What’s Better: Consent Orders or a Prenup?

In this video, Award Wining Family Lawyer, Bruce Provan from Page Provan discusses what’s best, consent orders or a prenup (binding financial agreement).

Transcript

Good morning. My name is Bruce Provan. I’m the Managing Director of Page Provan Family and Fertility Lawyers. We’re a firm of lawyers that practise exclusively in family and fertility law in Central Brisbane. I want to talk to you today about how to document a Financial Agreement. That is, an agreement post-separation, where you might have reached an agreement with your spouse or partner about how you’re going to divide your finances. So, first thing is that it’s important, if you have reached an agreement, is to properly document and formalise the agreement between you. If you don’t do that, there is nothing to stop the other person coming back, sometimes years later, to have another go and ask for more of the property. So if, for example, you were to inherit a great deal of money or have a successful business, the other person might be able to come back and claim some of that, even though it’s not property that you owned at the time that two of you separated. The other reason, it’s important to formalise any agreement is that if there’s any transfers of property between the two of you, they’re exempt from stamp duty, and that can save many thousands of dollars.

So there’s two ways that you can formalise a property settlement agreement. The first and most common way is to do an application for consent orders, and that gets filed in the Federal Circuit and Family Court of Australia, and gets approved by a Registrar, and becomes a court order. The reason it’s most commonly done that way is that’s the most watertight way of doing it. It’s been approved by a Registrar. There are limited circumstances where these orders can be set aside, but only in very limited circumstances. And in the many years that I’ve been practising family law, I’ve never actually come across one of these cases. So to do an application for consent orders requires the preparation of two documents. One is the application for consent orders, which sets out various information, including each party’s income, assets, liability, and superannuation. And the other document, which is the draft consent order itself, which is the agreement, sets out the full details of what’s been agreed between the two of you. Now, these documents are generally prepared by lawyers. They often require a great deal of care and detail in the preparation of documents to make sure that everything is covered.

And in doing so, make sure that there’s no tax problems or other problems that may arise because the documents haven’t been prepared properly. So, there will be some expense if you engage a lawyer to prepare these documents, but there could also be a considerable saving of money in terms of stamp duty. So, clients often come to us where they have reached an agreement with their spouse or partner asking us to prepare these documents. And that’s something that we can do fairly quickly. One of the advantages of having an application for consent orders is that both sides don’t need to have lawyers. So, it’s quite common for one person to have a lawyer who prepares the documents, and the other person is not required to have a lawyer to review and advise them. There are some circumstances where an application for consent orders is not the best way to document the agreement. So, for example, if there’s an agreement that’s not within what we call the range of what each party is entitled to, that should be documented by way of a Binding Financial Agreement. So, once the application for consent orders is lodged with the court, the Registrar from the court will consider the documents and consider whether the orders being sought are just and equitable.

And one of the things they will do is to have a careful look at the assets, liabilities, and superannuation, and the proposed division to decide whether what is being proposed in percentage terms is within the range. What that means is that in any case, there’s no exact division of property. In each case, we talk about the property settlements or the entitlements being within a certain percentage range. And as long as the Registrar is satisfied that what’s being proposed is within the range of each party’s entitlement, they will make the orders. The other way that the document or an agreement can be formalised is by way of a Binding Financial Agreement. Now, a Binding Financial Agreement is usually prepared by lawyers. Both parties are required to have independent legal advice before the agreement is signed in order for the agreement to be binding. The agreement doesn’t get lodged in court, and so it has the advantage that because it doesn’t have to go through the process, it doesn’t have that vetting process where the Registrar reviews it to make sure that each party receives their lawful entitlement. And because it doesn’t have to go through a court, that process can be quicker.

I hope that assists you, and if you have reached an agreement with your partner or spouse, I strongly encourage you to get legal advice in preparing or at least reviewing these documents. My name is Bruce Provan from Page Provan Family and Fertility Lawyers.