Many legal avenues are open to you when looking for a way to divide property after a separation. Each has its own advantages, but for many people, the significant deciding factor is cost. How much money will you need to spend to protect your assets and become financially independent once more? Learn more about Using a Separation Agreement Template in Australia.
What Is the Average Cost of a Legal Separation in Australia?
It is difficult to put a single number on the cost of financially separating from your partner. Some amicable couples can separate without legal help, never have a complaint, and end up with little expenses – this is rare. Others go to court for lengthy hearings, costing them hundreds of thousands of dollars.
Somewhere in between is your average separation – two people who have split amicably but wish to divide their property in a way that protects themselves individually if things were to change. They can handle being in a room with each other and don’t want a large portion of their assets to be chewed up by legal fees. If you are in this position, several options are open to you – by far, the most cost-effective is a financial separation agreement, correctly known as a Binding Financial Agreement.
The Number One Factor in Separation Costs
One thing will determine the cost of your financial separation more than any other – how much legal argument can you avoid?
Even if the split itself were emotionally hurtful, you would hurt yourself more by making a financial separation difficult. A calm conversation over coffee is over a thousand dollars cheaper than an angry conversation in a law office. It is nearly ten thousand dollars more affordable than a courtroom.
Avoid being the person who finishes with nothing because they were angry. A financial separation is not about hurting the other person but protecting you. A financial separation agreement is just that – an agreement. Working together with respect means you will walk away better off.
What Is a Financial Separation Agreement?
A financial separation agreement is a contract between two people who have separated, be they previously married or in a de facto relationship.
The term financial separation agreement does not mean anything under Australian law but is often used to refer to Binding Financial Agreements (or BFA). A BFA sets out the assets and liabilities of the couple, how they will be divided, and how financial processes like spousal maintenance will work.
The creation of a financial separation agreement is covered by the Family Law Act (1975), and Australian law demands several criteria be met before an agreement is considered legally binding. The contract must contain all relevant information about the couple’s joint and individual finances and explain how they will be divided. Each person must also speak to an independent lawyer who can explain the benefits and disadvantages of the agreement.
What Does It Cost for a Lawyer to Write a Separation Agreement?
Your typical Australian family law firm will charge between 400 and 700 dollars an hour for financial separation matters. This rate includes the initial consultation, drafting of the agreement, meeting with you to discuss your options, redrafting, emailing, and final printing. If the firm convinces you to let them arrange the valuation of property or assets, this will be billed. For even the simplest of separations, you can expect it to cost between five and ten thousand dollars. If there is a minor dispute, your lawyer may insist that both parties have representation present, and the cost can double.
Unfortunately, some lawyers wish to aggressively protect their clients in such a way that disputes become more likely. They promote an unhealthy idea that separation should involve “beating the other person”, which can lead to more money wasted on arguments you could have avoided. These lawyers are rare in Australia, but they are a good reminder that a cool-headed couple can save a lot of money by working together instead.
Can You Use a Separation Agreement Template in Australia?
Often, the best option for protecting your individual finances while dividing assets is by drafting your own separation agreement. Use a separation agreement template, like those offered by RP Emery. You can save thousands of dollars in unnecessary legal fees while ending up with the same document you would get through a lawyer.
Most legal firms use their own agreement templates – they effectively ensure every detail is included in the contract and that it will comply with the Family Law Act. Using your own template, you can take time together to weigh your options without worrying about the cost of the conversation.
Sample page of RP Emery’s Separation Agreement template for married couples
Is a Separation Agreement From a Template Legally Binding?
To make any separation agreement binding under the Family Law Act, each person in the couple will need to seek independent representation. This would be true even if you worked with a lawyer to draft it.
Each person will need their own lawyer, who will go through the draft and point out what advantages and disadvantages it has in its current form. The lawyer will also confirm that the contract would comply with Australian law. Once you have this meeting, they will provide you with a legal practitioner’s statement (or certificate), which you both include in the agreement before signing.
This process occurs no matter how the agreement is drafted. You don’t need to have the same lawyer advise you as who prepared it, and the lawyer giving advice has no problem with you using a template to draft it yourself.
RP Emery offers a service that reviews your draft and gives both parties access to the independent lawyers needed for advice. The lawyers can contact you by phone or zoom to go over the contract and provide the statement by email, making the process simple and easy. RP Emery’s legal review package is one of the cheapest ways to ensure your separation agreement is binding.
