Is an informal agreement legally binding?
No, an informal agreement provides no legal protection. When many separating couples reach what feels like a sensible arrangement, they divide up their assets, write it down in a document and have it witnessed by a Justice of the Peace. Although the process may feel very official, it is not.
In the eyes of the Family Law Courts, this is an informal agreement and it is completely non-binding. Either party can walk away from it at any point in the future and apply to the court for a formal property settlement, as though the informal arrangement never existed.
There is also a significant financial cost to this approach that most people don't realise. When real estate is transferred between separating spouses under a formal legal framework (Consent Orders or a Binding Financial Agreement), it is generally exempt from transfer duty (stamp duty). However, informal agreements do not qualify for this exemption. Depending on the value of the property involved, this oversight alone can cost tens of thousands of dollars.
Can a former partner make a financial claim years after separation?
Yes, and this is the issue that catches people most off guard. Although the Family Law Act does impose time limits on filing property claims, they operate very differently from what most people assume.
For married couples, the standard deadline is 12 months from the date a divorce order is finalised through the Court (Decree Absolute). The critical detail is that this time limit begins from the date the divorce becomes final. If you and your spouse separate but remain married, the time limit never begins, meaning that a claim can be filed at any point, even a decade later.
For de facto couples, the standard deadline is two years from the date of separation. However, even after that window closes, a former partner can apply to the court for permission to file out of time under Section 44 of the Act. Courts regularly grant this permission where the applicant can show they would suffer hardship if the claim were blocked or where there is a reasonable explanation for the delay, including family violence, lack of legal awareness or reliance on a promise that was never fulfilled.
This is one of the reasons lawyers often recommend formalising a property settlement rather than relying on limitation periods alone.
What happens to assets acquired after separation?
Many people assume that once they separate, any assets they acquire afterwards belong solely to them. In reality, the position is often more complex if a property settlement has not been formally finalised.
When an Australian Court assesses a property dispute, it generally considers the value of the asset pool at the time of the hearing rather than the date of separation. This means assets acquired after separation may still be taken into account when determining a property settlement.
If in the years following separation you build a successful business, receive an inheritance, purchase an investment property that increases in value or acquire other significant assets, those assets may still form part of the overall property pool considered by the Court.
The Court will consider how and when those assets were acquired, including whether they resulted from your own efforts, financial contributions or an inheritance. However, a former partner may still be entitled to seek an adjustment in their favour, particularly where factors such as future needs, caregiving responsibilities or differences in earning capacity are relevant.
What the courts have said
Australian Courts have considered this issue in a range of circumstances, demonstrating how assets acquired after separation can still become relevant when a property settlement has not been formally resolved.
Farmer & Bramley [2000] FamCA 1615: The couple separated with virtually no shared assets. Eighteen months later, the husband won $5 million in a lottery. As there was no formal property order, the win entered the asset pool at the date of hearing. The ex-wife was awarded $750,000, largely on the basis of her significant non-financial contributions during the marriage, including supporting her husband through a severe drug addiction.
Calvin v McTier [2017] FAMCAFC 125: Four years after separation, the husband received an inheritance of $430,000 from his late father. He argued it had no connection to the marriage, whilst the Full Court disagreed. The inheritance was included in the pool and the wife was awarded 35% of the total, primarily due to the disparity in their future earning capacity.
Holland & Holland [2017] FamCAFC 166: The husband inherited a property worth $715,000 three and a half years after separation. The trial judge attempted to treat it as a "financial resource" rather than a pool asset, a decision the Full Court overturned on appeal. The ruling confirmed that no asset is automatically immune from the property pool simply because it was acquired after the relationship ended.
While every case depends on its own facts, these decisions reflect a well-established principle of Australian family law: separating from a partner does not necessarily determine which assets will ultimately be considered by the court if a property settlement remains unresolved.
How do you achieve a clean financial break?
There are two legally recognised methods under the Family Law Act that permanently end your financial exposure to a former partner. Outside of these methods, everything else is informal and therefore unprotected.
Consent Orders
This is the most common path for separating couples who have reached agreement on how to divide their assets. Your lawyers draft an application setting out the agreed terms which is submitted to the Federal Circuit and Family Court of Australia. A Court Registrar reviews the application to ensure the proposed settlement is just and equitable. In most cases, neither party is required to attend court. If the registrar is satisfied with the arrangement, the Consent Orders are approved, become legally binding and permanently extinguish future property claims.
This pathway also unlocks the stamp duty exemption for real estate transfers, which can represent substantial savings depending on the value of the property involved.
Binding Financial Agreement (BFA)
A BFA is a private, formal contract governed directly by the Family Law Act, specifically Sections 90B to 90D for married couples and Sections 90UB to 90UD for de facto couples. It does not require court approval, which makes it a useful option when the parties have agreed on a division that a registrar might not consider visually equitable, but which both parties accept.
The strict requirement for a BFA to be legally binding is that both parties must obtain independent legal advice from separate law firms. Each solicitor must sign a certificate confirming that advice was given and, if this requirement is not met, the agreement can be set aside. This is a risk that has materialised in numerous cases where couples attempted to save costs by cutting corners on the process.
Moving forward with certainty
Many people assume that separation marks the end of their financial relationship. In reality, unless a property settlement is formally finalised, financial issues can remain unresolved long after a relationship has ended.
Future changes in financial circumstances may still become relevant to a property claim. This can include assets acquired after separation, inheritances, business growth and increases in asset values.
Consent Orders and Binding Financial Agreements are the two primary methods recognised under the Family Law Act for formally documenting an agreement about property and financial matters following separation. By documenting the agreed outcome in a legally enforceable way, they provide certainty for both parties and help reduce the risk of future disputes.
At Aubrey Brown Lawyers, our Family Law team works with clients at all stages of separation, helping them understand their rights, obligations and options.
If you have separated without formally resolving your financial affairs or are currently navigating a separation, we can help you understand your options and protect your interests.
