Calculating spousal maintenance

Understanding your obligation to pay or right to receive spousal support

It is not uncommon for couples to mutually support each other financially over the course of a de facto relationship or marriage. What you may not realise is that ex-partners may also be entitled to ongoing spousal support, with others obligated to give such support. Read on to discover the basics of spousal maintenance, how you calculate payments and how it differs from other family law financial agreements.

Spousal maintenance, spousal support and alimony payments (as they call it in the USA)

Spousal maintenance is a payment given from one spouse to another as a means of providing financial support. It may be a periodic or a lump sum payment, as some examples. Spousal maintenance (for married parties) or maintenance (for former de facto couples) is usually paid due to a range of factors, such as care of children of the relationship under 18 years, an illness or other health condition or other relevant factors.

This support can be ordered by the Court if it is not agreed, with varying lengths of time for such payments to be made in the case of periodic spousal maintenance/maintenance.

Spousal maintenance can often be confused with alimony, an American term not used within the Australian legal jurisdiction. However, this is essentially equivalent to spousal maintenance, maintenance or spousal support, as some call it.

Calculating spousal maintenance

While there are many services online that will claim to calculate how much you may be entitled to, in truth, there are a number of factors involved making it difficult for any online service to be able to come to an accurate conclusion.

However, the starting point is looking at a party’s need. This can be done in reference to a party’s income less their reasonable living expenses. The second step then is to assess the other party’s capacity to pay spousal maintenance, taking into account their income and reasonable living expenses among other things, and ascertaining whether there is a surplus.

Applying for spousal maintenance

A party seeking to receive an order for spousal maintenance must apply within 12 months of a divorce order taking effect, or within 24 months of the end of a de facto relationship.  Applications can be made to the Court outside of these time limits, but it can be a costly process seeking the Court’s permission to proceed out of time, and success is not guaranteed.

Spousal maintenance is not an automatic part of the separation or divorce process. If an agreement cannot be reached, the party that is requesting assistance must submit an application and then establish that they have a need for spousal maintenance.

Some of the factors that are considered by the courts, briefly referred to earlier, are:

  • The care of children under the age of 18 years – the parent/caregiver may be entitled to additional support for the spouse themselves
  • Any existing financial support agreement between parties which extends beyond the relationship’s termination
  • Age and health – if one party is significantly older than the other or has a medical condition
  • A party’s inability to obtain employment and/or access to reasonable living standards
  • A party’s access to other financial support, such as the pension or other government benefits
  • The income, additional property, and financial resources of the two parties – is one party significantly advantaged over the other?
  • The factors relevant to the relationship

 While there is no limit to what the courts may consider in terms of a spousal maintenance application, Australia is a ‘no-fault’ jurisdiction. As such, the Courts will not factor in who ended the relationship and why.

The Court’s involvement

A Court can make orders that a party must pay spousal maintenance to the other party, with the Court most frequently ordering periodic or lump sum payments. Spousal maintenance orders can also include the transfer of property.

On a successful application, the Court will also stipulate any relevant terms and conditions, including how long the payments will last, particularly when made as part of final orders.

Other forms of support/payments

Spousal maintenance is different and separate to other forms of financial support or agreements, such as child support or property settlement. Child support payments are made in support of the child/children. Property settlement payments can be made as part of dividing assets as part of an overall property settlement following the breakdown of a marriage or de facto relationship.

Daykin Family Law can guide you through the process of applying for or contesting an application for spousal maintenance. Contact us today for an overview of your options and how we can help you reach a positive solution.

We give you expert legal advice on the most appropriate and cost-effective course of action for you and your family.  Contact us on (07) 3338 5645 to make an appointment for a fixed fee initial consultation today.

The blog published by Daykin Family Law is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult Daykin Family Law on any legal queries concerning a specific situation.

8 Point Guide to Pre-nuptial Agreements

We are regularly contacted by people asking for advice on the preparation of a pre-nuptial agreement or a ‘pre-nup’, as we’ve covered in our previous article here.  In Australia, pre-nups are actually referred to as Binding Financial Agreements and we often help clients in this area, whether they’re getting married or entering a de-facto relationship, or already married or in a de-facto relationship.  We’re regularly asked a series of common questions, so we demystify each one of those questions in this article to help you make an informed decision on what might be appropriate for you and your relationship if you’re considering a pre-nup.

