Yes. That is the sound of a collective sigh of relief that can be heard around this time of year for many newly separated families. They have just navigated through the December/January school holiday period and of course the Christmas season.
This means that short term issues have needed to be resolved for the first time such as – how will the school holidays be divided; who will take the children on the usual holiday down to the coast; will both parents take the children separately on holidays; how will Christmas Eve, Christmas Day, Boxing Day and New Year’s Day be divided; how will they juggle a new separation with work commitments, family life and social life at a very emotional time?
So yes, not only are these newly separated families breathing a sigh of relief right now as they settle themselves back into the regular patterns of the school/work year post-December/January school holiday period, but they also deserve a big pat on the back.
However, now that the short term issues have been managed it is time to start thinking of long term matters which will need to be dealt with such as – how will property be divided; who will keep the family home; who will keep the beach house; how will care of the children be managed during the school term; how will financial support, including child support and/or spousal maintenance be addressed? And finally, how will this agreement be properly documented?
In relation to this last point of documenting a financial settlement, there are essentially two ways to document an end of relationship financial settlement reached by mutual agreement between the parties under the Family Law Act (1975). These are:
1. Application for Consent Orders which is lodged with the Court and is enforceable from the date that the Orders are made; and
2. Financial Agreement which is enforceable from the date that it is signed by the parties and their legal representatives and certain other legislative requirements are complied with.
Both options can cover the agreement in relation to property and spousal maintenance, and which type of documentation the parties use to formalise their agreement depends on the circumstances. However, it is incredibly important that these decisions are made carefully and with proper legal advice, as otherwise there can be unintended and potentially disastrous consequences.
For example, though it is not common, Consent Orders and a Financial Agreement can include a provision for the payment of periodic spousal maintenance for an unlimited period of time. If the agreement is documented through Consent Orders, the Family Law Act (1975) provides for the cessation of maintenance Orders on the death of either the payee or the payer, or on the remarriage of the payee (unless there are special circumstances). However there is no similar safeguard for the cessation of spousal maintenance for Financial Agreements. Therefore, unless the Agreement is properly drafted, the unintended consequence is that if the payer or payee dies and the Financial Agreement does not properly terminate maintenance obligations then the Estate of the payer must continue paying maintenance until the funds of the Estate are exhausted (and if the payee dies, must continue making payments to the payee’s Estate). The consequences are potentially disastrous for either the payer or the beneficiaries of the payer’s Estate.
Another example is the fact that cohabitation agreements cease to have effect if the parties marry, no matter what the agreement says. There are traps for young (and old) players in the area of family law property – you need to use a specialist if you want to avoid them.
While separated families do not always have the luxury of taking the time to make informed decisions in relation to the short term issues, the above examples illustrate the importance of seeking legal advice and making properly informed decisions in relation to the long term issues as it could make all the difference in the world, not only for themselves but also for their children.
By Juliette Ford, Director, Farrar Gesini Dunn