Five Tips for Lowering the Cost of Your Settlement Agreement
Even a settlement agreement template can cost a different amount of money based on how you approach it. Five things you can do from the beginning will save you hundreds to thousands of dollars on your financial agreement.
- Work Together. Arranging a financial separation should be about protecting your finances and moving on with your life. The second you make it about “winning” or revenge, you will start losing money for yourself.
- Try to do it yourself first. Even if you are worried and decide you need a lawyer to get it right, spend a little money and attempt to draft yourself. Remember, every fifteen minutes you save yourself from being in a legal office, you pocket over one hundred dollars.
- Don’t Try to Be Tricky. If a dispute arises and you have not been one hundred per cent open and honest with the other party when you made the agreement, the court will set it aside. Every cent spent on that agreement will be wasted, you will be faced with an expensive court hearing to decide on the division of assets, and you may even face further consequences. Intentionally trying to mislead the other party by not disclosing an asset or another relevant matter (such as an inheritance received) is classed as fraud under the Family Law Act.
- Think outside the Box! Having one party keep the matrimonial house and offering half the value in another form almost always ends up being better for both people. Your spouse’s company might be making a million dollars while they are boss, but would you be able to sell it for that if you were running it?
- Act Now. You might be tempted to wait until you are divorced, thinking things will be easier. They won’t. The further away you are from your separation date, the more complex a court hearing will be if there is a dispute. Complexity equals money that you will lose.
Five Common Mistakes Made While Separating
If you rush into a financial separation process without doing your homework, there are many ways you can lose money and have nothing to show for it. Couples who have wasted money during separation regularly mention these five common mistakes.
- Not making a financial agreement binding. If you do not undergo the process of receiving independent advice, any dispute will have the entire agreement set aside as if you had written it on a serviette.
- Using a template made outside Australia. It is easy to find free “separation agreement” templates online, but there are currently none drafted to comply with Australian law. Unless your agreement complies fully with the Family Law Act, it will not offer the financial protection you hoped for.
- Using your general practitioner lawyer. Many families have their own lawyer for general matters, but this person is rarely an expert in family law and may need to excuse themself from a case if there is a dispute over the agreement.
- Opting for consent orders without seeking advice. Rather than create a financial separation agreement, some couples opt to apply for the court to make orders. Without these being looked over first by a lawyer, they tend to be rejected, wasting your application fees. Binding agreements also offer more creativity than consent orders while having the same validity if created properly.
- Not considering superannuation. Superannuation is an asset that can be split under special circumstances. If you are considering doing so, you will need a binding financial agreement that includes superannuation splitting and is suitable for the type of fund you intend to split.
Frequently Asked Questions About the Cost of Separation
The separation agreement is only one part of the separation and divorce process. Other steps can also cost you money; it is worth knowing how much and to whom you may need to give money.
What Is the Cost of Getting an Initial Separation?
You do not need to apply to the court, employ a lawyer, or fill out any forms to separate in Australia. Separation does not require the other person’s consent, only that you inform them that you see the relationship as being over.
If you are married, you can apply for divorce after twelve months of separation. During this time, your finances will be treated the same as if you were married unless you arrange an agreement. If you are in a de facto relationship, there is no need for a divorce.
What Is the Cost of Getting a Divorce?
There is a single cost to applying for divorce in Australia of $990 (current as of 2023). In some circumstances, the court may waive a large portion of this fee. Filing for divorce and paying the fees can be done online.
If you apply for a divorce as a single party, you must have the divorce “served” on the other person. This will require a third party, who can be a friend or family member, but it is sometimes recommended to use a professional process server, which will require a small fee. If you apply together, no papers will need to be served.
Does a De Facto Separation Cost Less Than a Divorce Separation?
The financial separation of a couple costs approximately the same regardless of if they were in a de facto or marriage relationship. A different binding financial agreement is needed for each scenario, and RP Emery can offer you a template that suits you.
What Other Legal Separation Forms Do I Need?
When separating from your partner, you may need to inform Services Australia. This is essential if you wish to access government benefits from Centrelink or change how the Medicare family net is arranged. You will need to complete a Separation Details Form and may be required to offer additional information if you are separated under the same roof.
