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Maintenance in De Facto Relationships

De facto partners can now be compelled to pay maintenance to the other partner after separation under the same provisions that apply to separated married couples.

One difference for a de facto maintenance Order is that it will automatically end if the party receiving maintenance marries. In the case of the receiving party entering into a de facto relationship, the paying party can apply to have the Order set aside.

Spousal Maintenance

Hi, I’m Vanessa Mathews, and I want to give you some information today about spousal maintenance or support.

Many people don’t realize that the law requires one partner, either a husband or wife or de facto partner, where people are not legally married, to support each other financially. It’s not okay for one spouse to suddenly decide he or she is no longer giving any money to the other person. And even if you are divorced or the de facto relationship ends, the partner who was giving support must continue giving this financial help.

Now, the information I’m giving you applies to both married couples who divorce and de facto couples, after their relationship has ended. If you can come up with your own agreement, that’s the best way to proceed. But many people struggle to figure this one out. The law has rules and conditions for when financial support has to be given, and even how much, even after the relationship ends.

The court asks two basic questions. The first is whether or not one of the partners needs financial support or is this person able to support him or herself? But even if this person needs financial help, the judge will still ask a second question, which is, ‘Can the other partner pay me support?’ So how does a court decide if someone is entitled to support?

And how does the court decide how much money should be paid? The judge is going to consider a number of factors. He or she may look at the age of the person asking for help, and their ability to work. If one spouse or partner raised the children and is now, say, 50, with no work experience, the court might decide that he or she will have a harder time finding work at their age. So the judge might decide this person should get help. The court will also look at the person’s mental and physical health. Sometimes a person simply can’t work or cannot work in a job that will earn enough. If there are children, the court will consider who they live with, and give help accordingly.

The court also has to decide what standard of living is appropriate in each case. Now, there are a number of differences between de facto couples and couples who are legally married. There are a number of conditions that must be met for de facto couples in order for maintenance to be required. Also, de facto couples have up to two years after their relationship ends to request maintenance, while married couples have to make this request within 12 months after the divorce.

The aim of maintenance is to provide for the partner who needs it. So if a person remarries or starts a new de facto relationship, the ex-partner is no longer responsible. Their requirement to pay maintenance ends.

People often ask if they can get a tax deduction if they pay maintenance or if they have to pay income tax on maintenance they receive. The answer to both questions is no. There aren’t any tax implications for either person regarding maintenance.

I’ve tried give you some of the basics here. There are a lot of conditions and rules on maintenance, so I strongly recommend you seek advice from a lawyer specializing in family law. I’m Vanessa Mathews, for Mathews Family Law & Mediation Specialists.

The Importance of Finalising Your Property Settlement & the Dangers of Delay

Oftentimes, particularly in circumstances where parties to separation are amicable and consider that they “get along well”, spouses divide their assets according to a personal agreement – that is, an agreement negotiated personally between the parties without the use of lawyers or the Australian courts.

Such an arrangement is not legally binding, and until an agreement is documented in one of the approved manners, the agreement is considered to be an informal agreement.

One of the most significant consequences of not formalizing your family law property settlement is the possibility that your former spouse is able to make an application for a property settlement in the future – one, two, or even several years later. Being required to undertake a settlement years after your separation can have detrimental impacts on your financial and mental wellbeing and makes it difficult to plan your personal affairs. This is particularly so when as far as you knew, the matter was dealt with and is in the past.

It is important, and a principal consideration of the Australian courts, that parties finalize the financial aspects of their relationship so that they can get on with their lives.

How Do I Formalise A Property Settlement?

Australian family law affords former spouses (or parties to a de facto relationship) two ways in which they can formally finalize a property settlement lawyers. These are:

• 1. Making an application to the court for consent orders; or
• 2. Entering into a binding financial agreement (‘BFA’) (also colloquially known as a ‘pre-nap’).

To reiterate, an agreement is not legally binding unless and until it is documented in one of these manners.

1. Consent Orders

Parties to a separation that have reached an agreement about their property settlement are able to apply to the Family Court of Australia for orders to formalize the agreement so that it is legally binding. This application documents and details:

• The agreement reached by the parties; and
• Its practical application.

