Binding Financial Agreements v Consent Orders
Clients often come in to see me about a property settlement and ask about having a binding financial agreement (BFA) drawn up. When I ask why a BFA rather than consent orders, all too often their answer is – it was suggested to me by a friend/ colleague/ accountant etc. What is clear is that clients rarely understand the difference between these alternatives before coming to see me.
My clear preference is for …consent orders. Why? I believe a consent order offers more certainty than BFA’s because they are approved by the court. A court must be satisfied a proposed consent order is just and equitable in all the circumstances before making the order. Once made, a consent order can only be set aside in very limited circumstances: eg where there has been a miscarriage of justice because of fraud, duress, suppression of evidence or the giving of false evidence.
BFA’s are not approved by the court. An agreement can be set aside by a court for purely technical reasons. In addition, there is no requirement that a BFA be just and equitable. Accordingly, where a BFA is proposed it may be because one party is being short changed and the other party is concerned that a consent order in the same terms would not be approved by the court.
Further, consent orders have far less technical requirements than BFA’s so they are almost always cheaper for clients. Although I highly recommend both parties obtain independent legal advice this is also not a requirement for consent orders whereas it is for BFA’s
Occasionally there are benefits in having both consent orders and a BFA drawn up: eg when a property settlement includes a provision for lump sum spousal maintenance. Generally however, consent orders will be sufficient.
Given that consent orders give clients more certainty, are generally cheaper and have less technical requirements the decision is clear. In my book, consent orders win hands down.
Any Questions? Don’t hesitate to contact us.