Traps when providing for spousal maintenance in financial agreements
Published September 2010
When a court makes an order for spousal maintenance pursuant to section 74 of the Family Law Act 1975, there are statutorily prescribed events which terminate or modify the order. These are:-
- When a party dies – section 82(1) and (2);
- Remarriage of the payee – section 82(4); and
- Further order modifying the previous order – section 83.
None of those statutorily prescribed terminating or modifying events apply to maintenance prescribed by agreement. There are, of course, provisions in the Family Law Act 1975 that apply to maintenance in agreements. These are:-
- Prohibition on payment of maintenance by third parties – section 90BB;
- Inclusion of such provisions – sections 90B, 90C and 90D;
- The court’s jurisdiction to make orders with respect to maintenance notwithstanding any agreement – section 90F.
Further, the only statutorily prescribed event for the termination of maintenance pursuant to agreement is section 90J. That section provides the mechanism by which parties terminate financial agreements as a whole. The court, of course, may set aside a non-compliant or otherwise impugned agreement – sections 90K and 90KA – however there are no “automatic” terminating events.
In fact, section 90H makes it clear that an agreement subsists, notwithstanding the death of a party to it.
It follows that if an agreement is silent as to a terminating event with respect to maintenance, no termination applies. A payee may remarry, or even die, and the maintenance provisions will continue to remain binding on parties (or their legal representatives).** It is therefore crucial, when drafting agreements which contain ongoing maintenance provisions, to consider any agreed terminating event, and ensure the agreement expressly stipulates this.
** There is some debate about whether the cessation of spousal maintenance payments upon the death of the payee – such person clearly no longer requiring maintenance – could be construed as an implied term of the agreement. The better view, in our opinion, is that reliance on implied terms, as in the general law, is very risky.
For further information on this topic, please contact our Family Law team.