers we can help.
• The legal advice supplied must have been provided by a family lawyer licensed to practice in the Australian jurisdiction.
• The Financial Agreement must have been signed freely by each individual (free from coercion, duress, or undue influence).
• The Financial Agreement should include a thorough disclosure of each party’s financial situation.

Do I need to consult with a Family Lawyer?

Yes, it is a must. Prior to executing a separation agreement, each party must get separate legal counsel from a qualified family lawyer.

If you do not seek legal counsel before entering into a separation agreement, the arrangement will be unenforceable.

Keep in mind that you cannot just “visit” a lawyer or have the lawyer witness you signing an agreement; instead, you must acquire a “Certificate of Advice” from the family lawyer.

What is a Certificate of Advice, and How Does it Work?

Your family lawyer will issue you a ‘Certificate of Advice’ after reviewing your separation agreement and providing you with advice. You will sign this document to confirm that you have received the advice. You must then provide a copy of this certificate to the other party, and the other party must do the same for you. This condition of Section 90G of the Family Law Act 1975 cannot be met until all parties have received a copy of the document.

Can I Draft the Separation Agreement?

It is usually advised that a family lawyer with specialized knowledge prepare the agreement. Remember, it has massive ramifications, and having it struck out by the Court because of an error or because of its unfair nature is something you should avoid.

Furthermore, it is best to have a lawyer create the agreement since it will guarantee that the terms are stated in a clear and straightforward way, which will make it easier for the lawyers representing both parties to examine and offer a Certificate of Advice on the agreement.

It goes without saying, that it is best to stay away from online separation agreement templates since they seldom fulfill legal standards and are extremely likely to be invalidated by a Court if they are questioned.

Is it Possible for a Couple in a De Facto Relationship to Use Separation Agreements?

Yes, a separation agreement can be used to dissolve defacto relationships (sometimes known as a “de facto separation agreement”), even those that are in a same-sex relationship.

Is it Possible for a Couple to do a Separation Agreement after their Divorce is Finalised?

Yes, this sort of separation agreement is generally referred to as a ‘Post Divorce Property Settlement Agreement,’ and it is yet another type of binding financial agreement (BFA).

Please keep in mind that there are time constraints. Upon divorce, you must finalize your property settlement within 12 months of the date of your separation.

Do I have to go to Court in order to have my Separation Agreement Finalised?

No. One of the advantages of adopting a separation agreement is that you do not have to go through the court system.

When it comes to Prenuptial Agreements, What is the Difference Between Them?

A separation agreement is a binding financial agreement (BFA) that is put into AFTER two persons have separated.

A prenuptial agreement (prenup) is a binding financial arrangement (BFA) that is entered into BEFORE two persons split from one another.

The Family Law Act permits persons who are going to marry, who are currently married, or who are separated to enter into a Financial Agreement. Financial Agreements are classified into three categories:

• Before marriage agreements, when spouses wish to quarantine previously acquired assets from the consequences of separation, or when one spouse enters a marriage with interests in family business structures and there is a desire to protect those business assets from becoming embroiled in a legal battle.
• When it comes to financial agreements, they can be employed in a variety of situations. It may be an agreement reached while the parties are still in a happy relationship, and it will have the same impact as a pre-nuptial agreement, except that it will be entered into after the marriage.
• An asset protection measure may be employed when one or more spouses are experiencing marital difficulties and it is necessary to reorganize their financial affairs in order to offer security for one or more spouses. It might be a settlement agreement about the division of assets reached after the couple has separated but before the couple is divorced.

In the aftermath of a divorce, these agreements are utilized to secure a private settlement without the participation of a court or third parties in the proceedings.

Can a Separation Agreement include Provisions for Children and Child Custody Arrangements?

No. A Consent Order or a Parenting Plan must be used to resolve disputes involving children.

Is it Possible to have a Separation Agreement Rendered Void?

Yes, a separation agreement can be invalidated by a court of law for a number of different reasons. The following are examples of common reasons:

• if a party fails to reveal the full extent and value of their assets at the time the agreement was negotiated and executed.
• If a party unduly presses or coerces the other party into signing the agreement, the agreement may be voided.
• If the agreement is not reasonable and equitable (fair) it may be thrown out by the court.
• If an agreement was reached via deception, it may be thrown out of court.
• The agreement is to defraud or defeat a creditor (or creditors) may be set aside if it was made with the intent of defrauding or defeating a creditor (or creditors).

What Should You Do Now?

At Mediations Australia, we have a team of family lawyers and mediators who can assist you in Canberra, Perth, Adelaide, Melbourne, Sydney and all other locations in Australia. We also do international family law matters.