Children’s education fund accessed for ex-wife’s self-support

When a couple separates, the financial resources that used to be available for the benefit of both parties now need to be stretched to provide for separate living expenses. The issue of spousal maintenance comes into play when one party is in a weaker financial position through unemployment or caring for children. In these circumstances, it is common that the court makes extra provisions for the personal maintenance of that spouse.

In many cases, a pool of money may have been set aside for the couple’s children, but now it is evident that even this money can be included in the pool of funds accessed for spousal maintenance.

The recent case of Padnall [2014] FamCAFA 145, where the couple had saved a sum of $87,000 in an account they had agreed was to be used for the tertiary education expenses of their children, found that any plans made for particular funds during a relationship may be dissolved upon separation.

The wife made a claim against the husband for spousal maintenance and the husband claimed that those education funds should be made available for her living expenses.

The threshold for spousal maintenance

• Any court order is based on financial need, in addition to the other person’s capacity to pay
• There is a long-held precedent that a person is not required to use up all of their savings on their self-support in order to make a spousal maintenance claim

The trial judge found that as a result of the wife’s responsibility to care for the three children of the marriage, she had a need for spousal maintenance of $1462 per week to support herself and the children, excluding her savings account holding the $87,000, and made that order.

On appeal in the Full Court, Justice Strickland commented that there was no basis to disregard those savings:

“… There is no dispute … that the intention was to use the money in this account to meet the costs of the children’s tertiary education, but that was when the parties were together. The circumstances have altered with the separation, and in the context of the wife seeking spousal maintenance from the husband, alleging that she cannot support herself adequately, it is not open to the court to disregard these funds. It is also inequitable to do so, given that once the enquiry turns to the husband’s financial circumstances, it is his income, his assets, and his resources that are required to be taken into account.”

Judge Strickland concluded that the trial judge made an error in disregarding the $87,000 savings from the wife’s funds for self-support and sent the matter back to a different judge in the lower court for re-hearing on the application.

Streeterlaw Family Law Accredited Specialist Simone Green said: “Spousal maintenance is a complicated issue as individual circumstances vary enormously, so it is advisable to seek expert advice when considering your financial options after separating.”

For further information or advice, please contact the Family Law experts at Streeterlaw on 8197 0105 or email advice@streeterlaw.com.au.