When considering an application for consent orders in respect of a family law property settlement, the Family Court must be satisfied that the orders proposed are just and equitable.

Although the parties are not required to obtain specialist legal advice in relation to an application for orders, it is highly advisable that you do so, as the documents required are technical in nature, and the consequences of an agreement not being documented correctly can be costly and time-consuming.

2. Binding Financial Agreements

Parties to a marriage or de facto relationship can enter into a binding legal agreement (essentially a contract) that details the financial arrangements should their marriage or de facto relationship break down.

A binding financial agreement can be entered into:

• Before marriage
• During marriage
• After divorce

A binding financial agreement is capable of covering:

• Property matters
• Financial support of a spouse (i.e. spousal maintenance), or the termination thereof that is, to prevent a former spouse from making an application for maintenance in the future should their circumstance change. This protection is not afforded solely by consent orders.

Unlike an application for consent orders, in order for a financial agreement to be binding, both parties must seek independent legal advice as to the effect of the agreement on the rights of either party and the advantages and disadvantages thereof. Additionally, and as distinct from an application for consent orders, a binding financial agreement is not required to be deemed as just and equitable by the Australian courts.

Other Important Considerations

You are not required to be divorced to formalize your property arrangements – in Australia, divorce is a largely administrative process and is distinct from property settlement matters.

You should also consider that when you are divorced, you have twelve months from the date that the divorce is granted to bring an application for a property settlement to the court. After this time, ‘leave’ (i.e. permission) from the courts to apply for property orders may not be granted, or may nevertheless be costly and time-consuming to pursue. De facto couples have two years from the date of separation in which to apply to the court for property orders.

Where To From Here?

Our accredited family law specialist solicitors are available to assist in all matters pertaining to your property settlement and can advise as to the method that is most suited to your particular circumstances. If you would like to speak to one of our family law specialists and property settlement lawyers about any of your family law property matters, please contact us on 1300 635 529 or email [email protected] to arrange a free telephone consultation.

Property Division – The Details

The Family Law Act provides for property division for both formerly married couples, as well as de facto couples. There are two main goals when it comes to property division. First, this should be a step towards finalizing the economic relationship between the parties. This “clean break” principal is supported by the requirement that courts make orders that will end the financial relationship of the parties as far as practicable. Second, this process recognizes contributions to property, both financial and non-financial.

An action for property division must be brought timely. For instance, if you were formerly married you must bring any property proceedings within 12 months of when your divorce order became absolute. Alternatively, if you were in a de facto relationship, you must seek property division prior to two years after the end of the relationship

Broad Discretion

The court maintains broad discretion when it comes to making property orders. For instance, should the parties disagree as to the ownership of property, the court has the discretion to make a declaration regarding the property in question.

Even the language in the Family Law Act speaks to this notion that the court has an abundance of discretion; the exact language expresses that the court may make “such order as it considers appropriate.” This broad discretion is subject to seven restrictions/considerations the court must contemplate. These considerations listed below are enumerated in the

Family Law Act.

• the direct and indirect financial contributions of the parties
• the non-financial contributions of the parties
• contributions to the welfare of the family, including contributions as homemaker or parent
• the effect of any order on the parties’ income earning capacity
• the list of considerations in s 75(2) and 90SF(3) of the Family Law Act
• any other order made under the Family Law Act affecting a party or child of the marriage or de facto relationship
• any child support payable, or likely to be paid in the future

Finally, the last bit of guidance that the Family Law Act offers to the court, is that the court shall not make an order unless the circumstances indicate that it is both just and equitable to make the order.

Because the Family Law Act fails to provide strict guidelines with regard to property division, and the courts are given such broad discretion, the courts have adopted a four-step process to apply to property orders. First, the court must identify and value the property, then consider contributions of the parties, then consider the factors listed above, and finally consider whether the order is just and equitable.

Step One: Identify and Value Property

The court must identify and value a rather encompassing pool of property, which includes real property, assets, liabilities, financial resources, property presently possessed and property expected, as well as property disposed of. The court must also identify and value business interests, licenses, permits and professional qualifications, inheritances, insurance policies, among many other types of property. As you can see, the type of property is pretty much anything – the list is rather extensive.

