In the eyes of the law, a de facto relationship has many of the characteristics of a marriage and a person may be ordered by a court to provide ongoing financial support, or “maintenance”, to his or her spouse regardless of whether the couple was married or lived together in a de facto relationship. As such, de facto partners would be wise to consider in advance how they may like to distribute or protect their property and financial assets should their relationship break down.
How does the Court determine Maintenance Orders?
Broadly speaking, the Court will consider a request for a Maintenance Order by judging one party’s ‘need’ for maintenance, and the other party’s capacity to pay the maintenance.
Firstly, the Court considers whether the person seeking a Maintenance Order is genuinely unable to adequately financially support themself. That person must be able to prove that they are seeking maintenance for what the Court considers “an adequate reason”, for example, having to care for a child or being unable to work due to age or health.
Secondly, the Court must be convinced that the person being asked to pay maintenance has the capacity to do so, after taking into account that person’s own reasonable living expenses and (in some circumstances) those of others, such as their new partner or children.
The Court will also inquire about other matters, such as each party’s financial and employment prospects going forward. In the event that either party has re-partnered following their separation and is living with their new partner, the Court will also take into account that new partner’s income and living expenses.
Finally, in making a Maintenance Order, the Court will consider what kind of maintenance should be provided. Types of maintenance include periodic (ongoing) payments, periodic payments until a specified date or event, or even lump sum payments in the form of cash or non-cash assets. Maintenance Orders can be made on either an interim or a final basis.
Forward thinking: settling maintenance issues up front
Maintenance Orders have the potential to bind a former couple for many years, and it is becoming increasingly common for de facto couples to create a binding agreement that states how their property and finances would be divided if they were to separate. These agreements are known as financial agreements and they are legally binding on both parties if they are properly prepared. Financial agreements can be created before or after a couple has started living together.