Spouse and de facto maintenance: farewell forever (just not financially)

Family & Relationship Law eBulletin - 30 June 2014

Summary

Are you married or living in a de facto relationship? You may have already thought about how your assets might be divided in the event of a separation, but did you know that you could also be responsible for financially supporting your spouse or de facto (including same sex) partner well into the future? It all comes down to a little thing called a maintenance order and the ramifications can last for decades.

 

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Family Law Act 1975

Back in 1975, Australian Prime Minister Gough Whitlam introduced an Act of Parliament known as the Family Law Act 1975. While the Act has been tweaked and adjusted along the way, it has remained as the primary piece of Australian legislation for all matters concerning divorce, separation, parenting arrangements, property division and financial maintenance.

In 2009 the Family Law Act 1975 was significantly amended to remove the legal distinction between de facto and married couples. This means that all couples (including same sex) have substantially the same rights and liabilities of married couples, including rights for spouse maintenance and superannuation ‘splits’.
 

Spousal and de facto maintenance orders

Under the Family Law Act, a person has a responsibility to financially assist their former spouse or de facto partner if that person cannot support themselves. This kind of financial support is known as ‘spouse’ or ‘de facto spouse’ maintenance and it can be costly.

While paying ongoing maintenance to support your former spouse or de facto partner’s lifestyle may seem far-fetched, the Family Court doesn’t necessarily see it that way. In fact, the Court has the power to order a person to provide maintenance to their spouse or former de facto partner. This can be in addition to any orders for a property settlement.

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How does the Court determine maintenance orders?

The Family Court of Australia or the Federal Circuit Court of Australia can deal with applications for spouse maintenance or de facto spouse maintenance. Broadly speaking, the Court will consider a request for a maintenance order by judging one party’s ‘need’ for maintenance, and the other party’s capacity to pay the maintenance.

Firstly, the Court considers whether the person seeking a maintenance order is genuinely unable to adequately financially support themself. That person must be able to prove that they are seeking maintenance for what the Court considers “an adequate reason”, such as having to care for a child or being unable to work due to age or health (for example).

Secondly, the Court must be convinced that the person being asked to pay maintenance has the capacity to do so, after taking into account that person’s own reasonable living expenses and (in some circumstances) those of others, such as their new partner or children.

The Court will also inquire about other matters, such as each party’s financial and employment prospects going forward. In the event that either party has re-partnered following their separation and is living with their new partner, the Court will also take into account that new partner’s income and living expenses. However, a person will not be ordered to provide maintenance for a former spouse or former de facto partner who has re-married.

Finally, in making a maintenance order, the Court also needs to consider what kind of maintenance should be provided. Types of maintenance include periodic (ongoing) payments, periodic payments until a specified date or event, or even lump sum payments in the form of cash or non-cash assets. Maintenance orders can be made on either an interim or a final basis.

 

Time limit for maintenance applications

An application for spouse maintenance must be made within 12 months of the divorce becoming final. An application for de facto spouse maintenance must be made within two years of the breakdown of the de facto relationship. It is possible to apply for maintenance outside these times limits however, special permission must be obtained from the Court.

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Forward thinking: settling maintenance issues up front

While many couples don’t like to talk about what might happen if they were to separate, the fallout from a relationship breakdown can have long term financial consequences. As maintenance orders can bind parties for many years, it is becoming increasingly common for married and de facto couples to create a binding agreement that states how their property and finances would be divided if they were to separate. These agreements are known as financial agreements and they are legally binding on both parties if they are properly prepared.

Couples can enter into a binding financial agreement at any time ie they can be created before or after a couple has started living together or marries.

The financial agreements we have in Australia are similar to American pre-nuptial agreements. In addition to covering property and finances, a couple can also use them to exempt each other from spouse and de facto maintenance, or to specify the maintenance terms in the event that they separate.

If you are unsure of the potential impact that your relationship could have on your financial situation it is important to seek appropriate legal advice.

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Further information

All information on this site is of a general nature only and is not intended to be relied upon as, nor to be a substitute for, specific legal professional advice. No responsibility for the loss occasioned to any person acting on or refraining from action as a result of any material published can be accepted.

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