Both the nature of the property as well as the value must be determined as of the date of the decision, rather than the date of separation or divorce. When determining the value of the property, the court will begin by considering the fair market value of the property. Fair market value generally refers to the amount that a willing (not anxious) purchaser who is adequately informed would pay a willing (not anxious) seller of the property. In some instances where there is a dispute as to the value of property, and the court cannot make a determination of the value, the court may order the property be sold.

Once the property has been identified and value, a simple formula is used to determine the net asset pool of the parties. The total assets minus the total liabilities will result in the net asset pool used by the court.

Step Two: Contributions

The court will consider financial contributions, non-financial contributions, contributions to the care and welfare of the family, and contributions in the capacity of homemaker or parent. Financial contributions are any monetary contribution related to acquisition, conservation, and improvement of the property and refers to contributions made before the marriage, during the marriage, and after separation. On the other hand, an example of a non-financial contribution would be where one party performs maintenance or renovations of any family asset.

Often, especially when considering long relationships, the court will make a determination that the parties contributed equally. However, each situation is unique, and may not call for a determination of equal contribution. The court can make necessary adjustments to account for your unique circumstances.

One situation that is given special attention with regard to contribution is violence. If violence during the marriage or relationship had an adverse impact on a party’s contributions to the marriage, the judge will consider this when assessing the respective contributions of the parties.

Step Three: Additional Factors

This step helps the courts in addressing the future needs of the parties. The court will consider all relevant factors, including but not limited to:

• the age and state of health of each party,
• the income, property and financial resources of each party and their physical and mental capacity for achieving gainful employment,
• responsibility for a child of the marriage who is less than18 years old,
• commitments necessary for a party to support themselves or to support any other person that the party has a duty towards,
• eligibility for a pension, allowance or benefit,
• the standard of living which is reasonable in the circumstances,
• whether the relationship has affected the earning capacity of a party and to what extent,
• if either party is living with someone else, the financial circumstances arising from cohabitating with another person,
• the terms of any Orders made in relation to the property of the parties and the terms of any binding financial agreement.

Step Four: “Just and Equitable” 

The last step in the property division scheme requires to court to ensure that the proposed order is both just and equitable. This step is intended to allow the court to take a step back from the proceedings, and a whole, determine if the order is appropriate. The order should only be finalised if it is fair for each party. What is fair for one couple may not be fair for another couple, and thus determining fairness is wholly dependent on the circumstances of each individual case.

Variations of Property Orders

Despite the objective of ending the economic ties between the parties, property orders may in fact be varied after they have been issued. Variations are only permissible under certain circumstances. The Family Law Act only allows for reconsideration of a property order where both parties have consented, or where one party makes an application and the court is satisfied that at least one of the following is applicable:

• there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, etc.
• circumstances have arisen since the order was made that has rendered it impracticable for all or part of the order to be carried out
• a person has defaulted in carrying out an obligation imposed by the order, and as a result it is just and equitable to vary or set aside the order
• circumstances have arisen since the order relating to a child or the marriage or relationship, and hardship will occur if the order is not set aside or varied
• a proceeds of crime order concerning property of the marriage or relationship, or such an order has been made against a party to the marriage or relationship.

Should you be in a situation where you anticipate property division, the best thing for you and your former partner to do is to work through steps one through four before bringing property proceedings. This will often help you avoid having to go through litigation to arrange for your property division.

Maintenance – The Basics

Maintenance – The Basics

Maintenance is available to those who were married, and also those who were part of a de facto couple. While there is no automatic right to maintenance, the court may choose to issue an order for maintenance if the facts indicate that it is proper. When faced with whether to issue an order for maintenance, the court will consider a myriad of factors, such as the ability of one party to pay, the standard of living of the spouses, the income capacity of the receiving spouse and whether it has been negatively impacted by the marriage, any child support being paid, and the health of the spouses.

When an order for maintenance is issued, it is intended to be temporary. The ultimate objective of maintenance is to help the financially disadvantaged party to reach a point of self-support. Most maintenance orders do not last more than three or four years, as the court ultimately wants all parties to reach a point of financial independence so the relationship can be finalised.

