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Why have a financial agreement?

The Family Law Act 1975 (Cth) (the ‘Act’) sets out the rules concerning marriage, divorce, responsibility for children and financial matters after the breakdown of a marriage or de facto relationship.

The Act also recognises that people should be free to divide their property by agreement in the event of, or after a break-up, without Court intervention. An agreement made before or during the relationship determines how the property or financial resources of the parties will be distributed if the relationship ends. A financial agreement made after a relationship breaks down formalises the division of property as agreed between the parties.
Financial agreements are not approved or registered in Court (unlike consent orders) however are enforceable by a Court provided they are formally documented and circumstances do not exist which would make them void.
The parties must receive independent legal advice and acknowledge that they are each aware of their rights and obligations under the agreement. If done correctly and under the right circumstances, financial agreements can be a less formal and cost effective solution to dividing property.

How binding is the financial agreement?

Provided the agreement follows formal procedures, and unless there are extenuating circumstances a financial agreement is generally binding.

The Court will set aside an agreement obtained by fraud. This includes the non-disclosure of significant assets by a party and agreements made to defeat the interests of a creditor of one of the parties, or a third party with whom one of the parties has pending property matters. Parties therefore need to be honest in their dealings and when disclosing assets, financial resources and estimating values.
A financial agreement may also be set aside if circumstances change dramatically creating hardship for a party or relating to the welfare of a child of the relationship. Generally, the Court will be able to set aside a financial agreement if it considers it is ‘just and equitable’ to preserve the rights of a party.
If you believe you have entered into a financial agreement under duress or in fraudulent circumstances, then we can advise you on your rights to have the agreement terminated or set aside.

What is the effect of the financial agreement?

If the agreement is made prior to or during the relationship, the provisions regarding distribution of property are triggered in the event of a breakup and the parties must divide their property in accordance with the terms of the agreement.

Whether a financial agreement is made prior to, during or after a relationship breaks down, the parties are bound by normal contractual principles.
By signing a financial agreement, parties contract out of provisions of the Act that would otherwise determine the division of assets after a breakup. This circumvents the Court’s usual process used to divide assets and to determine spousal maintenance. More information on this process is contained in our ‘Property Settlements’ section.
Parties should be aware that a financial agreement may result in a less or more favourable division of property had the agreement not been in place and the usual property settlement processes under the Act applied.

What are Consent Orders?

Separating couples who are able to reach an agreement on the division of their property, may apply to have that agreement endorsed by the Court.

This is more formal than entering into a financial agreement. Because of the Court’s involvement, the orders are less likely to be set aside. Accordingly, consent orders are said to provide greater finality to property matters.
Consent orders are only used after a relationship breaks down. They can provide for a superannuation split and include matters concerning parenting arrangements.
As with financial agreements, disclosure is critical and the Court will only approve the orders if it considers they are just and equitable in the circumstances.
Your Lawyer will prepare the relevant application which will include a financial statement setting out the assets and liabilities of each party. Draft consent orders are attached to the application and if approved, the orders are stamped by the Court and returned to the parties.
We have assisted many parties with documenting the division of property in the event of a breakup. We will guide you through this process and explain your rights and responsibilities before formalising an agreement.

How are children’s matters determined?

In determining matters relating to children the Family Law Act 1975 (Cth) requires that the parties attempt to resolve their disputes utilising dispute resolution services.

The overriding principles considered by the Family Court with respect to parenting arrangements are that the best interests of the child are paramount, and that:
• children should have the benefit of a meaningful involvement with both parents in their lives;
• children should be protected from physical and psychological harm and harm resulting from being subjected to family violence;
• children should receive parenting conducive to them achieving their full potential;
• unless a child is at risk, parental responsibility should be equally shared and children should have the right to spend time on a regular basis with both parents and other people significant in their lives;
• parents should co-operate in determining what is best for the children rather than fighting in Court.
It is important to understand that shared parental responsibility does not mean that the child or children will spend equal time with each parent. In this respect, various practical and other factors are considered such as the ages of the children and their ability to cope with change, the existence of and their relationship with other siblings, the parents’ respective work commitments, schooling and location.
Shared parental responsibility however does involve joint and equal responsibility and authority for the child or children and input with respect to long-term decisions such as their health, welfare and education.
Going to Court

If agreement cannot be reached regarding parenting issues it may be necessary to apply to Court for the appropriate orders.

