02 Apr Potential Claims After A Property Settlement
Whilst a property settlement severs the financial ties between you and your former spouse, there are two possible claims that may be made by your former spouse even after a property settlement. These are:-
- Spousal Maintenance; and
- Making a claim on your estate in the event that you predecease them.
SPOUSAL MAINTENANCE
Spousal maintenance is a legal obligation that can be imposed on one spouse or de facto partner to provide financial support to their former partner after the breakdown of a marriage or de facto relationship.
Spousal maintenance is separate from property settlement, which refers to the division of property and assets between former spouses or partners. Spousal maintenance aims to provide ongoing financial support to a former spouse or partner who cannot meet their reasonable expenses from their own income or resources.
Under the Family Law Act, Spousal Maintenance is assessed on two limbs, whether one party has a need for Spousal Maintenance and whether the other party has the capacity to pay Spousal Maintenance.
The only way a party can contract out of future liability for spousal maintenance is to enter into a Binding Financial Agreement. If spousal maintenance is a real issue when negotiating consent orders one option available to the parties is to exclude spousal maintenance by entering into a Binding Financial Agreement in conjunction with the consent orders.
DECEASED ESTATE
Section 57(1)(d) of the Succession Act 2006 (NSW) provides that a former spouse of a deceased person can make a family provision claim against the deceased’s estate regardless of the written intentions in the deceased’s Will. While a former spouse is eligible to make a claim this fact alone is not sufficient for him or her to be successful.
In relation to former spouses, the Court must first determine whether in its opinion having regard to all of the circumstances of the case (whether past or present) there are factors which warrant the making of the application. This issue is determined on the whole of the available evidence. The whole of the evidence includes the making or otherwise of orders altering property interests in the Federal Circuit and Family Court of Australia (“FCFCOA”). Whilst the existence of a property settlement will usually preclude a former spouse from successfully claiming further provision this is not conclusive. An application may be entertained if there has been a material change in circumstances since the FCFCOA property order was made.
Under the Succession Act (2006) (NSW), a person may release his or her right to make a claim for provision from a deceased estate. A release is not binding unless it is approved by the Court.
In order to entirely preclude your former spouse or de facto partner from making a claim for provision under your will when you die, you and your former spouse/de facto can enter into a mutual deed of release in which you each promise not to bring such a claim against the other’s Estate. In order for a mutual deed of release to be legally enforceable, an application must be brought in the Supreme Court of NSW for the mutual promises in the deed of release to be approved of and upheld by the Court. It is important to note that the mutual deed of release signed by the parties is not binding on the Supreme Court until it has been approved of by it.
A mutual deed of release is not suitable for every separating couple. It is generally only suitable for couples who have finalised their property settlement after separation and are able to be entirely financially independent of the other in the future. If you or your spouse remain financially dependent after separation, for example relying on ongoing spousal support, then a mutual deed of release will generally not be suitable.
To discuss how best to protect your assets both now and in the future, speak with one of Solari and Stock’s experienced Family Law Solicitors. Call us on 02 8525 2700 or click here to request an appointment online.
Article by Nikita Ward
Photo by Towfiqu barbhuiya on Unsplash