Consent Orders vs Financial Agreements: Why Properly Documenting Your Property Settlement Matters
We often quote the statistic that around 95% of separating couples resolve their property settlement without the need to go to court.
What is less talked about is how those agreements are actually documented and finalised.
It is extremely important to ensure that any property settlement you and your former partner agree to is properly documented. This is what brings finality to your financial relationship.
Failing to do so can have serious consequences — sometimes many years down the track.
A Million-Dollar Lesson in “Almost Finalised”
I often recount to clients the circumstances of a previous client who attempted to resolve their property settlement informally to avoid legal costs.
In hindsight, it became a very costly mistake — a million-dollar mistake.
When the parties separated, their large suburban home was sold and the proceeds were paid to the former spouse.
My client retained their business, which at the time was valued at approximately the same amount. Each party kept their remaining assets, including superannuation and personal items.
On the surface, it appeared to be a fair and reasonable division.
However, the agreement was never formally documented.
What Happened Next
Over time, my client’s business grew significantly. What had been a modest operation developed into a multi-national business with substantial value.
Years later, my client entered a new relationship and decided to remarry. There was just one problem — no divorce had ever been finalised.
To proceed, an application for divorce was required.
Under the Family Law Act 1975, property settlement proceedings can generally be brought:
• within one year of a divorce (for married couples); or
• within two years of separation (for de facto relationships)
However, where no formal settlement has been finalised, the position can become far more complicated.
Shortly after the divorce was granted, my client received correspondence from their former partner seeking financial disclosure.
Because the original property settlement had never been properly finalised, the former partner was able to pursue a claim — more than 15 years after separation.
The Outcome
By that stage, the asset pool had changed dramatically.
Instead of being assessed based on the financial position at separation, the Court was able to consider the current value of the assets, including the now highly successful business.
The result?
My client’s former partner had the opportunity to take a “second bite” at what had become a very valuable asset pool.
Why Properly Documenting Your Property Settlement Matters
This is why it is critical to formalise any property settlement through either:
• Consent Orders, or
• a Binding Financial Agreement
These legal mechanisms:
• bring finality to your financial relationship
• prevent future claims
• provide certainty moving forward
Without proper documentation, your financial ties to a former partner may remain open indefinitely.
The Key Takeaway
Informal agreements do not provide finality.
Time does not fix an unfinished property settlement.
Courts deal with the asset pool as it exists when proceedings are brought — not when you originally separated.
Finalising your agreement properly is not just administrative — it is risk management.
Or put simply:
The most expensive property settlement is the one you thought was already done.
Don’t Leave Your Property Settlement Open
Even if you’ve reached an agreement, failing to properly document your property settlement can leave you exposed to future claims.
Our team can help you finalise your agreement correctly and protect your financial position moving forward.
👉 Get in touch with KLM Solicitors today to discuss your options.
