The difference between binding financial agreement vs consent orders in plain language
When couples who have separated reach an agreement about who gets what and the division of their assets, there are several ways in which that agreement can be formalised.
One of the ways in which separated couples can document their agreement is by entering into a Binding Financial Agreement. This is the legal term used in Australia however many people also know this document as prenuptial agreement. Think of it like a post-nuptial agreement. The term Binding Financial Agreement is used in Australia for both pre-nuptial agreements and agreements following a separation.
A Binding Financial Agreement shares some similarities to a consent order. Some of the main differences between a Binding Financial Agreement vs Consent Orders are:
- Binding Financial Agreements require two lawyers to be involved. Consent Orders do not strictly require the involvement of lawyers although it is generally recommended.
- Consent Orders are processed through the Family Court. Binding Financial Agreements do not require any approval by the Family Court to put in place.
- Binding Financial Agreements are typically more expensive than Consent Orders. This is because Binding Financial Agreements involve two lawyers and the more lawyers involved, the more costly the exercise. Two lawyers are required so that there is one lawyer acting for each party to the Binding Financial Agreement.
There are also similarities between a Binding Financial Agreement vs Consent Orders. Some of the main similarities between a Binding Financial Agreement vs Consent Orders are:
- Even though a Binding Financial Agreement isn’t initially processed by the Family Court, it can be enforced by the Family Court similar to someone breaching the terms of a commercial contract. Consent Orders can also be enforced by the Family Court. The binding nature of a Binding Financial Agreement vs Consent Orders is effectively the same.
- Transfer duty. A Binding Financial Agreement and Consent Orders both attract transfer duty concessions. This means that if there is property (such as real estate or motor vehicles) being transferred from joint names to one party or from one party’s name to the other, you will pay less money to the government for the transfer.
Are binding financial agreements the more flexible or preferred option?
Binding Financial Agreements are not always the more flexible or preferred option when separated couples have reached an agreement about who gets what. This is because requirements to disclose assets and be full and frank about your financial position are part of the process of putting in place both Binding Financial Agreements and Consent Orders.
Because a Binding Financial Agreement involved two lawyers, Binding Financial Agreements are typically a lot more expensive as well. Sometimes, the cost of putting in place a Binding Financial Agreement is the reason why people prefer to take the Consent Orders option.
Why Consent Orders are often the stronger choice
Consent Orders are often the preferred choice to document an agreement about who gets what between separated couples.
When comparing a Binding Financial Agreement vs Consent Orders, the attractiveness of Consent Orders comes from Consent Orders being:
- Cheaper
- No requirement for lawyers
- Binding and enforceable
- Approved by the Family Court
- Difficult to set aside
- Transfer duty concessions
The difference between Binding Financial Agreement and Consent Orders often favours Consent Orders once all factors are considered.
Court approved, enforceability, protection for both parties
Consent Orders are court approved. Consent Orders are enforceable. Consent Orders provide protection for both parties because they are binding.
The absence of court approval when putting in place a Binding Financial Agreement often makes a Binding Financial Agreement a less attractive option to documenting an agreement between separated couples.
Consent Orders are accessible and affordable with DIY templates
It is extremely difficult for people who want to do-it-themselves to put in place a Binding Financial Agreement that will be recognised by the Family Court for the simple reason that a Binding Financial Agreement requires two lawyers to be involved. In essence, there is no such thing in Australia as a do-it-yourself Binding Financial Agreement.
On the other hand, it is entirely possible for separated couples to prepare their own do-it-yourself consent orders.
Consent Orders are reviewed by the Family Court and how they should be drafted and worded is often a barrier to people being able to prepare DIY Consent Orders.
At Legal Aspirations, we offer DIY templates for Consent Orders. Our Consent Orders templates and Consent Orders examples can be purchased from our website in the Cart.
All of our Consent Orders examples and Consent Orders templates have been developed by Australian lawyers specialising in family law.
Identifying which option suits your situation
Speaking with a family lawyer about your specific situation is a good start following any separation. This is because you should know what you are legally entitled to before you commence negotiating with your ex about who gets what.
Once you and your ex have reached an agreement about who gets what, it is then advisable that you consider the options available to you to document the agreement.
Having an understanding about the difference between Binding Financial Agreement and Consent Orders will help you to work out what your next steps are.
Many separated couples who want the benefit of a court-approved agreement, the benefit of finality and enforceability and are attracted to cost savings and reducing expensive legal fees will opt for preparing Consent Orders.
The term Consent Orders is often used interchangeably with Minute of Consent Orders.
Legal Aspirations and our Consent Orders Templates
Minute of Consent Order examples and Minute of Consent Orders templates are available for purchase from Legal Aspirations.
There is no one size fits all and therefore Legal Aspirations has developed a platform that allows you to personalise your Consent Orders and purchase Minute of Consent Orders tailored to your individual needs.
A guide to the process of obtaining Consent Orders is on our website.
Visit our Cart to view all our Minute of Consent Orders templates, Minute of Consent Orders examples and Minute of Consent Orders precedents.
If you have any queries, feel free to contact us at support@legalaspirations.com.au
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