A separation agreement (known as a binding financial agreement (or BFA) under the Family Law Act) is a legally binding document that formalises your property settlement.
As a separation agreement is legally binding, each party must carefully consider their options and decide what is in their best interest prior to signing it. To assist separating couples, we have drafted the following step by step guide to assist you in understanding the process of obtaining a separation agreement.
Separation Agreements in NSW
Step 1 – Initial Meeting With Lawyer
We recommend that following separation both parties are independently advised by an experienced family lawyer. At your initial meeting, you will have an appointment with a family lawyer who will advise you about your situation, the likely outcomes and what steps you should take. If both parties are independently advised by an experienced family lawyer it significantly increases the prospects of a quick settlement.
Step 2 – Financial Disclosure
Each party must start the process with full and frank ‘Financial Disclosure’. Each party has a duty of disclosure that requires parties to provide to each other all information relevant to the matter. This duty continues until the matter is finalised. Each party is required to provide information to the other all party about all sources of income, assets, debts and other financial resources. This applies whether the property, financial resources and earnings are owned solely, as a beneficiary (for example, the party’s child or de facto partner) or are held in corporations, trusts, company or other such business structures. Each party should carefully consider the financial information provided by the other party and decide if any valuations are required. An experienced family lawyer will be able to give you a full list of documents required and advise you if valuations are required.
Step 3 – Negotiation
After full financial disclosure has been exchanged, both party’s lawyers will negotiate a final outcome. This may occur through the exchange of letters, face to face meetings or mediation. This process may take several days or may take several months depending on the complexity of the assets being divided.
Step 4 – Drafting
Once an agreement is reached the lawyer will draft the separation agreement. Both parties will review the agreement and negotiate the terms of the separation agreement.
Online Forms & Templates
We have recently seen a rise in the availability of cheap online forms and templates available for download for a small fee (or for free), it is important that you do not use an online form or template. While these forms/templates may be appealing due to their low costs, they are rarely legally enforceable (notwithstanding their claims to the contrary) and do not meet the legal requirements. Every relationship is different and you need a specialised family lawyer to draft an agreement relevant to your specific circumstances. We strongly recommend parties obtain proper advice and spending a limited amount of money now, rather than spending tens of thousands of dollars contesting the agreement later.
Step 5 – Obtain formal written advice on the terms of the agreement
After the agreement is drafted (and during the whole process) you should be advised by an experienced family lawyer. Once the agreement is drafted, however, both parties must be independently represented by a separate lawyer about the advantages and disadvantages of signing the agreement and the effect that the agreement has on the parties. Both lawyers will independently provide a certificate, certifying that this legal advice has been provided. If the ‘Certificate of Independent Legal Advice’ is not provided, the agreement is not legally binding, even if it has been signed by both parties.
Step 6 – Signing
Once the agreement is agreed, drafted and both parties have obtained independent legal advice, both parties will sign the same agreement and copies will be provided to both parties. The original agreement will be stored in a lawyers’ safe custody room indefinitely so both parties can obtain a further copy in the future if needed.
A separation agreement is a complex legal document, the division of your assets after separation occurs will likely be one of, if not the biggest, financial decision of your life. We recommend that all parties going through, or considering, a separation obtain specialised family law advice so that they are protected an obtain a fair outcome during this difficult time.