When would you need a BFA or Consent Order?
When a marriage or de facto relationship ends, it’s essential to resolve financial matters to provide clarity and certainty for both parties moving forward. In Australia, there are two primary legal options for formalising a financial settlement: Binding Financial Agreements (BFAs) and Consent Orders.
Although both options aim to set out how assets, debts, and possibly spousal maintenance will be divided, they differ significantly in terms of structure, legal status, and the process involved. Understanding these key differences is crucial to making informed choices during what can be an emotionally challenging and legally complex time.
What is a Binding Financial Agreement (BFA)?
A Binding Financial Agreement is a private contract between two parties. It can be entered into:
- Before a relationship;
- During a relationship; or
- After separation or divorce.
BFAs outline how financial matters such as property division, superannuation, and spousal maintenance will be handled if the relationship ends.
Advantages of BFAs:
- Private Agreement: Unlike Consent Orders, BFAs are not filed or approved by a court.
- Flexibility: Parties have the freedom to decide their own terms, even if the outcome wouldn’t necessarily align with what a court might deem “just and equitable.”
Disadvantages of BFAs:
- Expensive: Can be more expensive due to the strict legal requirements.
- Risky: BFA’s are not reviewed by a court, so the risk of being challenged later for example, due to duress or undue influence is higher.
- Complex: BFA’s are often more complex to draft and enforce if not properly executed.
What are Consent Orders?
Consent Orders are written agreements approved by the Family Court. They are usually made after separation or divorce and set out how financial matters, and parenting arrangements, will be finalised.
Consent Orders carry the same legal weight as court-imposed orders but are made with the consent of both parties.
Advantages of Consent Orders:
- Court Approved: Submitted to the Family Court, which reviews the agreement to ensure it’s fair and reasonable. This means that the agreement is at a lower risk of being overturned.
- Legally Binding: Once approved, Consent Orders are enforceable in the same way as any court order. This means that the agreement can be enforced through the Court system.
- Faster and more cost effective: BFA’s are typically faster and more cost effective as both parties’ are agreeable to the terms. The orders are usually made “in chambers”, that is, a judge approves them without a hearing.
Disadvantages of Consent Orders:
- Less flexibility: Consent Orders must be in an required form and meet the requirements and standards of the Court. The court may reject the application if it doesn’t consider the agreement just and equitable.
- Limited: They can only be used after separation.
Which one is best for you?
Binding Financial Agreements and Consent Orders both offer clarity, legal certainty, and peace of mind when finalising financial matters after a relationship ends.
While both serve similar purposes, each has unique legal and practical implications, and the most suitable option will depend on your individual circumstances, goals, and the level of flexibility or protection you require. Seeking expert legal advice is not only essential to meet legal requirements but also to ensure your agreement is enforceable, tailored to your needs, and aligned with your long-term interests.
Whether you’re considering entering into a Binding Financial Agreement or applying for Consent Orders, an experienced family lawyer can guide you through the process and help you make the right decision for your future.
Take the next step with confidence – contact the experts at Your Divorce or Auslex today to discuss your unique needs and how you can best move forward.
