Who is respon­si­ble for pay­ing expens­es after separation?

Need­less to say, sep­a­ra­tion is a stress­ful time where you and your for­mer part­ner are both adjust­ing to a new nor­mal’. Nav­i­gat­ing the new nor­mal’ can be chal­leng­ing, par­tic­u­lar­ly when it comes to mak­ing arrange­ments for the pay­ment of expens­es. One ques­tion we often hear is who is respon­si­ble for pay­ing expens­es now?”.

Each fam­i­ly is dif­fer­ent and there­fore, each fam­i­ly’s indi­vid­ual cir­cum­stances will need to be tak­en into account. Often the low­er income earn­ing par­ty will expect that their expens­es are paid by the high­er income earn­ing par­ty, but this is not always pos­si­ble. The real­i­ty is that par­ties now have two house-holds to main­tain with the same amount of income that pre­vi­ous­ly sus­tained one household. 

Here are some things to con­sid­er when it comes to pay­ing expens­es after separation:

Things to con­sid­er if you stop pay­ing expenses:

  1. If you stop pay­ing the mort­gage and oth­er expens­es, this respon­si­bil­i­ty is like­ly to fall on the oth­er par­ty, sub­ject to their capac­i­ty to pay such expenses. 
  2. A few issues can arise where a par­ty does not have the capac­i­ty to meet their own expens­es including:
  • If you have joint assets, your cred­it may be affect­ed by any defaults made by the oth­er par­ty. This may make it dif­fi­cult for you to pur­chase real estate in the future or even obtain a cred­it card. Fur­ther­more, the bank may act to recov­er their debt (for instance, through the sale of your property).
  • Depend­ing on your finan­cial capac­i­ty the oth­er par­ty may request that the Court make orders requir­ing you to con­tribute towards their day-to-day liv­ing expens­es, in cir­cum­stances where they do not have the abil­i­ty to sup­port themselves.
  • If you decide to stop pay­ing expens­es that you were pre­vi­ous­ly respon­si­ble for, it may be pru­dent to advise the oth­er par­ty in advance that you are doing so, to pro­vide them with ade­quate time to make arrange­ments to change the direct deb­its or poli­cies. This open and forth­right com­mu­ni­ca­tion is like­ly to assist you with nego­ti­a­tions in the future. 

Things to con­sid­er if you con­tin­ue to meet expenses:

  1. In cir­cum­stances where you have the finan­cial capac­i­ty to con­tin­ue meet­ing cer­tain expens­es fol­low­ing your sep­a­ra­tion, it is impor­tant to know that whilst your finan­cial con­tri­bu­tion will be tak­en into account for the pur­pose of a final prop­er­ty set­tle­ment, it can­not be recov­ered’ or repaid’ to you, dol­lar for dollar.
  2. If you con­tin­ue to con­tribute to expens­es fol­low­ing sep­a­ra­tion, it reduces the like­li­hood that your for­mer spouse will ini­ti­ate Court pro­ceed­ings to seek spouse main­te­nance which can be a time con­sum­ing and cost­ly exer­cise to defend. It is very impor­tant to obtain inde­pen­dent legal advice about whether it is like­ly that a Court will make Orders for spouse main­te­nance in your cir­cum­stances and whether an infor­mal arrange­ment to pay the mort­gage and oth­er expens­es until set­tle­ment may be in your best interest. 
  3. It may also be nec­es­sary to take into account what type of con­tri­bu­tions the oth­er par­ty will be mak­ing – for exam­ple, if they have the full-time care of your chil­dren, they too are mak­ing a post-sep­a­ra­tion contribution. 
  4. A coop­er­a­tive arrange­ment with your for­mer spouse can assist in pre­serv­ing good­will between you while you nego­ti­ate a final resolution. 

The above infor­ma­tion is to be con­sid­ered sep­a­rate­ly from child sup­port, which you may have to pay pur­suant to any assess­ment made by the Ser­vices Aus­tralia (Child Support).

As you nav­i­gate the com­plex­i­ties of mak­ing arrange­ments after sep­a­ra­tion, it is impor­tant that you obtain inde­pen­dent legal advice. We can assist you pave the way for­ward and ensure that you are kept informed every step of the way, as your actions fol­low­ing sep­a­ra­tion can have far reach­ing con­se­quences for your final prop­er­ty settlement.