Importance of consent orders

Article by Kasey Fox.

Why you need Consent Orders if you separate from your spouse or partner

One of the common questions I get as a Family Lawyer is why Consent Orders are necessary. This is particularly so when a separating couple is still on good terms with each other and have been able to easily reach an agreement.

Let’s take, for example, a hypothetical de facto couple called Michael and Sarah.  Michael and Sarah have been in a de facto relationship for 7 years, have bought a house together in their joint names and now have decided to separate. They do not have any children together. Fortunately, they want this to be an amicable separation, and have reached agreement about how to divide up their assets. As part of that agreement, Michael will retain the family home, take over the mortgage and make a cash payment to Sarah. Otherwise they will each keep their own superannuation.

Sarah and Michael ask – “If we have agreed, why should we go to the trouble of Consent Orders?”

Here are the top reasons Michael and Sarah (and you) should consider Consent Orders if you separate:

Stamp Duty Exemption

Depending on what State or Territory your property is in, you may have to pay stamp duty on the transfer of the property if you don’t have Consent Orders.

For Michael and Sarah, their house is in the ACT. To put in place their agreement for the family home, Sarah will need to sign a Transfer form for her share of the property to be transferred to Michael. Michael will need to obtain a new mortgage in his sole name and Michael will need to borrow funds to pay Sarah.

One problem Michael is likely to face is that when he tries to lodge the Transfer form with the ACT Land Titles Office for stamping (without Consent Orders) is that Michael  will be charged stamp duty on the transfer from Sarah and Michael ’s joint names, to his sole name.

If, however, Michael and Sarah had Consent Orders setting out the agreement about the home (and other assets) the Transfer from Sarah to Michael would be exempt from stamp duty.

And this isn’t just for real estate, it can apply to other assets as well, such as motor vehicles.

Ensure your agreement is binding

Let’s say that Michael and Sarah have organised the transfer of property and payment to Sarah and think their matter is finalised.

However, Michael now has a new partner who tells him that the agreement he made with Sarah was not a good one because Sarah had significant superannuation from her public service job whereas Michael  has barely any superannuation. Michael is getting older, and isn’t sure how he will support himself in retirement. At his partner’s suggestion, Michael then decides to file an Application with the Court, seeking some of Sarah’s superannuation. “That’s not fair!” Says Sarah. “We had a deal!” Unfortunately for Sarah, Michael is not bound by the original agreement, because it was never formalised.

Protect your future assets

Let’s take our de facto couple Michael and Sarah again. They have separated, organised the transfer of property, payment to Sarah and Michael has paid stamp duty on the transfer.

Fast forward 6 months later and Michael  receives a very large inheritance. He goes all out, buying multiple properties, a boat and many other luxury items. Unfortunately for Michael, because he didn’t have Consent Orders with Sarah, Sarah can now apply to the Court for a property settlement, including seeking a share of Michael ’s inheritance and the assets he has now purchased.  Despite the fact that Sarah has already received a payment for her share of the house, and Michael ’s inheritance came months after they separated, Sarah can make a claim on the new assets Michael  has acquired post separation because they didn’t have Consent Orders.

If you and your spouse or partner have separated, even if you have reached agreement, you should seek advice from a family lawyer about that agreement and how it should be formalised.

Kasey Fox is a Family Lawyer and Director at Farrar Gesini Dunn.