A Family Dispute Resolution Certificate must be filed with an application to the Court to determine parenting matters, other than consent orders. This means that the parties must attend compulsory dispute resolution with an accredited independent consultant before proceeding. Exceptions apply in urgent circumstances, if there has been family violence or abuse, or if the application is related to a contravention of a previous order.
If the matter goes to Court, there will be a range of factors to consider in determining the future care and responsibility for the children. In addition to the principles already outlined, the Court will consider the extent to which a parent has or has not fulfilled their responsibility towards a child or embraced the opportunity to do so.
In some circumstances the Court will appoint an Independent Children’s Lawyer (ICL) or order that a Family Report be prepared by a psychiatrist or psychologist. An ICL is usually appointed in complex matters or matters involving allegations of abuse, neglect, family violence or mental health issues. The purpose of a Family Report is to address matters from an independent perspective and to propose arrangements that focus on the best interests and welfare of the child.
The best interests of the child are also reflected in the manner in which proceedings are conducted. The impact that proceedings may have on a child is always considered and cooperation between the parents is fostered with as little formality during proceedings as possible.
We appreciate that no two families are alike and that parenting matters can be fraught with emotion and conflict. This is evident in the discretion available to the Court in determining orders that are in the best interests of the child.
We recommend that advice be obtained as soon as your relationship breaks down to ensure that you are aware of your rights and responsibilities. Our early involvement and expertise will assist you in navigating this complex area of law during a stressful time.
Parenting Plans

A parenting plan is an agreement made between parents regarding the ongoing and future arrangements for children.

Parenting plans are not legally enforceable however are taken into account if one of the parties subsequently applies to the Court for a parenting order to vary the parenting plan. Parenting plans may be made before or after divorcing.
Consent Orders – Parenting

A consent order is a legally binding agreement with respect to parenting arrangements and can also include terms regarding the division of property.

Consent orders are made after agreement by the parties without the need to attend Court, however they have the same force as an order made after a Court hearing.
The parents, grandparent or other person concerned with the welfare of a child or children may make a parenting order.
What is a de facto relationship?

The legal recognition of a de facto relationship is necessary to access certain remedies under family law legislation in the event of a break up.

Under the Family Law Act 1975 (Cth) persons are in a de facto relationship if:
• they are not legally married to each other; and
• they are not related by family; and
• having regard to all the circumstances of their relationship, they have a relationship as a couple living together on a genuine domestic basis.
Several factors are considered in establishing this criteria including the duration of the relationship, the common residence, the existence of a sexual relationship, financial dependence or interdependence, ownership of assets, mutual commitment, care and support of children and the perception of the relationship. The Act recognises same sex couples.
Parties to a de facto relationship may have property matters determined by the Family Court provided that:
• the period of the relationship was at least 2 years; or
• there is a child of the relationship; or
• the relationship is registered under State or Territory legislation; or
• significant contributions have been made by one of the parties and the failure to issue a property order would result in a serious injustice.
A de facto relationship allows parties to apply for similar remedies from the Family Court as are available for married couples. Matters concerning children of a de facto relationship are also dealt with by the Family Court – refer to our information on ‘Children’s Matters’.
Any proceedings for property adjustment must be commenced within 2 years of the de facto relationship ending.
The legal relevance of a de facto relationship

If you are in a de facto relationship, it may be assumed that you are subject to the same rights and responsibilities applicable to married couples. Consider whether this is appropriate in your circumstances.

