Married couples, and now de facto couples, have a legal obligation under the Family Law Act to provide financial support to one another. If that financial support is not forthcoming, then either party to a marriage or de facto relationship is entitled to apply to a Court for orders that the other party pay maintenance to them.
Usually, a Court will not make orders for spousal/de facto maintenance unless the parties have separated, or otherwise there is some very good reason why it ought to. In any event, there are two general requirements in order to succeed in a claim for maintenance. The first of which is for the Applicant to establish a need. This is done by demonstrating that the Applicant’s income, having regard to their property and whether they are working to their capacity, is exceeded by their reasonable weekly expenses. If for instance a party makes him or herself unemployed, or is not working to capacity, then this can cause problems establishing the need component.
The second aspect that an Applicant must demonstrate is that the other party has the capacity to pay maintenance.
Establishing need and capacity is done through each party preparing a Financial Statement form, which is a prescribed form in Family Court proceedings. A Financial Statement sets out the average weekly income, average weekly expenses, assets, liabilities, financial resources and superannuation of each party.
Apart from filing Financial Statements in Court proceedings, each party then has an obligation to verify their financial circumstances.
The question often arises that if a claim for spousal/de facto maintenance can be established, how will it be paid? A Court can order maintenance to be paid periodically. If it does so, it is most commonly for a defined period of time to allow a party to retrain and re-establish him/herself in the workforce. The alternative is for maintenance to be paid by way of a lump sum. This is often tied up with a property settlement whereby a party may receive a greater proportion of the net assets than they would otherwise be entitled to receive.
If a Court decides to order maintenance be paid on a periodic basis it will calculate the need of the Applicant, and then look to the other party’s capacity. The quantum of what it is paid may be limited to the paying party’s excess income over weekly expenses.
If a Court is contemplating financial support to be received by way of a lump sum then a number of different approaches can be taken, depending upon what net assets are available for division between the parties. One approach might be to quantify the weekly need of the Applicant and then work out what this represents over a period of a few years, and then give that party an additional lump sum out of the net assets in that amount. In the alternative, it may be appropriate to take a general approach and determine that the party in need of support receive an arbitrarily assessed additional percentage of the net assets taking into account their apparent need.
Craddock Murray Neumann has a specialised Family Law section with two Accredited Specialists in Family Law, one a former Registrar of the Family Court of Australia. For assistance telephone Dominic Wilson (02) 8268 4000.