By Lawyer, Shannon Jenkin

The cost of living has increased due to inflation in recent years, which has had a major impact on many parts of life, including the financial responsibilities arising following divorce or separation. In the context of, spousal maintenance is one area that is still heavily impacted, inflationary pressures can make an already complex process more complicated.

Spousal Maintenance: What is it?

After a divorce, one partner may continue to assist their former spouse financially by way of paying spousal maintenance. In Australia, the Family Law Act 1975 (Cth) governs this. Section 72 of the Act for married couples, or Section 90SE for de facto couples, provides that if a former spouse is unable to reasonable support themselves for a variety of reasons, the former spouse may be required to provide for them.

When determining the quantum and length of spousal maintenance payments, the Court will consider:

• The age and health of each party.
• Their sources of income, assets, and financial resources.
• Their ability to work.
• The standard of living that is reasonable in the circumstances.
• Whether the marriage has affected a party’s ability to earn an income.
• Any financial responsibilities to support children or others.

Spousal maintenance may be payable as a periodic amount, or by way of payment of specific expenses (for example mortgage repayments, rent, utilities).

How Inflation Affects Spousal Maintenance

Inflation affects spousal maintenance in two main ways: first, by raising the cost of living; second, by changing the value of the payments. As essential goods and services become more expensive, a fixed maintenance amount that was once sufficient may no longer be adequate to meet the recipient’s needs. For example, increased costs of housing, utilities, and groceries costs can make a fixed maintenance amount inadequate. Similarly, a prior agreement to pay such expenses, may no longer be sustainable.

Addressing Inflation

Anticipating the impact of inflation before finalising any agreement is important. One effective strategy for a payee of spouse maintenance is to link periodic maintenance payments, or those for a specific sum payable over time, to the Consumer Price Index (CPI). By adjusting payments in accordance with inflation, it makes sure that the value of maintenance reflects the ever-increasing living costs. Including a CPI indexing provision in your agreement will ensure that the payments automatically adjust based on changes in the CPI. This helps maintain the recipient’s standard of living, despite economic fluctuations. By incorporating CPI indexing and taking protective measures, individuals can ensure that maintenance remains fair and adequate over time.

Adjusting Spousal Maintenance

If a maintenance order has already been made, in some cases, it may be necessary to seek a variation to reflect current economic climate. This may be done so under Section 83 for married couples, or Section 90SI for de facto couples, of the Family Law Act, which allows either party to request a change to the maintenance order if there has been a significant change in circumstances. Inflation and rising living costs may constitute such a change for either the payer or the payee.

Understanding the legal options available to you and planning accordingly can help both payers and recipients manage spousal maintenance effectively. If you have any legal questions about spousal maintenance, please get in contact with our team of experienced lawyers who can assist or point you in the right direction.