Including spousal maintenance in your Financial Agreement

Spousal maintenance is the financial support provided to a party who is unable to adequately support themselves.

One partner (who is financially able) may need to financially support the other partner after separation or divorce if the other partner is incapable of supporting themselves.

Spousal maintenance does not apply automatically.

A couple (either married or de facto) may agree to spousal maintenance being paid.  If so, then spousal maintenance can be formalised by inserting the appropriate provisions into your Binding Financial Agreement.

If you cannot reach agreement about spousal maintenance, then you may need to consider applying to the Family Court, which has the power to make orders it considers proper for maintenance in your circumstances.

If a party is reasonably able to do so, they will be liable to maintain the other party if and only if, the other party is unable to support himself or herself adequately:-

• by reason of having the care and control of the children under 18;
• by reason of age or physical or mental incapacity for appropriate gainful employment; or
• for any other adequate reason.

This is intended to take some strain off of the public purse – on the face of it, any party who receives a Government pension, may be eligible for spousal maintenance, if the other party is in a reasonable position to be able to support them.

8 Factors to Consider

When considering whether to include spousal maintenance in your Financial Agreement, you should consider:-

• the age and state of health of each you;
• the income, property and financial resources of each of you;
• the physical and mental capacity of each of you for appropriate gainful employment;
• whether a party has the care or control of a child/children under 18;
• the standard of living that is reasonable in the circumstances;
• the extent to which the maintenance would assist the party to undertake further education or training to obtain an adequate income;
• the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration; and
• the need to protect a party who wishes to continue a role as a parent.

These matters are listed in section 75 of the Family Law Act.  You can read the list in full, here.

How will maintenance be paid

If you have both agreed for spousal maintenance to be paid, consider whether it should be paid by a lump sum payment or instalments.  It may even be appropriate to provide spousal maintenance in the form of a transfer of property, whether matrimonial home or other property.

If you are transferring property or a share of property in consideration of spousal maintenance, then you must specifically state so in your Agreement, because if it is not adequately documented and clear, it may leave the door open for an application for spousal maintenance in the future.

Remarriage – what if a person receiving spousal maintenance remarries?

You will no longer be entitled to spousal maintenance should you remarry.  If you begin a de facto relationship, then the Court will consider the financial relationship that exists between yourself and your new partner, when deciding whether you are able to support yourself.

SAMPLE CLAUSE for spousal maintenance provisions in a Binding Financial Agreement

If you and your partner have agreed that spousal maintenance should be paid, here is a standard sample clause which is typical of those contained in Binding Financial Agreements for spousal maintenance:-

• The Parties desire to have finalised, once and for all, all matters of a financial nature in dispute between them, including spousal maintenance of [name] after the relationship has terminated.  The parties have therefore entered into this Financial Agreement which is made under the provisions of section 90C and section 90F of the Family Law Act.  This Agreement relates to all property and financial resources of the parties and the maintenance of each of each of them.

• [the payer] agrees to pay [the payee]  by way of spouse maintenance the sum of $1,000 per week; this sum is to be paid to [the payee] monthly in advance (the monthly amount being $4,333) and the first payment is to be made within four days of executing this agreement and then on the same date in each succeeding month.

• Payment of spouse maintenance pursuant to the preceding clause, shall terminate upon the first in time of the following events to occur:

(a)    death of either spouse party to the Financial Agreement;
(b)    re-marriage of the payee for spouse maintenance;
(c)    the payee residing in a de facto relationship within the meaning of the Family Law Act for a period, whether continuous or in aggregate, of more than 3 months;
(d)    [insert sunset date];
(e)    the payer becoming bankrupt or subject to a personal insolvency agreement.

As mentioned above, there may be times when it is appropriate that maintenance should stop, such as if the receiving party enters into another relationship or if the payer become unemployed or loses his or her income source at a later date.  You should clarify the circumstances in which maintenance payments will cease within your Financial Agreement.

For more information on how you can put your own Binding Financial Agreement in place, see here.