When a relationship ends, one of the most pressing concerns for both parties is how their financial affairs will be resolved. A separation agreement, in the form of a Binding Financial Agreement under the Family Law Act 1975, allows separating couples to settle property and financial matters privately, without the need for court proceedings. Reid+Alexander Lawyers assist clients in negotiating and preparing separation BFAs that provide a clear and enforceable resolution.
What Is a Separation Agreement?
A separation agreement is a Binding Financial Agreement entered into after separation between parties to a marriage (under section 90C, or section 90D if made after divorce) or a de facto relationship (under section 90UC). It operates as a legally binding contract that sets out how the parties' assets, liabilities, financial resources, and spousal maintenance will be divided.
Unlike consent orders, which require court approval, a separation BFA is a private agreement between the parties. This offers several advantages:
- Privacy: The terms of the agreement are not placed on the court record and remain confidential between the parties
- Flexibility: The parties have greater freedom to negotiate terms that suit their particular circumstances, without needing to satisfy a court that the arrangement is just and equitable
- Speed: A separation BFA can often be finalised more quickly than consent orders, which require court processing times
- Control: Both parties retain control over the outcome rather than leaving the decision to a judge
What Can a Separation Agreement Cover?
A separation BFA can address all financial matters arising from the breakdown of the relationship. Typical provisions include:
- Division of the family home and other real property
- Distribution of savings, investments, and bank accounts
- Allocation of personal property, vehicles, and household contents
- Treatment of superannuation interests, including splitting arrangements under the superannuation splitting regulations
- Division of debts and liabilities, including mortgages, personal loans, and credit card debts
- Spousal maintenance obligations, including the amount, duration, and conditions of payment
- Treatment of assets held through trusts, companies, or self-managed superannuation funds
Time limits apply to property claims after separation. For married couples, an application must generally be made within 12 months of the divorce becoming final. For de facto couples, the time limit is two years from the date of separation. A separation BFA should be finalised promptly to avoid complications.
How We Prepare Your Separation Agreement
At Reid+Alexander Lawyers, we follow a methodical approach to ensure your separation agreement is comprehensive and enforceable:
- Assessment of your position: We review your financial circumstances and advise you on your entitlements under the Family Law Act, providing a realistic assessment of likely outcomes if the matter were to proceed to court.
- Negotiation: Where agreement has not yet been reached, we assist you in negotiating with the other party or their solicitor to reach terms that are fair and workable.
- Full financial disclosure: Both parties must provide complete disclosure of their financial affairs. We guide you through this process and review the other party's disclosure for completeness.
- Drafting the agreement: We prepare the BFA, ensuring all agreed terms are clearly documented and the agreement complies with legislative requirements.
- Independent legal advice and execution: Each party receives independent legal advice from their own lawyer, and the agreement is signed with the required solicitor's certificates attached.
Separation Agreement vs Consent Orders
Both separation BFAs and consent orders are mechanisms for formalising a property settlement after separation. The choice between them depends on the parties' circumstances and priorities. Key differences include:
- Consent orders are approved by a court and carry the weight of a court order; BFAs are private contracts
- Consent orders provide stamp duty exemptions in most states for property transfers; BFAs may not attract the same concessions
- BFAs offer greater privacy and flexibility in the terms that can be agreed upon
- BFAs may be more susceptible to challenge on technical grounds if not properly prepared
We advise each client on which mechanism is most appropriate given their particular circumstances.
"A well-prepared separation agreement allows both parties to move forward with certainty, knowing that their financial affairs have been resolved on terms they have chosen."
If you are separating and wish to explore your options for a financial settlement, contact Reid+Alexander Lawyers to arrange a confidential consultation.