Spousal Maintenance in Binding Financial Agreement

17 January 2023

The main purpose of a Binding Financial Agreement is to set out the legally binding terms of division of assets, debts and superannuation of a couple who has separated.

In effect, via a Binding Financial Agreement, parties ‘contract out’ of their right to have a Judge determine how their property pool is divided, and instead abide by the terms of division set out in the Binding Financial Agreement itself.

A Binding Financial Agreement can also however deal with ‘spousal maintenance’.

‘Spousal maintenance’ is the payment / asset transfer / indemnity provided by one spouse to the other. Such is often warranted where one spouse could not maintain themselves without a Centrelink benefit.

As the recent case of Ellerton & Jennings [2021] FedCFamC1A 39 (22 October 2021) (“Ellerton“) demonstrates, special care must be taken when incorporating spousal maintenance terms into a Binding Financial Agreement.

The essence of Ellerton is that spousal maintenance terms in a Binding Financial Agreement are void where, when the Binding Financial Agreement came into effect, one of the parties was unable to maintain themselves without a Centrelink benefit.

This is an example of just one of the many traps that may be encountered in family law matters.

For such traps to be avoided, it is crucial that an experienced family law is retained.