Last updated 21 November 2016
Two principal methods of documenting an agreement for property settlement may be used by parties to a dispute:
- financial agreements
- consent orders.
If an agreement is not documented as a consent order (an order of the Family Court) or documented as a financial agreement complying with pt VIIIA (for married couples) or pt VIIIAB (for de facto couples) of the Family Law Act 1975 (Cth) (Family Law Act), then the agreement is not binding and enforceable, and either party may start property settlement proceedings at any time up to 12 months from the date of their divorce or up to two years from the date of separation for de facto couples (or after that period if they obtain the leave of the court).
Parties can plan and document their property settlement (for more information about spousal maintenance see the Spousal & Child Maintenance and Child Support chapter) before cohabitation or marriage or during their relationship in advance of a separation by way of a pre-nuptial agreement or cohabitation agreement. Alternatively, parties may leave it until they separate to enter a separation agreement.
An agreement can deal with all or part of the parties’ property. To the extent that the property of the parties is dealt with by the financial agreement, the court is not able to make orders for property settlement pursuant to ss 78 and 79 of the Family Law Act. For example, if an asset is covered in a financial agreement, the court cannot make an order in relation to that asset that is contrary to the terms of the agreement.
Financial agreements between de facto couples in all states and territories except Western Australia are also covered by the Family Court with the same requirements as agreements between married couples.
- be in writing
- be expressed to be made pursuant to the relevant section of the Family Law Act
- not be made where another agreement is in force between the parties with respect to the matters contained in the financial agreement. If there is another agreement, then it must be terminated. The parties can enter a formal termination agreement (ss 90J or 90UL Family Law Act for de facto financial agreements)
- not have been set aside by the court
- not have been terminated.
Before signing the agreement, each party must receive independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party, and the advantages and disadvantages at the time that the advice was provided.
Either before or after signing the agreement, each party must be provided with a signed statement from the legal practitioner stating that the advice set out above was provided. The certificate may be annexed to the financial agreement and signed by the legal practitioner, but this is no longer a requirement under the Family Law Act.
A copy of the statement provided to each party is given to the other party or to the legal practitioner for the other party.
If, once an agreement is signed by both parties, one or more of the requirements set out above are not met, the financial agreement may still be binding if:
- the court is satisfied that it would be unjust and inequitable if the agreement was not binding
- the court makes an order declaring the agreement is binding
- the agreement has not been terminated or set aside by the court.
A superannuation agreement will be binding on the trustee of a superannuation fund who will be required to give effect to the agreement and divide the superannuation interest in accordance with the agreement. While the superannuation agreement is made under pt VIIIB of the Family Law Act, it can form part of a financial agreement covering other issues of property settlement (and spousal maintenance) (s 90MH for married couple and s 90MHA for de facto couples, respectively) or be a standalone agreement regarding superannuation. The superannuation agreement can deal with two issues:
- payment/interest splitting on the breakdown of the parties’ marriage
- flagging of payments, which restrains a trustee of the superannuation fund from dealing with the superannuation interest until the flag has been lifted by either a flag-lifting agreement or an order of the court.
A consent order is prepared in the form of a draft order of the court. A registrar will issue a sealed order in the terms of the draft order if satisfied that the terms of the order are just and equitable in all the circumstances.
Once issued, an order for property settlement will finalise a party’s right to claim property settlement, but leaves open the party’s right to make a spousal maintenance claim against the other party within 12 months of divorce. Any orders for maintenance included in the consent order are usually variable under s 83 of the Family Law Act. If parties are not engaged in any other proceedings before the court at the time the application is made, the form to use is an Application for Consent Orders which is then filed in the Family Court.
The Family Court provides a do-it-yourself kit for the preparation of consent orders, which is helpful for parties who have reached agreement.