 

  1. What is a pre-nup?

A pre-nup, or Binding Financial Agreement (BFA) as it is referred to in Australia, allows couples to enter into a legal agreement about their financial affairs in the event of a separation.  This applies to married couples (post-nuptial), those who plan to wed (pre-nuptial) and parties in a de-facto relationship.

Binding Financial Agreements were introduced to provide a mechanism for couples who are either contemplating marriage, or are already married, to organise their affairs, including what could happen to property, businesses or how they would be looked after financially following a separation.

 

  1. Are pre-nups (Binding Financial Agreements) legally enforceable?

The Family Law Act 1975 (Cth) allows couples to enter into a Binding Financial Agreement before marriage or cohabitation, during marriage or cohabitation, and after a relationship breakdown. Each party must enter into the Binding Financial Agreement willingly and effectively must be fully informed of the advantages and disadvantages of entering into the agreement, their rights etc. Each party must receive independent legal advice about the Binding Financial Agreement.

To ensure any pre-nup is less open to challenge later on, the parties should ensure that any contemplation of a Binding Financial Agreement is done in ample time to prepare the document and negotiate the terms before any wedding, and ensure there is no duress or undue pressure on either party.  Both parties need time to fully consider, negotiate and obtain independent advice on the Agreement.

 

  1.  What are the benefits of having an agreement in place?

A  significant benefit of a BFA is that it can provide clarity and certainty to both parties in a relationship and can extend to their families too.  By setting out agreed-upon rules prior to any potential dispute, it may be more likely that the agreement will be considered by all parties to be fair and reasonable.

A BFA can seek to protect pre-existing assets from claims by the other party, which is important when one party is in a superior financial position to the other.  Often one party has accumulated assets prior to the relationship without contribution from the other party and therefore wish to ensure those assets remain theirs upon separation.  

 

  1.  What are the cons and pitfalls?

The Family Law Act gives the Court power to set aside a BFA in a number of circumstances.

Such circumstances include:

  • where it was obtained by fraud or duress;
  • a party failed to disclose relevant matters;
  • where the objective of the agreement was to defeat the interests of other parties;
  • where circumstances have arisen which make it impracticable for the agreement to be carried out;
  • since making the agreement, a material change in circumstances has occurred relating to the care and welfare of a child and, as a result of the change, the child or a party to the agreement will suffer hardship if the court does not set the agreement aside;
  • Any provision in a financial agreement that seeks to exclude or limit maintenance payments can be ineffective if at the time of the agreement coming into effect the proposed recipient is unable to support himself or herself without resort to an income tested pension benefit or allowance.

If a financial agreement is set aside, the Court can make orders for property settlement and maintenance in accordance with the principles set out in the Family Law Act.

 

  1.  What would the agreement contain?

The agreements are tailored to individual circumstances; no one agreement is the same as another.  The agreement can deal with the division of both property (assets, liabilities, superannuation and financial resources) and spousal maintenance, or some agreements deal only with property division and leave spousal maintenance to be dealt with at a later time with no agreement prior to a separation.

The agreement may set out how assets are to be held and managed during the marriage, for example, whether a joint account will be opened and how property is to be held.

 

  1.  Do lawyers need to be involved?

Put simply, yes!  For a BFA to be in fact “binding” under the Family Law Act, it requires, among other things, a lawyer to certify that they have given advice to their client with respect to:

  1. The effect of the Agreement on that person’s rights; and
  2. The advantages and disadvantages, at the time the advice was provided, of that person making the Agreement.

Without this advice, the Agreement may not be binding and enforceable even if it is duly signed by all parties involved.  

 

  1. How do I terminate an existing Binding Financial Agreement?

A Binding Financial Agreement can be “terminated” in one of two ways:

  • the parties can enter into another financial agreement, provided that a specific provision is included in the new agreement stating that the former agreement is terminated; or
  • the parties can enter into a “termination agreement” pursuant to section 90J (for married couples) or section 90UL (for de facto couples) of the Family Law Act. As with the original BFA, for a termination agreement to be binding and enforceable, it must be signed by all parties to the agreement, and each of the parties must have received independent legal advice with respect to the termination agreement.

 

  1. What is the cost of an agreement?

Costs depend on the complexity of the financial arrangements and the length of the negotiations.  However, the existence of a fair and negotiated agreement can mean legal costs are significantly lower in the long run than if there are subsequent divorce proceedings.


If you, or someone you know, is entering a relationship or marriage and could benefit from a discussion about whether a Binding Financial Agreement is right for them, please contact us for an appointment at our office in Fortitude Valley, Brisbane.