If certain specific circumstances have arisen since the order has been issued, the order may be varied. The court may only take this action, however, if one of the circumstances proscribed in the Family Law Act has occurred. An example of when an order for maintenance may be varied is where the cost of living has changed to justify a variation.

Orders for maintenance will terminate upon the occurrence of an event, for instance if either party dies or remarries. However, termination of an order does not affect your right to collect an arrearage.

Maintenance – The Details

Maintenance – The Details

When there is a disparity between parties’ income and earning capacity, the Family Law Act allows this disparity to be remedied through the something called “maintenance.” Typically, maintenance is only available for a short-term period – about three to four years. The idea behind only allowing a party to receive maintenance for a relatively brief period of time is that the maintenance payments are intended to compensate the recipient while that person takes steps to enter the workforce or re-establish him or herself.

Much like the approach to property division, the objective of maintenance is to work towards a “clean-break” between the parties. Maintenance is intended to be a temporary crutch to help the financially disadvantaged party get back on their feet and subsequently be able to independently support themselves.

An action for maintenance can be brought before divorce, after divorce (but within 12 months), even if the parties’ marriage is void, and after the breakdown of a de facto relationship. The two major limitations with regard to orders for maintenance are that you must get leave or court (special permission) to seek maintenance after 12 months of the divorce being final, and you cannot seek maintenance if there is a binding financial agreement that addresses maintenance.

Who Is Entitled to Maintenance?

The Family Law Act provides for three circumstances that warrant an order for maintenance for formerly married couples. Said circumstances are:

(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 adequate reason,

Additionally, the court must consider relevant factors in making this determination. Those factors include: the ability of one party to pay, the standard of living of the spouses, the income capacity of the receiving spouse and whether it has been negatively impacted by the marriage, any child support being paid, and the health of the spouses.

There is a similar provision regarding maintenance for de facto couples. While there is no automatic right to maintenance, one party may be liable to pay maintenance towards the other party to the extent that the party can reasonably do so and only in circumstances where the other party is unable to support himself or herself adequately. The test used by the courts is not whether the applicant is in need of maintenance, but rather if that person is in a position to support themselves with their own resources.

Types of Maintenance Orders

An order awarding maintenance can be made several ways; by consent, after a contested hearing or to meet urgent needs. The Family Law Act gives courts the authority to issue an urgent maintenance order without a detailed enquiry, which would normally be required upon application for maintenance. These cases are rare, and only exist where one party is in immediate need of financial assistance. These orders differ from regular maintenance orders and only last for a limited duration.

Another type of maintenance order is referred to as a secured maintenance order. This occurs where the court makes a requirement that a maintenance order be secured by some type of collateral. These orders minimise the risk of default, and also make the enforcement of a maintenance order easier.

Maintenance can be in the form of periodic payments, a lump sum, or use of the car or home. The modern trend is for maintenance to be issued in a lump sum amount. This is preferable because the objective of awarding maintenance is to provide the financially disadvantaged party temporary help to reach a level of self-support. Often, a lump sum works towards this objective better than periodic payments.

Varying and Terminating Maintenance Orders

Maintenance orders differ from other family law orders in that they may only be varied on limited grounds. In order to have the amount of a maintenance order increased or decreased, the following circumstances must have occurred since the order was made or last varied:

• the circumstances of a person who was benefiting from the order have changed
• the circumstances of the person liable to pay have changed
• the cost of living has changed to justify a variation
• the amount is not proper or adequate and the original order was made by consent
• material facts were withheld from the court or deemed false, and those facts affected the order issued by the court

While the court enjoys slightly more discretion when varying other orders in family law proceedings, it is clear that they may only vary maintenance orders for the reasons laid out above.

Once a maintenance order requiring the payment of a lump sum has been executed, and the money paid, that order can no longer be varied. Such orders are deemed to have completed and at that point cannot be altered.

An order for maintenance will terminate upon the happening of various events. It will terminate at a time prescribed in the order, when the order is discharged, when one of the parties dies, or when a party remarries. However, it is important to keep in mind that once a maintenance order terminates, your rights to collect arrears do not also terminate. If you are owed maintenance, you may still collect it despite the fact that the order is no longer in affect.