For example, if a de facto partner dies, then the surviving partner is usually entitled to a significant share of the deceased partner’s estate. This might mean that your children from a previous relationship are unintentionally precluded (to the extent you would like) from benefiting from your estate.
The recognition of a de facto relationship under the Family Law Act has been a major step in acknowledging the rights of less traditional (i.e. non-spousal) relationships. It is important however that de facto partners are aware of their legal status and can plan to prevent unintended consequences arising from their relationship.
Some de facto couples choose to make a financial agreement to set out how their property is divided if their relationship breaks down, thus ousting the jurisdiction of the Family Court. This is common for couples who are in a new relationship but have children from a former relationship. The financial agreement may also protect a partner’s children’s inheritance from potential family provision claims.
All relationships are different and plans need to take into account the respective needs of the partners and their financial circumstances, whilst understanding the impact that the law would otherwise have on a de facto relationship. It is wise to consider these matters whilst a relationship is sound rather than after it breaks down.
Our Lawyers can explain the legal effect of your relationship and help you and your partner plan ways to ensure that your property is divided or left as you intend.
Recently separated? What next?

Separating from your spouse or partner is seldom easy. In addition to the emotional upheaval there are practical aspects to consider. Ironically, the time that a clear head is most needed is the time that emotions run high and balance is difficult to find.

We encourage clients to seek legal advice as soon as possible so we can explain your rights and help you move forward in settling matters between you and your ex-partner. We will guide you through the separation process and help you reach agreement with your ex-partner. If agreement cannot be reached, we will advise you on starting proceedings to have appropriate orders put in place.

What are some of the things I should do after separating?

The following are some issues to consider when separating.
• Personal safety is a priority. Unfortunately, some separations result from or end in violence. We urge you to put safety first and contact your local police if you are experiencing violence or harassment.

• We can represent you in matters involving an Apprehended Violence Order (AVO) or if you wish to oppose an AVO that has been ordered against you. Please see our separate section on ‘Apprehended Violence Orders’.
• If possible, talk to your ex-partner about arrangements for the children to ensure their wellbeing is paramount. Let your ex-partner know that an amicable breakup is desirable and try to come to some resolution regarding children and then property.
• Arrange to see your Lawyer as soon as possible. Even if the decision to separate is mutual, you need to be aware of your rights. Sometimes parties are agreeable at the beginning of a separation but emotions escalate once discussions about children and property start.
• If possible, obtain legal advice before leaving the family home. If you do move out, make sure you notify authorities of your new address. You might consider renting a post office box for privacy reasons and so your mailing address does not need to be changed again if you subsequently move.
• Ensure that you have access to bank accounts, home loan accounts and investments. Keep originals or copies of important documents such as passports, marriage certificates, superannuation and insurance policies and update passwords for email accounts and internet banking.
• Make sure that any property registered in joint names remains insured.
• Start a journal and keep written records of relevant dates, events and conversations.

When and how can I obtain a divorce?

A divorce is the legal process of ending a marriage. An application for divorce may be made individually or jointly through the Family Court. Online applications are encouraged and a copy of the marriage certificate and relevant filing fee must accompany the application. Additional documents are required for non-citizens.

The primary requirements for granting a divorce order are that:
• the marriage has irretrievably broken down; and
• the parties have lived separately and apart for a continuous period of 12 months; and
• there is no reasonable likelihood the parties will live together again.
If you have been married for less than two years, a certificate from a family counsellor confirming that you and your ex-partner have considered reconciliation must be provided, unless there are special circumstances such as the existence of domestic violence.
The Court acknowledges that parties may be technically separated however, due to a range or circumstances, continue to live under the same roof. These circumstances are generally related to the responsibility for children, religious, cultural or financial matters.
You do not need to attend court if the application is made jointly, or if made individually and there are no children of the marriage under 18 years. If you are the sole applicant with a child of the marriage under 18 years, then you will need to attend Court. An individual application needs to be served on the ex-partner.

