Our earlier Blog, DIY Consent Orders – Can it be Done? Dealt with Consent Orders generally, what they are and the process involved in obtaining a Consent Order to formalise an agreement.
The purpose of this Blog is to bring to light some of the common pitfalls that we see as Family Lawyers when reviewing Consent Orders prepared by other Family Lawyers or Client’s themselves, with a particular focus on property settlement matters.
When reviewing a Consent Order, it is important to bear in mind that this document forms the basis and outlines the necessary steps to finalise the financial relationship of the parties, as it is the duty of the Court when approving such Consent Orders to end the financial relations of the parties. For this reason, every contingency must be considered and dealt with, as after all, if it is not in the Consent Order, there is no requirement for the step to be undertaken and should you require a particular step or action to be undertaken, this may result in further involvement of the Court, leading to increased legal fees.
Some of the below issues are a list of the common pitfalls that we see in everyday practise, it is not an exhaustive list, but a selection of the most common mistakes made:
Transfer/Stamp Duty
A Consent Order will allow the person retaining a real property pursuant to the Order, to obtain an exemption from payment of transfer/stamp duty upon the transfer of the share of the former partner to them.
It is important to bear in mind that particular provision must be made in the Orders for the transfer of one person’s share to the other and the full property description be included as per the Title Search of the property ie – Lot on Plan description.
In some circumstances, Orders are made for the sale of a real property and then a party decides to retain the property themselves by buying out the other party. In these circumstances, where the Orders do not provide for such transfer, but simply a sale, the party retaining the real property will be required to pay transfer/stamp duty. If you consider that you may retain a real property, you can include provision for a transfer to be effected and associated refinance to take place within a set time frame and should you be unable to refinance during that time, the property be listed for sale. At least that way, if the property is transferred to you, you secure the transfer/stamp duty exemption.
Superannuation Splitting
In circumstances where the superannuation entitlements of a party is split for the benefit of the other party, the superannuation fund must first be given notice of the intended superannuation split and asked whether they agree to the wording of the Consent Order. This is known as procedural fairness. You must provide evidence to the Court of procedural fairness being given, together with a copy of a Family Law Superannuation Information Request Form from the superannuation fund to confirm the value of the fund, prior to the Court approving Orders.
Further, once the Consent Orders are approved and sealed Orders received from the Court, it is important that a certified copy of the Order is served by post upon the superannuation fund, as otherwise, they will not attend to the superannuation split. It is important to note that there have been circumstances where a superannuation fund will not give effect to a superannuation split, due to a delay in providing a Consent Order to the fund. The superannuation fund will usually issue forms for the person to complete who is benefitting from the superannuation split, which includes their details and the superannuation fund in which they wish for the funds to be rolled into.
Time Periods
As Consent Orders are binding, they need to be drafted in a way that ensures that they are enforceable. In this respect, it is important that for any provision requiring the transfer of an asset, or other action to be taken by a party, that a time period for such step to be undertaken, be included. By not including such time periods, a party may never be in breach of an Order, if they do not attend to a step within a particular time period, which may lead to further Court involvement and associated legal costs, due to the Orders not being enforceable.
Default Provisions
It is important to consider the “what ifs”. For instance, what occurs if a party cannot refinance a mortgage and retain a real property or what occurs if a party does not pay the other party the cash property settlement sum. In such instances, the sale of an asset is usually required so as to discharge any associated loans or make payment of a cash property settlement sum and it is important that provision is made in the Orders, otherwise, further Court action will be required to enforce such Order.
Joint Bank Accounts
So as to preserve your credit rating and to protect yourself against any future potential liabilities, it is important to ensure that all joint bank accounts are closed and provision made for both parties to attend to all necessary steps to close the joint bank accounts. Also provision should be made for the responsibility of any amounts outstanding and also who retains any remaining balances, with such steps to take place within a set time frame.
Should you need assistance in preparing Consent Orders to reflect the terms of your property settlement agreement, need advice on Consent Orders prepared by you, your former partner or their Solicitor, or wish to discuss your matter generally, please contact our Gold Coast Office for a free fifteen minute telephone chat with one of our Family Lawyers.