When separating couples reach agreement about property and finances, the next critical question is often overlooked:
How do you formalise that agreement so it is actually enforceable and protected?
In Australia, there are two primary options under the Family Law Act 1975:
- Consent Orders
- Binding Financial Agreements
Both can finalise financial matters. However, they operate very differently and offer different levels of protection depending on your circumstances.
What Are Consent Orders?
Consent Orders are agreements filed with the Court and approved as legally binding orders.
The Court will only make Consent Orders if it is satisfied the agreement is just and equitable.
Once approved, they carry the same legal force as if a judge made the decision after a hearing.
Key Features Of Consent Orders
- Reviewed and approved by the Court
- Must be just and equitable
- Legally enforceable as Court orders
- Can deal with property, superannuation splitting, and spousal maintenance
What Is A Binding Financial Agreement?
A Binding Financial Agreement, often called a BFA, is a private contract between parties.
It does not require Court approval. Instead, each party must obtain independent legal advice before signing.
BFAs can be entered into before, during, or after a relationship.
Key Features Of A Binding Financial Agreement
- No Court involvement or approval
- Requires strict legal formalities
- Can finalise property and spousal maintenance
- Greater flexibility in structuring outcomes
Court Oversight Compared With Private Agreement
Consent Orders are reviewed by the Court to ensure the outcome is just and equitable. Consent Orders carry an added layer of independent scrutiny
Binding Financial Agreements are not subject to that review. BFAs depend entirely on the quality of the drafting and the advice provided
Which One Is Safer?
For most separated couples, Consent Orders are generally the safer and more reliable option.
This is because:
- The Court checks the outcome is just and equitable
- They are less vulnerable to being challenged later
- Enforcement is straightforward
By contrast, BFAs can be set aside in certain circumstances, including:
- Failure to meet strict legal requirements
- Fraud or non-disclosure
- Duress, undue influence, or unconscionable conduct
This makes BFAs more technically fragile if not done properly.
When A Binding Financial Agreement May Be Better
Despite the risks, BFAs can be the better option in some situations.
For example:
- You want to exclude Court involvement entirely
- You are entering into a more complex or tailored financial arrangement
- You want to deal with spousal maintenance in a final and absolute way
- You are managing risk in high asset or second relationship scenarios
A properly drafted BFA can provide strong protection, but it must be done carefully.
Spousal Maintenance: A Key Strategic Difference
One of the most important distinctions relates to spousal maintenance.
- Consent Orders can finalise spousal maintenance, but only if the Court is satisfied that neither party will need support in the future
- A Binding Financial Agreement can permanently exclude spousal maintenance, even if circumstances later change
This can be a major advantage or a significant risk, depending on your position.
Speed, Cost, and Practical Considerations
Consent Orders
- Typically more cost effective
- Processed through the Court
- Some delay while awaiting approval
Binding Financial Agreements
- Often more expensive due to strict legal requirements
- No Court delay
- Greater drafting complexity
Which One Actually Protects You?
There is no one size fits all answer.
However, in most cases:
- Consent Orders offer stronger protection through Court oversight
- Binding Financial Agreements offer flexibility but carry more risk if not properly prepared
The right option depends on your financial position, risk tolerance, and future plans.
Common Mistakes To Avoid
We regularly see issues arise where:
- Agreements are not formalised at all
- Parties rely on informal arrangements
- BFAs are poorly drafted or do not meet legal requirements
- Spousal maintenance is not properly addressed
Failing to formalise your agreement properly can leave you exposed to future claims.
Spousal Maintenance and Property Settlement Must Be Considered Together
Finalising property settlement does not automatically finalise spousal maintenance. If this is not properly addressed, a party may bring a claim later.
This is a key area where legal advice is essential.
What This Means For You After Separation
Choosing between Consent Orders and a Binding Financial Agreement is not just a procedural decision. It directly affects your long term financial security.
The level of protection you achieve will depend on:
- How your agreement is structured
- Whether risks are properly addressed
- The quality of legal advice obtained
Making the wrong choice or taking shortcuts can undo an otherwise fair agreement.
How We Can Help
At South Coast Family Law Group, we advise clients on property settlements, Consent Orders, and Binding Financial Agreements, with a focus on risk management and long term protection.
We work with you to determine which option best suits your circumstances and ensure your agreement is properly formalised.
If you are negotiating a property settlement, obtaining advice early can make a significant difference to your outcome.
Call our expert family lawyers in Wollongong and Shellharbour on (02) 4202 6644 or email admin@scflg.com.au to obtain tailored advice today.
