Get the right advice to avoid future claims
Author – Dennis Grant
Most separating couples understand they will need to reach a property settlement to divide their assets and liabilities. In our experience, most people expect that settlement to be final. But this is not always the case.
It can come as a shock to learn that in Australia, an ex-spouse or ex-partner may still be able to make a claim for spousal support, even after the parties have reached a property settlement and have had this properly documented.
The right advice is essential to avoid being faced with a claim after you thought everything between you and your ex had been resolved.
This article discusses claims for spousal maintenance from a former partner under the Family Law Act.
(NB In NSW, it is also possible that an ex-spouse or ex-partner could make a claim for provision out of your estate after your death. We will address this in another article.)
What is spousal maintenance?
Spousal (or de facto) maintenance is a payment made by one partner or former partner to a marriage or de facto relationship to the other partner. It is separate from an order for child maintenance. It is also different from any orders about how the property of the relationship will be divided. Spousal maintenance orders can be made between heterosexual or same-sex couples.
The law in Australia says that each of the partners in a marriage or de facto relationship has a legal duty to support the other partner, according to their respective needs and their capacity to pay.
If one of the partners does not have the ability to financially support themselves (usually because there is a disparity in income or earning capacity), they can ask the court to make an order for spousal maintenance.
When can a spousal maintenance claim be made?
Someone can ask for a spousal maintenance order while they are still married or in a de facto relationship. They can also make a claim after a divorce or after the breakdown of a de facto relationship.
However, there are time limits for making these applications. Where the parties were married, they must make an application for spousal maintenance within 12 months of the date of the divorce. If they were in a de facto relationship, they must make the application within two years of the end of the relationship.
What can the court decide to do?
The court has to decide whether or not to make an order for spousal maintenance. If it decides to order one person to pay spousal maintenance, it will decide what sort of payment is adequate to support the other person.
How long can a spousal maintenance order last?
Sometimes the court will order one person to pay a lump sum.
However, the most usual type of order will be that one person must pay the other person a weekly or monthly amount for a particular period. Potentially these orders can last for years.
How does a property settlement affect a claim for spousal maintenance?
When separated couples reach a property settlement, this divides between them the property that either or both own at the time the settlement takes place. Each person will receive and keep the property they are entitled to under the settlement.
People often assume that once the property is divided, each person will support themselves into the future without assistance from the other person.
This is not the case. A person can still make an application for spousal maintenance over and above the property settlement.
Can you make sure the property settlement is final?
As part of a property settlement, the court will not make an order that prevents a person from making a claim for payment of spousal maintenance.
This means that court orders for a final division of property (alone) cannot prevent one of the former partners making a claim for spousal maintenance after the division of property has been made.
Again, there are time limits, but claims are being made to the court and people are finding themselves in this situation.
Make your property settlement final with a binding financial agreement
However, the Family Law Act does provide that parties to a marriage or a de facto relationship can enter into a binding financial agreement. This can be made before, during, or after a marriage or de facto relationship.
This agreement must be in writing. It must comply with the other technical requirements in the Family Law Act.
Binding financial agreements do not need to be approved by the court. However they will only become effective if each of the parties has obtained independent legal advice. Each of their legal advisors must provide a Certificate of Independent Legal Advice in the form required by the Family Law Act.
This type of agreement allows the parties to set out how all the property and financial resources of either or both of them will be dealt with. In this way it is similar to a property settlement order that the court may make. However, it also allows the parties to reach an agreement that will cover the maintenance of either party, including future spousal maintenance.
This means a properly drafted binding financial agreement can prevent a claim for payment of spousal maintenance.
Reaching agreement for certainty and closure
In our experience, at the end of a relationship, most parties are anxious to reach closure. A once-and-for-all final property settlement is an important part of this. That is why we generally recommend to clients that they settle on a binding financial agreement. We are experienced in preparing these for clients.
Dennis Grant is an experienced family law practitioner at Pryor Tzannes & Wallis.
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