Have you ever wondered what the difference is between a BFA and consent orders?
If you have reached an agreement regarding property and financial matters and would like to formalise it legally, you may consider consent orders or a Binding Financial Agreement (BFA).
There are some key features which separates a consent order from a BFA. Firstly, a BFA is a private agreement entered into without the involvement of Court whereas consent orders require the parties to convince the Court that their agreement is just and equitable. A BFA can also be entered into before, during or after the relationship has ended whereas consent orders are entered into post-separation.
A BFA is not binding unless both parties have sought independent legal advice. This is evidenced by a solicitor’s certificate confirming that they have provided legal advice to the party concerned. Both parties’ solicitor’s certificates form part of the overall BFA document.
Similar to consent orders, BFAs require parties to provide full and frank disclosure of their financial affairs. This means exchanging details of all assets and liabilities. Unlike consent orders, BFA does not require parties to engage in financial discovery however discovery is highly encouraged when entering a BFA. Discovery is the process of exchanging parties’ financial documents including but not limited to bank statements, valuations of significant assets, tax returns and notice of assessments & superannuation statements. Essentially, providing financial discovery is the best practice method of providing financial disclosure as failure to provide full and frank disclosure can lead to a BFA being set aside in the event of a dispute.
Discovery provides more certainty and surety of parties financial standing as all details are set out with evidence. It also avoids room for disagreement between parties on values of assets and liabilities. Perhaps most importantly, engaging in discovery allows your solicitor to provide you with full and proper legal advise in relation to your entitlements. This is especially relevant when providing a solicitor’s certificate which as previously mentioned, forms an integral part of BFAs.
Engaging in discovery ultimately reduces the risk of a BFA being set aside on the basis that a party did not provide adequate disclosure or was not properly advised.
Other important things to note are that unlike consent orders, parenting arrangements including child support cannot be finalised through a BFA. Furthermore, a BFA may not be binding if you are in receipt of or eligible for government benefits.
If you are considering legally formalising your property/ financial arrangements, please speak to one of our expert family lawyers on the option which is best suited to your needs.
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