Separation Agreement

What is a Separation Agreement?

A Separation Agreement, often referred to in Australia as a Binding Financial Agreement, is a contract entered into between two spouses that describes how the couple will handle their family responsibilities and protect and divide their marital assets as a consequence of their separation at the end of their marriage.

A Separation Agreement is referred to as a "Binding Financial Agreement" under Australia's Family Law Act 1975 (Commonwealth) (the "Act"). It is also often referred to as a Financial Agreement. It addresses issues of child and spousal support, division of debts and assets, child custody and parenting time arrangements, and division of the marital home. It is designed to finalise these matters fairly so that the parties have certainty about their circumstances moving forward.

What are the different kinds of Binding Financial Agreement (other than a Separation Agreement)?

A Separation Agreement is one form of Binding Financial Agreement. In addition, the following kinds of Binding Financial Agreements can also be used in Australia:

• Prenuptial Agreement: which is entered into before marriage.
• Postnuptial Agreement: which is entered into during the relationship - after marriage but before separation (if separation even occurs at all).
• Cohabitation Agreement: which is entered into by unmarried couples who are living together.
• Divorce Agreement: which is entered into after divorce.

Is it mandatory to have a Separation Agreement?

Yes and no. The parties can separate without a written agreement if they choose to, but if they do this then it leaves open the possibility that one of them could come back at a later time and make a claim against the other party.

If the parties use a valid Separation Agreement, then it will rule a line under the matter and will prevent either party from coming back to make a claim against the other party at a later time.

For a Separation Agreement to be valid, it must be in writing and the parties must each have independent legal advice about it (from different lawyers). The parties' lawyers must both sign the agreement as well.

What are the prerequisites of a Separation Agreement?

Ultimately, for a Separation Agreement to be legally binding in Australia, the parties need to both have independent legal advice and they need each of their lawyers to sign off on the agreement.

It is in both parties' interests that the agreement is legally binding, so they know that no further claims can be brought by the other party in future. Under section 90G of the Act a Separation Agreement is not binding on the parties to it unless:

(a) the agreement is signed by all parties; and

(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and

(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and

(d) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and

(e) the agreement has not been terminated and has not been set aside by a court.

In addition, both parties should provide complete, honest and accurate disclosure about their financial circumstances, including all assets, liabilities, and sources of income. If a party does not provide full disclosure, then the agreement may be overruled by a court at a later date, which could allow the other party to make a subsequent claim.

The parties should think carefully about a division of assets which is fair and reasonable for both parties. If one party pressures the other to agree to an unreasonable split of assets, then the lawyers are unlikely to sign off on the agreement, which means the parties will be forced into more protracted negotiations and extra legal costs.

What has to be done once a Separation Agreement is ready?

Before a Separation Agreement can be finalised, a number of things need to happen. The parties both need to have independent legal advice, and their lawyers need to sign the agreement. Specifically, section 90G of the Act says that the Separation Agreement will not be binding unless:

(a) the agreement is signed by all parties; and

(b) before signing the agreement, each spouse party was provided with independent legal advice from a legal practitioner about the effect of the agreement on the rights of that party and about the advantages and disadvantages, at the time that the advice was provided, to that party of making the agreement; and

(c) either before or after signing the agreement, each spouse party was provided with a signed statement by the legal practitioner stating that the advice referred to in paragraph (b) was provided to that party (whether or not the statement is annexed to the agreement); and

(d) a copy of the statement referred to in paragraph (c) that was provided to a spouse party is given to the other spouse party or to a legal practitioner for the other spouse party; and

(e) the agreement has not been terminated and has not been set aside by a court.

Is it necessary to notarise a Separation Agreement?

No, but the agreement must be signed by both parties, as well as independent lawyers for both parties.

What are the costs involved in the finalisation of a Separation Agreement?

Both parties will need to pay for their own independent lawyer. A lawyer who signs a Separation Agreement for a party is obliged to provide that party with advice about the effects of the document, the party's rights as well as the advantages and disadvantages of the document, and to ensure that the party understands what they are doing.

Most lawyers will charge based on the time they spend on the matter. Therefore, in many cases, the parties can save a significant amount of money if they are able to work together to compile a complete list of their assets and liabilities, and come to some kind of reasonable agreement about how they are going to split their finances, before they each go to see their lawyer.

This document is designed to help the parties to do that. Alternatively, the parties may work through this document with their lawyer to develop a final document for signing. Many parties find that it is helpful to prepare a Separation Agreement template as a draft before they go to their respective lawyers. Doing so helps guide them through the relevant issues to consider and helps them to get a basic understanding of the situation before they have to engage their lawyer.

Who pays for a Separation Agreement?

Both parties need to pay for their own lawyer. The parties can come to any agreement they like regarding paying for the Separation Agreement, although most parties split the cost.

What must a Separation Agreement contain?

Both parties should provide complete, honest and accurate disclosure about their financial circumstances, including all assets, liabilities, and sources of income. If a party does not provide full disclosure, then the agreement may be overruled by a court at a later date, which could allow the other party to make a subsequent claim.

The parties should think carefully about a division of assets which is fair and reasonable for both parties. If one party pressures the other to agree to an unreasonable split of assets, then the lawyers are unlikely to sign off on the agreement, which means the parties will be forced into more protracted negotiations and extra legal costs.

In addition, the agreement may address the following issues:

• Child and spousal support.
• Division of debts and assets.
• Child custody and parenting time arrangements.
• Division of the marital home.

The Agreement is designed to finalise these matters fairly so that the parties have certainty about their circumstances moving forward.

Which laws are applicable to a Separation Agreement?

The Family Law Act 1975 (Commonwealth) governs family law and separation in Australia. Part VIIIA of the Act deals with financial agreements. Section 90G of the Act specifies what needs to happen for an agreement to be binding.

How to modify the template?

You fill out a form. The document is created before your eyes as you respond to the questions.

At the end, you receive it in Word and PDF formats. You can modify it and reuse it.