Family Law | Relationship breakdown: how do we sort out maintenance?
Working out how the everyday expenses will be met is one of the biggest challenges for people when they separate from a relationship. Worrying about how to manage short-term finances can result in parties trying to delay separation because one or both parties cannot imagine how they will be able to afford to maintain separate households.
Your Family Lawyer can help you to navigate these issues.
What is spouse maintenance?
Spouse maintenance or de facto partner maintenance is a payment or series or payments made by one party to the other to assist them in meeting their expenses. A party (including a same-sex partner) can seek maintenance however it is not automatic right and will only be paid if there is an agreement with the other party, or a Court Order. These days, maintenance is generally only paid for a specified period, for example, until the youngest of the parties’ children starts school.
Does our agreement have to be in writing?
It is a good idea to have a maintenance agreement in writing to avoid disputes later on. At the very least, payments should be made to a bank account, not in cash, and the banking transactions should be identified as maintenance. If the parties can reach agreement on all property and financial issues then a Family Lawyer can advise on how maintenance should be included in the settlement documents.
How does the Court handle spouse maintenance?
When the Family Court is asked to determine whether a party should receive maintenance, it assesses two things: the applicant’s ability to adequately support themselves (“need”) and the respondent’s ability to pay (‘capacity’). This assessment is based on documents that are provided to the Court. Therefore in order to prepare, each party needs to provide to their own lawyer detailed information about their income, expenses, assets and liabilities.
What information do I need to provide to my lawyer?
- Your latest income tax return and notice of assessment;
- Your employment contract or employer’s letter of offer setting out your salary, benefits and bonuses and stating when these will be paid;
- Payslips or other documents showing your current income (if you have more than one job you will need these details for each);
- A summary of your work history, such as a CV or resume;
- Invoices and payment receipts for expenses such as rent, food, electricity, gas, fares, petrol, insurances, entertainment and the like;
- A list of your current bank accounts;
- Bank account statements and credit card statements (your lawyer will let you know the period to be covered);
- Your latest superannuation member’s statement; and
- If you are not employed, copies of your recent job applications, a statement about your employment prospects and if appropriate, a statement about further training or study including costs and time frames.
Your lawyer will advise whether further documents will be required.
Other things to consider:
- Need is not necessarily based on the expenses a party currently incurs. A party’s spending patterns may have changed because of the separation and it is open to the Court to have regard to the typical expenses they would have incurred prior to separation. Conversely, a party cannot claim expenses for which need or a previous pattern of expenditure cannot be established.
- A party is usually not required to sell assets in order to support himself or herself. However, this is a matter of balance and reasonableness. For example, if a party has substantial funds in a bank account but is claiming further sums for maintenance, the Court may not necessarily make an order for maintenance because that party can maintain himself or herself.
- When determining need, it is important to note that spouse maintenance is not the same as child support. The breakdown of expenses for a party should separately identify expenses forchildren. While this may sometimes be an artificial estimate (for instance, how much of an electricity expense has been incurred due to the children) it is important to make these distinctions clear.
- Capacity is not necessarily assessed on a party’s current income. If a party is practically able to earn an income but deliberately chooses to be underemployed or unemployed so that they will not be ordered to pay maintenance, the Court has the discretion to determine that the party has capacity.
- Government benefits are disregarded asincome for the purposes of spouse maintenance.
- Just because a party has the capacity to pay does not mean he or she has to pay his or her higher income to the other party. If one party cannot establish need, it can be irrelevant how much capacity the other party has.
Why is this important?
Due to the size of the current Court lists, property and financial cases are taking longer to be heard by a Judge and it is therefore not uncommon for the process to take more than 18 months to final hearing. Interim maintenance is sometimes ordered by the Court to be paid for a period of time between separation and the finalising of the parties’ financial matters. Maintenance can also be ordered to be paid after final settlement until a specified event occurs, for example, the sale of the former matrimonial home.
At Swaab, we urge you to seek advice about your maintenance rights and obligations as early as possible. This is very important, especially if you are the party seeking spousal maintenance, as delays in the final resolution of a case may have a significant impact on your financial position.