The blog published by Daykin Family Law is intended as general information only and is not legal advice on any subject matter. By viewing the blog posts, the reader understands there is no solicitor-client relationship between the reader and the blog publisher. The blog should not be used as a substitute for legal advice from a legal practitioner, and readers are urged to consult Daykin Family Law on any legal queries concerning a specific situation.

 

prenuptial and binding financial agreement difference

Prenuptial and Binding Financial Agreements – Is There A Difference?

At Daykin Family Law, we are often contacted by couples asking for advice on the preparation of a prenuptial agreement or ‘prenup’.  Prenup is a popular terminology, but actually refers to agreements taken prior to marriage in the USA and other countries.  The equivalent of a prenup in Australia is known as a Binding Financial Agreement.

What is a Prenuptial Agreement?

A prenup, or Binding Financial Agreement as it is referred to in Australia, allows married couples (post-nuptial), soon to be married couples (pre-nuptial) and parties in a defacto or same sex relationship, to enter into a legal agreement about their financial affairs in the case of a relationship breakdown.

Binding Financial Agreements were introduced in Australia in 2000 to provide a mechanism for couples who are either contemplating marriage, or are already married to organise their affairs, including what could happen to property, business or how they would be looked after financially following a separation.

Should I get a prenup?

Prenups, or Binding Financial Agreements, are designed to remove uncertainty and avoid the stress of going to court.  When done correctly, they can be a very useful tool for financial planning.  It is, however, very important to take your time, and use an experienced lawyer to demonstrate that each party has had the opportunity to negotiate and reach a fair decision on the agreement.  Agreements done in haste have been known to be challenged by the court.

In a recent case known as Thorne v Kennedy, the High Court overturned a prenup between a young woman and her property developer husband after she was made to sign the agreement the night before her wedding.  The judges ruled that the document was effectively signed under duress.  Therefore, it’s important that a pre-nuptial agreement is agreed upon by both parties over an adequate period of time.  Other circumstances where the court can overturn an agreement is where the agreement would put unnecessary hardship on the spouse, especially where there are children involved.

In sum, pre-nuptial agreements have many benefits when entered into with the right legal advice from a family lawyer.  They can protect your property and estate plan, reduce conflicts, clarify special agreements and establish ground rules for future matters.  If you’re considering a BFA and would like some advice on whether it’s right for you, contact us today.

binding financial agreements

Do I need a binding financial agreement?

When separation occurs, it can be difficult to know what you need and who to speak to. Let us explain what a binding financial agreement is and when it might be appropriate.

What is a binding financial agreement?

A binding financial agreement is a document that records an agreement as to the division of a married or de facto couple’s respective property interests. A binding financial agreement can address how the property and financial resources of a couple are dealt with, as well as spousal maintenance.

A binding financial agreement can be completed either before a relationship has commenced, during a relationship or after a relationship has broken down. For the purposes of this blog, we will focus on binding financial agreements completed after a relationship has ended.

What are my options for recording a property settlement?

When a couple separates, and they agree about the division of their property interests, there are usually two options available to them to enter into a property settlement and finalise their financial relationship with one another. For a binding and enforceable property settlement agreement, they can either:

  1. Enter into a binding financial agreement; or
  2. Apply for consent orders and file the proposed orders with the court for the court’s consideration and approval.

There are advantages and disadvantages to each of the above options, so you should seek legal advice as to the option which will be most suitable for your circumstances.

Should I choose a binding financial agreement?

A binding financial agreement may be more suitable in circumstances where, for example, the parties wish for their agreement to be recorded and kept strictly private and confidential between the parties and their solicitors. Another example is where the agreement may not be seen in the eyes of the court as being a just and equitable distribution of the net assets.  A private agreement such as this done correctly will effectively oust the jurisdiction of the court to make property adjustment orders.

Binding financial agreements are completed without any supervision by the court system. Therefore, you have more control over when the agreement comes into effect and are not subject to the court’s final approval of the terms of settlement.

Binding financial agreements will not be suitable for all cases though. Also, they can often be more expensive than obtaining consent orders, because your lawyer will be required to take your instructions, draft detailed documents with precision to ensure it is binding and provide comprehensive written legal advice to you regarding your rights and other matters in relation to the document.

What are the requirements of a binding financial agreement?

There are strict requirements set out in the Family Law Act 1975 (Cth) (FLA) which must be adhered to for a financial agreement to be binding. Some of the requirements include, but are not limited to:

  1. It must be in writing;
  2. It must be signed by all parties to the agreement; and
  3. Both parties must have received independent legal advice including on the effect of the agreement on their rights before the binding financial agreement is signed.

