Why it’s important to legally document your financial separation

When couples decide to separate, many believe they can “sort things out” themselves without resorting to a family lawyer to finalise the division of their property.

But a “do-it-yourself” agreement often does not meet strict legislative requirements and therefore cannot be considered legally binding.

Simone Green, who specialises in family law at Sydney law firm Streeterlaw, said while it is beneficial for parties to work together in reaching a settlement, a document that is not legally binding could be worthless.

“We strongly recommend that both parties obtain legal advice in respect to formally documenting that agreement by way of either Consent Orders or a Binding Financial Agreement in accordance with the Family Law Act,” Ms Green said. “Both options are relatively inexpensive (compared with issuing court proceedings) and have many benefits in bringing finality and peace of mind to the parties.”

Ms Green said doing nothing to finalise property interests is also dangerous.

“Since the Family Court assesses the asset pool of the parties at the date of the hearing, rather than at the date of separation, separating parties risk incurring greater losses if they leave things too long,” she said.

“It is extremely important that separating couples finalise the division of their assets and liabilities quickly. Married couples have just 12 months following the date of divorce to finalise their property interests or file an application with the court. De-facto couples have 24 months following the date of separation to legally document their agreement or file an application with the court.”

It is not possible to file an Application for Consent Orders, or an application seeking adjustment of property interests in the court following this time without leave, which is an expensive exercise.

Ms Green said Consent Orders or Binding Financial Agreements also have the added benefit of providing an exemption from the payment of stamp duty in respect to the transfer of property between former spouses (de-facto or married).

“Not having to pay stamp duty can save thousands of dollars from the asset pool of separated couples,” she said.

For more information, please contact Simone Green at Sydney law firm Streeterlaw on 8197 0105 or by email at advice@streeterlaw.com.au