Under the Family Law Act, spousal maintenance may be formalised by way of a Financial Agreement (under sections 90B, 90C, 90D, 90UB, 90UC, 90UD).
If you have reached agreement with your ex concerning spousal maintenance and wish to formalise your arrangement by way of a Financial Agreement, you need to be aware of the following issues.
When will the payment stop?
Have you considered when the payment of spousal maintenance will end? This is particularly relevant if you are the person making the payment.
It is important that you clarify when (if ever) the payment will terminate or it may become an ongoing obligation on your part.
Will the payment cease:-
- On a set date (ie. after 2, 3 or 5 years);
- On your death (or will it continue to be binding on your estate?) or the death of the payee;
- On the payee entering into a de facto relationship or marriage;
- If your income stops or decreases or you become bankrupt; or
- If the payees starts earning income or their income increases.
You might only want spousal maintenance to be in force for a short term period. This might allow the other party a chance to get back on their feet, undertake a course or education to enable them to enter the workforce and support themselves or until they find suitable employment.
Alternatively, the spousal maintenance can be a longer term arrangement. It is a decision that needs to be made based on individual circumstances as agreed between both parties.
When the court makes an order for spousal maintenance, the Family Law Act defines the terminating events that automatically cancel the spousal maintenance payments. They are: on the death of either party or the remarriage of the payee.
These automatic terminating events given under the Act do not apply to spousal maintenance arrangements under a Binding Financial Agreement so you need to state when such payments will cease.
Possibly the only way to cancel ongoing spousal payments if no end date has been specified in a Binding Financial Agreement, is to terminate the entire Binding Financial Agreement. This is because a Financial Agreement cannot be edited or changed once it is finalised, only terminated completely. This will have the effect of terminating any other arrangements for the division of property contained in the agreement.
Duty to notify each other should circumstances change
In addition to specifying terminating events in your Agreement, each party should be under an obligation to notify the other party as soon as they become aware of such an event taking place.
For example, if the payee enters into a de facto relationship, and the payment of spousal maintenance terminates on such an event occurring, he or she should notify the payer as soon as possible of this situation. If overpayments have been made beyond the date of the terminating event, then they should be refunded.
Identify all the relevant details
Section 90E of the Family Law Act states that you must clearly set out the following information regarding a provision relating to maintenance:-
- The party for whose maintenance provision is made;
- The amount provided for, or the value of the portion of the relevant property attributable to the maintenance of the party.
Example of a spousal maintenance clause
It is important to identify all of the variables with precision when making a provision for spousal maintenance within a Binding Financial Agreement. The provision should not be vague or open to misinterpretation.
Here is an example of a spousal maintenance clause, keeping in mind that such provisions are unique based on the circumstances of the parties and likewise this provision may not suit every situation.
All our Financial Agreement Kits contain provisions for spousal maintenance which can be amended to suit your circumstances.
1. [first party] (the Payer) agrees to pay [second party] (the Payee) spouse maintenance in the amount of $[amount] per week. This sum is to be paid to the wife monthly in advance (the monthly amount being $[amount]) 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.
2. Payment of spouse maintenance pursuant to the preceding clause, shall terminate upon the first in time of the following events to occur (“terminating event”):-
(a) death of either spouse party to the Financial Agreement;
(b) remarriage 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 set end date, eg. 14 March, 2025, if applicable];
(e) the payer becoming bankrupt or subject to a personal insolvency agreement.
3. Each party (or their representative) must notify the other in writing as soon as practicable of the occurrence of a terminating event listed in clause 2. Any spousal maintenance payments that have been made for periods after the date of a terminating event, shall be forthwith refunded to the payer by the payee, promptly on demand by the payer.