The end of a marriage or a de facto relationship can be a stressful and uncertain time. Severing and finalising property and financial matters – outside of the immediate concerns “Get out of the house and give me my ring back” – can seem of little consequence at the time. For these reasons, and with well-intentioned hopes of reaching a more amicable separation, the number of ex-partners using online “Separation Agreements” have increased. It is important, however, to understand the limitations of these types of agreement and the potential difficulties for parties who sign them under the impression that they are legally binding.
In the last 12 months, we have been seeing an increasing number of DIY Separation Agreements from one particular website (which will remain nameless). We had a look at it. The first step is to select your state of residence. Once selected, you are informed, speciously, that “Your Separation Agreement will be governed by the laws of (selected state). Also, it will be tailored to meet the specific laws and regulations of (selected state), which you have selected.” Interesting, given that the applicable law is Commonwealth and not state-based. After inserting any and all details you like, you are then required to select a licence in order to print and use the Agreement. Even the ‘free’ trial subscription requires you to enter your credit card details that will be charged should you not cancel in time.
In almost every instance, these Agreements are not binding. They invariably fall foul of the requirements for an enforceable Financial Agreement which are set out in section 90G of the Family Law Act 1975 (Cth). Therefore, neither party has to do what is detailed in the Agreement. This can result in a huge range of problems. Even if both parties, in good faith, carry out their duties outlined in the Agreement, problems can still arise. One such problem, stemming back to the non-binding nature of the Agreement, is that neither party has legally released their right to make claim on the other party under Part VIII of the Act. In short, the ex-partner can come back and make a claim for a bigger piece of the pie. If you or your ex-partner:
(a) haven’t received independent legal advice from a legal practitioner about the Agreement; or
(b) don’t have a signed statement from a legal practitioner confirming they provided the necessary advice,
the Agreement is not binding (see sections 90G(1)(b) and (c)). And that’s just two of the requirements.
If the Agreement is not binding because it doesn’t comply with the Act, you may not even be able to achieve what both parties intend. If certain proverbial boxes have not been ticked, such as getting the approval of your super fund’s trustee for a super split (known as procedural fairness) and if the relevant clause is not properly drafted (see section 90MJ), you won’t be able to transfer super funds from one party to another. Also, if property is transferred without satisfying the necessary requirements, you may be liable for stamp duty that you would otherwise not have to pay.
We recommend that you get legal advice and negate the risk and uncertainty that comes with DIY Separation Agreements. Legal advice is, prima facie, more expensive than the DIY Agreements we have seen available online. However, given the range of difficulties set out above – meaning they’re worth approximately the same, under the Act, as an agreement jotted down on the back of a pub coaster and sealed with snake oil – we suggest the investment may be more beneficial in the long run.
The above is not intended as legal advice. You should obtain legal advice in relation to your own specific circumstances.