Do you need to document a divorce agreement?
Lots of issues can come up in a divorce but once the hard work of negotiating an agreement is done, the next question should be ‘What needs to be documented?”
It is important to be aware of the options available when it comes to – whether? and if so, how? to document children’s arrangements, property settlement and maybe even, Child Support.
The ‘rule of thumb’ is that a ‘property settlement’ must be documented, however whether to document a ‘parenting arrangement’ should depend on the circumstances of the situation.
To help you find your way through, here are some of the options you should consider:
It is important that when you settle property, a written agreement is made. This can be either in the form of a Financial Agreement or a Consent Order.
A Financial Agreement is not filed with the Court, so each party needs to get independent legal advice. These agreements are very difficult to set aside.
A Consent Order is a standard Court form and once completed and signed, it is filed with the Court.
If prepared and completed correctly, both types of documents are legally binding and have the added benefit of providing an exemption for stamp duty (i.e. nil) as well as CGT roll-over relief, for any transfers of property made pursuant to the documented agreement.
Unlike property, deciding whether to document children’s arrangements should really be considered on a case-by-case basis as it depends on the specific situation and circumstances. If the parties can cooperate effectively and there are no disputes over when each parent should care for the children, then often an agreement is not needed to ‘lock in’ dates and times. If, however, arrangements encounter difficulties then an agreement can either be documented by way of a Parenting Plan or a Consent Order.
A Parenting Plan has no specific form and is not legally binding. It generally details the arrangements the parents wish to make, with signatures from both parents on the plan. A word of warning – while it is not legally binding, if a dispute arises and it is taken to Court, the Court can use the Plan as evidence of the parties’ intention.
The Application for Consent Order is a Court form and it is completed and signed in conjunction with the Consent Order, and they are then filed with the Court. Once ‘sealed’ by the Court, the order is legally binding, which means there can be consequences if it is contravened.
It is important to remember that although a Parenting Plan is not legally binding, if it is made after a Court Order, then where it conflicts, it will override it.
Child Support is a form of financial support designed to help parents cover the costs of day-to-day care of their children. The Department of Human Services (formerly the Child Support Agency (CSA)) is responsible for overseeing Child Support payments.
When a parent applies to the CSA, a mathematical formula is applied to determine how much Child Support should be paid. A Child Support assessment takes into account the number of children involved, the age of the children, the income of each of the parents, and the level of care each parent provides for the children. If parents agree, they can opt out of the CSA assessment and/or collection process and document their own agreement.
The Child Support Agency only provides two types of agreements, a Limited or Binding Agreement, each of which have different conditions. The Limited Agreement can only be entered into if there is already an Agency assessment in place and the Child Support amount being paid is equal to, or more than, the assessment – it also only lasts for 3 years.
A Binding Agreement can be entered into if there is no assessment but both parties must seek independent legal advice before entering into the agreement.
If either agreement is completed it should then be registered with the CSA.
Documenting an agreement for any family law issue is a significant step, as they all carry serious consequences. Regardless of how amicable arrangements may be, it is strongly recommended that you get Specialist Family Law advice before entering into any documented agreement.
To get specialised advice with one of our experienced family lawyers, contact us today. We offer a fixed fee, no obligation initial appointment. To arrange, phone (07) 3221 4300 or email [email protected] or fill in our online form.