Working out how the everyday expenses will be met is one of the biggest challenges for people when they separate from arelationship. 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 separatehouseholds.
Your Family Lawyer can help you to navigate theseissues.
What is spouse maintenance?
Spouse maintenance or de facto partner maintenance is apayment or series or payments made by one party to the other to assist them in meeting their expenses. Aparty (including asame-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 aCourt Order. These days, maintenance is generally only paid for aspecified period, for example, until the youngest of the parties' children startsschool.
Does our agreement have to be in writing?
It is agood idea to have amaintenance agreement in writing to avoid disputes later on. At the very least, payments should be made to abank 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 aFamily Lawyer can advise on how maintenance should be included in the settlementdocuments.
How does the Court handle spouse maintenance?
When the Family Court is asked to determine whether aparty 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 ofassessment;
- Your employment contract or employer's letter of offer setting out your salary, benefits and bonuses and stating when these will bepaid;
- Payslips or other documents showing your current income (if you have more than one job you will need these details foreach);
- A summary of your work history, such as aCVorresume;
- Invoices and payment receipts for expenses such as rent, food, electricity, gas, fares, petrol, insurances, entertainment and thelike;
- A list of your current bankaccounts;
- Bank account statements and credit card statements (your lawyer will let you know the period to becovered);
- Your latest superannuation member's statement;and
- If you are not employed, copies of your recent job applications, astatement about your employment prospects and if appropriate, astatement about further training or study including costs and timeframes.
Your lawyer will advise whether further documents will berequired.
Other things to consider:
- Need is not necessarily based on the expenses aparty currently incurs. Aparty'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, aparty cannot claim expenses for which need or aprevious 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 amatter of balance and reasonableness. For example, if aparty has substantial funds in abank account but is claiming further sums for maintenance, the Court may not necessarily make an order for maintenance because that party can maintain himself orherself.
- When determining need, it is important to note that spouse maintenance is not the same as child support. The breakdown of expenses for aparty 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 distinctionsclear.
- Capacity is not necessarily assessed on aparty's current income. If aparty 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 hascapacity.
- Government benefits are disregarded as income for the purposes of spouse maintenance.
- Just because aparty 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 partyhas.
Why is this important?
Due to the size of the current Court lists, property and financial cases are taking longer to be heard by aJudge and it is therefore not uncommon for the process to take more than18months to final hearing. Interim maintenance is sometimes ordered by the Court to be paid for aperiod of time between separation and the finalising of the parties' financial matters. Maintenance can also be ordered to be paid after final settlement until aspecified event occurs, for example, the sale of the former matrimonialhome.
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 acase may have asignificant impact on your financialposition.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.