De Facto Relationships – The Details

In Australia, the law affords some protection to couples that have chosen not to get married, yet lead the life of a married couple, including same-sex relationships. Whether you chose not go get married out of convenience, or for religious reasons, you can take comfort in knowing that should you separate, you are entitled to similar protection under the law as if you were married.

It is worth noting that the rules regarding de facto relationships may vary slightly depending on the state or territory, so this article will focus on the federal law laid out in the Family Law Act of 1975.

A de facto relationship exists when two people are not legally married to each other, not related by family, and regarding the circumstances of their relationship, they carry on as a couple living together on a genuine domestic basis. In determining whether a de facto relationship exists, the court will look at a myriad of factors laid out in the Family Law Act, including:

• the duration of the relationship;
• the nature and extent of their common residence;
• whether a sexual relationship exists;
• the degree of financial dependence or interdependence, and any arrangements for financial support;
• the ownership, use and acquisition of their property;
• the degree of mutual commitment to a shared life;
• whether the relationship is or was registered under a prescribed law of a State or Territory as a prescribed kind of relationship;
• the care and support of children;
• the reputation and public aspects of the relationship.

In order to receive the benefits awarded to de facto relationships under The Family Law Act, the parties must have engaged in a de facto relationship for at least two years (except if there is a child of the relationship or one party made substantial financial contributions).

Recent Changes – Family Law Amendment Act 2008

The Family Law Amendment Act was given Royal Assent in November of 2008 and greatly impacts de facto couples. The amendment brought these relationships under the purview of the federal law and allows them to be treated the same as married couples. The major change brought about by the amendment is that the financial settlement regime was extended to both same sex and heterosexual de facto relationships.

The amendment allows parties to a de facto relationship to seek declaratory relief in relation to their relationship and property, seek maintenance orders, seek property adjustment orders, and the amendment allows de facto couples to enjoy superannuation splitting and financial agreements.

The amendment does not affect de facto couples whose date of separation came prior to March 1, 2009; those relationships are not subject to the laws of the federal system, and are limited to relief awarded under state and territory laws. The date of separation is the sole determining factor as to whether a de facto relationship is governed by state or federal law. Should your de facto relationship have ended prior to this 2009 date, there is one way you may still have access to the federal law. If you and your partner make an unconditional choice to opt in to the federal legislation, and you satisfy the following elements, your separation can fall under the purview of the federal law.

1. There must be no current order about property or maintenance.
2. There must be no agreement between the parties enforceable under the state law in existence.
3. The parties must consent in writing.
4. The parties must have received independent legal advice as to the advantages and disadvantages of making the choice.
5. The parties must have received a signed statement confirming the advice from their lawyer.

Generally, this exception is no longer applicable because The Family Law Act has placed a two-year limitation on the institution of matrimonial causes. So, had your de facto relationship ended before March 1, 2009, but no legal action was filed within two years then you would not be eligible for any relief.

Each of the following subsections highlights the relief available to de facto couples thanks to this 2008 amendment.

De Facto Relationships and Property Settlement

The Family Law Act makes little difference between property settlement amongst formerly married couples, and those who were in a de facto relationship. For all intents and purposes, the courts are to treat property settlement issues for married and de facto couples the same, and the language under the Family Law Act is nearly identical.

For an in depth analysis regarding property division, please see the articles in our property settlement centre. With regard to property settlement issues, just know that there is no real distinction between the way the law treats married couples and those who were in de facto relationships. The way that creditors, bankruptcy trustees, and property orders are treated is practically identical.

De Facto Relationships and Maintenance

Similar to property settlement issues, the way in which de facto relationships are treated with regard to maintenance is identical to the way in which married couples are treated. There are provisions in the Family Law Act that discuss the right to maintenance, power to order maintenance, factors to look at, urgent maintenance, and modification of orders that are almost verbatim for both married and de facto couples. You can find an analysis of all of the rules regarding maintenance in our maintenance center.

De Facto Relationships and Financial Agreements

As you may have guessed, the provisions of the Family Law Act that discuss financial arrangements for married couples is largely the same as the provisions that apply to de facto couples. Parties to a de facto relationship are permitted to enter into financial agreements; the only major distinction being that the agreement will be no longer be binding if a de facto couple later marries. Again, for a more detailed look at the law surrounding financial agreements, please see our property center.

