Spousal Maintenance in Australia
There can be a great deal of confusion around the issue of spousal maintenance in Australia. Sometimes it is confused with the financial maintenance of children (“child support”), or other financial maintenance we hear about in the media in overseas jurisdictions (such as “alimony” in the United States).
In Australia, spousal maintenance refers to a situation where, following the breakdown of a marriage or de facto relationship, one party makes payments to or on behalf of the other party for what is usually a defined period of time.
Here are some points about spousal maintenance that are often the subject of queries from our clients:
Spousal maintenance is not automatically awarded to a party, and is not enforceable unless ordered by a Court.
Often parties can negotiate some spousal maintenance “by consent” and this is usually as part of an overall “package” to resolve all outstanding financial matters between the parties upon the breakdown of their relationship.
If an agreement cannot be negotiated, then the party in need of maintenance can apply to the Court for an Order. In the first instance, the applicant must satisfy the Court that they cannot support themselves on their own income or financial resources alone. Secondly, the Court must be satisfied that the paying party can afford to support the other in addition to being able to service all of the paying party’s other liabilities, legal financial obligations (such as child support) and living expenses.
Spousal maintenance is usually defined to end upon certain circumstances arising.
Overwhelmingly, in cases where spousal maintenance is ordered or agreed in Australia, it is only temporary and will end upon the parties’ overall property settlement becoming “final”. This aligns with the general family law principle of the “clean break” between parties once all financial matters between them are resolved, meaning that there should be no other financial ties between them (aside from child support where applicable).
In some cases however, spousal maintenance may be ordered to continue until the receiving party has completed training or re-skilling, or secured employment, or the youngest child attains a certain age (say 8 years), or until they enter into a new de facto relationship or marriage. Every case is assessed on its own merits.
Income earning capacity vs actual income earned.
If an application is made to the Court for spousal maintenance, the Court will assess the financial circumstances of both parties. In each case, the Court will assess the earning potential of a party in addition to also hearing evidence about the actual income earned. For example a party who is unemployed may not be deemed eligible for spousal maintenance if there is evidence that the person actually has the skill and capacity to engage in paid work. Conversely a party who unilaterally reduces their income to avoid spousal maintenance obligations may still find themselves the subject of an order to pay based on their earning capacity (often supported by evidence of earnings prior to separation).
Who may be eligible for spousal maintenance then?
The Family Law Act clearly states (at Section 72) that “a party to a marriage is liable to maintain the other party, to the extent that the first-mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:
a. by reason of having the care and control of a child of the marriage who has not attained the age of 18 years;
b. by reason of age or physical or mental incapacity for appropriate gainful employment; or
c. for any other adequate reason….”
It must be noted that spousal maintenance generally only occurs where there is a large disparity between the parties’ respective earning capacities. The most obvious (and common) example is where one parent is engaged in long-term, highly paid employment, whilst the other parent has primarily raised the children of the relationship and run the household for several years. Upon the breakdown of the relationship, the parent who has been at home (and consequently out of the paid workforce for several years) has no capacity to suddenly start supporting themselves financially without some interim support from the other parent until such time as a property settlement can be resolved and potentially until some further education or training completed.
De Facto Relationships versus Marriage.
De facto parties may also be liable to support their former partner even if there was never any intention to marry.
Parties to a de facto relationship that has broken down can apply to the Court for de facto spousal maintenance (in addition to property settlement) provided the relationship broke down after 1 July 2010 (in the case of South Australia); where the de facto relationship exceeded 2 years, or where there was a child of the relationship (amongst other requirements).
This can be quite a concern for parties who enter into a de facto relationship either deliberately or inadvertently, with little awareness of the legal relationship they are establishing, and with no understanding of the potential claim they may become exposed to simply by letting time pass by.
26 June 2017