After the divorce is granted

The divorce order is effective one month after it is granted provided that suitable arrangements are in place for any children under the age of 18 years. The parties to the former marriage are thereafter free to remarry.

The granting of a divorce order triggers a 12-month timeframe within which to commence proceedings for a property settlement or maintenance order. A divorce order also affects a previously-made Will. If you have not already done so, property proceedings should be started and your Will revised.
Our Lawyers are sensitive but knowledgeable in family law property and children’s matters and will provide valuable assistance with the intricacies of divorce, separation and property settlement.

How is property divided after separation?

A property settlement after the breakdown of a marriage or de facto relationship can be resolved by consent orders, financial agreement or proceedings in the Family Court.

The Family Law Act 1975 (Cth) encourages separating couples to settle property disputes as amicably as possible, particularly if relationships will be ongoing, such as where children are involved. The more difficult the parties are, the more expensive the process, depleting available assets and adding stress to an already-difficult time.
We recommend you read our section on ‘Financial Agreements and Consent Orders’ and ‘De facto Relationships’ which may also be of interest.

What are the first steps?

Different time limits apply for commencing Court proceedings, depending on whether you are still married, divorced or have been in a de facto relationship.

Generally, proceedings must be commenced within 12 months of finalising a divorce and within 2 years of separating from a de facto relationship. You do not need to be divorced before affecting a property settlement.
If you have recently separated you should meet with your Lawyer promptly to clarify dates so that if proceedings become necessary, relevant timeframes can be diarised. During our first meeting, we will obtain comprehensive details from you about your relationship, children, assets and liabilities.
Usually, we will ask you to bring in various documents such as bank statements, superannuation and loan account details. We appreciate that it may take some time to get this information which can be provided as it becomes available.
It is important to give full disclosure and provide accurate information during property proceedings. We will gather this information and the relevant facts to build your case to achieve a fair settlement or to proceed to court if the matter does not settle amicably.
If you and your ex-partner have already reached an agreement on how your property should be divided then we can discuss your rights, how the proposed agreement will affect you, and the most appropriate way for it to be documented.

What if we don’t agree?

If there is no agreement on how to divide your property, we will attempt to negotiate a settlement through your ex-partner’s Lawyers. In most cases parties are required to cooperate and make a genuine effort to resolve their differences and take part in dispute resolution processes.

With the help of the parties’ Lawyers, this will often result in an agreement in principle which can be documented and, if necessary, endorsed by the Court.
If no agreement is reached, or the matter is very complex, going to Court may be necessary. In this event, we will wherever possible, minimise the issues in dispute to avoid excessive fees.

What does the Court consider?

In determining a division of property, the Family Court uses a four-step process:
1. The Court identifies the assets, liabilities and financial resources of the parties. This includes real and personal property, furniture, motor vehicles, investments, cash, shares and insurance policies.

Superannuation is also included and may be ‘split’ between the parties to give effect to property orders.
2. Contributions made between the parties are assessed. This includes financial contributions such as assets brought into the relationship and the parties’ respective earnings, and non-financial contributions such as the care and welfare of the family.
3. Each parties’ future needs are evaluated taking into account their relative earning capacities, state of health and the need of the primary carer of children to provide a suitable home.
4. The Court will determine, in all of the circumstances of the case as a whole, the orders that are ‘just and equitable’.
Generally, the starting point will be an equal distribution of assets before consideration of the various factors. The Court’s determination is discretionary and no two cases are alike. Within each of the four steps there are numerous other considerations.
No matter what process is used, it is important to formalise your property settlement to finalise your affairs and obtain stamp duty exemptions on the transfer of any property.
If you have recently separated from your spouse or de facto partner, our experienced Lawyers will explain your rights and assist you to achieve a fair division of property, allowing you to move on with your life.

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