De Facto Relationships and Superannuation

Superannuation splitting is available to de facto couples to the same extent that it is available to married couples. The only noteworthy distinction is that there are more complex provisions regarding the separation declaration for de facto couples than there are for married couples.

As you can see, thanks to the 2008 amendment, if you are involved in a legally recognised de facto relationship, and you subsequently separate, you are entitled to nearly the same relief you would be entitled to had you and your partner married.

De Facto Relationships – The Basics

A de facto relationship exists where two people, who are neither married nor related to each other, live together on a genuine domestic basis and includes same-sex relationships.

In determining whether a de facto relationship truly exists, the court will consider several factors, including but not limited to: the duration of the relationship, whether a sexual relationship exists, the degree of financial support, and your reputation and public aspects of your relationship. If you have engaged in a de facto relationship for at least two years, you are entitled to similar relief upon separation that you would be entitled to if you had chosen to marry.

In 2008 major changes were made with regard to the way the law treats de facto couples that subsequently separate. Now, de facto relationships fall under the purview of the federal law and are discussed in The Family Law Act of 1975. The 2008 amendment basically allowed for de facto couples to be entitled to nearly identical relief as married couples in terms of property settlement, maintenance, and financial agreements.

The bottom line is that the law awards some protection for de facto couples even though you and your partner chose not to get married. If you were party to a de facto relationship and have since separated, be sure to contact your lawyer and learn about the types of relief that are available to you.

Maintenance in Same Sex Relationships

Partners in a same sex couples can now be compelled to pay maintenance to the other partner after separation under the same provisions that apply to separated married couples.

One difference for same sex couple maintenance order is that it will automatically end if the party receiving maintenance marries. In the case of the receiving party entering into a de facto relationship, the paying party can apply to have the order set aside.

Same sex de facto relationships

The laws relating to property settlement at the end of a same sex de facto relationship have recently changed. For relationships that have broken down since 1 March 2009, the Court now deals with all of the legal aspects of the separation, including any parenting agreement, property settlement and maintenance. As a result, parties to relationships that have broken down after 1 March 2009 may have more extensive entitlements than they would have had under state law.

The lawyers at Mathews Family Law & Mediation Specialists Melbourne understand the difficulties involved and the unique nature of individual relationships. We have extensive experience negotiating property settlements for couples who have a substantial asset pool, such as a major property/share portfolio or a family business. The process of a breakdown in a de facto relationship can be just as complex as divorce. We understand both the emotional and the commercial implications of splitting assets. We are committed to ensuring a fair settlement is achieved as quickly as possible, we aim to reduce the time taken and therefore the cost to you.

In addition to helping couples after a relationship breakdown, we can also provide advice to clients who may be considering entering into a de facto relationship and want to protect their assets and financial independence.

If you have recently ended a same sex couple relationship, or are considering entering into a same sex couple relationship and would like to know how these changes affect you, Mathews Family Law & Mediation Specialists is a leading family law firm in Australia, please contact us on +61 3 9804 7991 to speak with a family lawyer from our law firm today. You can also send through your enquiry online now and we will contact you shortly.

Binding Financial Agreements between de facto partners

Parties to a de facto relationship can make binding financial agreements. A financial agreement can be made either before the relationship begins (often known as a ‘pre-nup’), at any time during the relationship or on separation. The agreement can cover matters such as:

• responsibility for expenses,
• classification of property owned by the parties as either joint or individual property,
• the categorization of property acquired during the relationship as either joint or individual,
• responsibility for debts and
• the division of property and maintenance if the couple  separates.

If you have come to an agreement without legal advice, you should obtain advice before you sign anything. Mathews Family Law & Mediation Specialists can provide you with the advice needed to make an informed decision before you enter into a binding financial agreement. We can also assist by drafting the agreement for you to ensure that it covers all the legal requirements that you may not have thought of.

Mathews Family Law is a leading family law firm in Australia. Please contact us on 1300 635 529 to speak with our specialist family law lawyers and divorce lawyers today. You can also send through your enquiry online now and one of our family law attorneys will be in touch to discuss your property settlement matter or binding financial agreement matter.