Binding financial agreements can be set aside by the court where the requirements have not been met, or where other circumstances are present such as fraud, non-disclosure etc. Whether a financial agreement is binding on the parties would ultimately be a decision for the court to make if it were ever challenged, so it is important to engage the right lawyer who can draft the agreement correctly and provide you with sound legal advice.

Cutting corners

You will almost certainly be able to find a “cheap and quick” binding financial agreement after a search on Google. But beware, the risks of entering into a binding financial agreement that does not satisfy legislative requirements can be significant.

It could end up costing you much more in the long run to cut corners on recording a settlement.  This could be to either rectify a deficient agreement, or respond to a court application seeking property adjustment orders.  This is even after you thought you had finished and settled.

Seek expert advice to ensure you are protected.

Speaking to a professional

If you have separated from your partner (or are considering it) and would like advice on your options regarding property settlement, contact Daykin Family Law today to book an initial consultation with our Director, an Accredited Family Law Specialist, at a reduced fixed fee.

Daykin Family Law has extensive experience drafting and advising on binding financial agreements and can assist with finalising your property settlement sooner so you can move forward with certainty. We can meet with you in our offices conveniently located in Fortitude Valley close to the CBD, or by phone or Skype.

Love & Assets: What is a Pre-Nup? Do I need to be engaged to protect myself?

Whether it’s on an American TV sitcom, or in a Kanye West song, we’ve all heard the term “Pre-nup”.  But what does this mean?  And how do they work in Australia?  Can they be used outside of contemplating a walk down the aisle?

On this side of the globe, we have Financial Agreements.  This is a contract between two or more parties that can be entered into before, during or after a relationship.

We will focus on these “pre-nup” or “pre-nuptial” Financial Agreements.  These are highly technical agreements made by parties before marriage under Section 90B of the Family Law Act 1975.  The agreement can cover how any or all property and financial resources of the parties will be dealt with in the event of a separation.  It can also cover what spousal maintenance, if any, will be paid between the parties.  Other ancillary matters can also be included.

Importantly, Financial Agreements are being used more and more to protect assets that one person brings into a relationship, or the assets that one person will receive during their relationship at some point in time from family or some other source.  This allows assets to be preserved for children of a previous marriage, as an example, children that are yet to be born or even extended family members.

The possibilities are near endless.  There can be an entire quarantine of property or financial resources, or one party can acquire an incremental interest over time in the other person’s property, to adjust for the passage of time or even the pitter patter of tiny feet.  Financial Agreements can be reviewed at an agreed time in the future, and they can even have an end date if this is what the parties agree on and want.

These agreements are not just for people contemplating marriage.  There are different circumstances where couples can enter into this type of agreement, including:

  • The couple is going to live together but there is no plan to get married
  • The couple is going to live together and they do plan to marry, but have not decided when they will get married
  • The couple is already living together
  • The couple is already married

The Family Law Act 1975 outlines specific requirements that must be met to ensure that the agreement is binding and enforceable.

One of the requirements under the Act for a financial agreement to be binding is that both parties must be given independent legal advice before the agreement is signed.  This is about the effect of the agreement on the party’s rights, and the advantages and disadvantages to that party of making the agreement.  The lawyers need to sign certificates to this effect.

Both parties must engage their own lawyers.  A common lawyer cannot be engaged by both parties for the purposes of a Financial Agreement, even if both parties are completely in agreement about the terms and what is to happen.

The law surrounding Financial Agreements is in an almost constant state of change in Australia.  The legal fraternity is currently awaiting the outcome of a High Court case involving the issue of duress when parties sign these types of agreements.  It is vitally important to ensure that the lawyer you engage has a high level of knowledge around the technical and practical aspects of this area of family law. 

These are sensitive issues, with people’s relationships continuing to hopefully grow and flourish while we negotiate and draw these agreements up.  Often there are many people involved and invested in the process on the outer edges, such as business partners, adult children and extended family members.  As a result, these matters need to be handled with care by the lawyers concerned to promote harmony where possible, and avoid unnecessary conflict which could harm the relationship.

We work with a range of lawyers who we recommend to our clients’ partner or fiancés, who share our pragmatic approach and are highly competent in this area. 

Talk to us today if you are considering an agreement for your relationship,  no matter what stage it is at.  We can discuss with you the many varied options for how such an agreement can work for you and achieve the level of asset protection you desire.

First published 15 September 2017