When parents separate, there are a number of options to consider when arranging the financial support of the children. As experienced family lawyers, we often see that the payment of child support and the financial support of children can be a source of disputes between separated couples that derail otherwise workable post-separation arrangements. You should consider getting advice about and then discussing entering into a child support agreement with your former spouse as one method of clearly setting out the financial arrangements to support children. This is particularly important in circumstances where children may have many (costly) extracurricular activities and may have ongoing health issues that require regular treatments that may or may not be covered by private health insurance or they are enrolled in private schools.
Negotiating a property settlement is often the ideal time to be having a structured conversation around what our clients are going to do, or are wanting to do, about financially supporting their children going forward. It is important to consider what arrangements for children should continue post-separation and income disparity exists between the children’s parents.
In this article, we look at what Child Support Agreements are, how a Child Support Agreement works and what you should do before deciding on your child support arrangement.
Can you have a Child Support Agreement?
Child Support Agreements are an option available to parents any time after separation. They are not compulsory and each family situation is different. There are two different types of Agreements, Binding and Non-Binding (limited). They are different to Child Support Assessments.
Child Support Assessments are calculated and issued via the Child Support Agency, based on each parents’ percentage of care of the children and their income. A Child support assessment is not intended to extend to the payment of extra expenses such as private school fees and extraordinary health costs (dental treatment such as braces and the like) and the payments can be collected via the Child Support Agency or voluntarily. In some circumstances, the payments are actually garnished from a wage or salary of the payer but usually when there are issues with compliance with the actual assessment. A child support assessment sets out the periodic amounts that one parent is assessed to pay the other parent by way of regular amounts, usually calculated on a fortnightly, monthly and annual basis.
How do Binding Child Support Agreements work in Australia?
Child Support Arrangements are not a one-size-fits-all solution. They are tailored to the individual financial circumstances of the children and the parents.
Both parents are required to obtain independent legal advice before entering into and signing the Binding Child Support Agreement. It must be approved by the Registrar of the Child Support Agency and it is then registered with the Child Support Agency. They are enforceable by the Federal Circuit Family Court of Australia and can only be set aside by the Court or by the parents agreeing to enter into a Termination Agreement.
A Binding Child Support Agreement may have the effect of replacing a child support assessment for the payment of periodic (regular) child support and deal with the allocation and payment (as between the parents) of non-periodic payments such as school fees, the cost of medical treatment and extracurricular activities.
For example, Parent A may agree to pay 50% of the school fees, 50% of medical and dental expenses as well as the children’s private health cover. Parent B will agree to pay the rest. In addition, Parent A may also agree to pay a sum of money to Parent B on a regularised basis as periodic child support. The method and timing of the payment of expenses from one parent to the other can also be set out in the Agreement for absolute clarity.
A Binding Child Support Agreement may be time-limited, for example, it may be in force until the youngest child turns 18 years of age or it may only be in force for a specified period, such as five years. Careful consideration needs to be given to how long the Agreement will be in force and what events (if any) might cause the Agreement to be suspended, for example where the party shouldering the greater financial responsibility for the support of the children loses their job.
A Limited Child Support Agreement does not require the parties to obtain independent legal advice before entering into the Agreement but it is wise to do so. An administrative assessment must be in place for a Limited Child Support Agreement to be enforceable and the child support provided for under the Agreement must be at least the annual rate of the assessed amount payable. If one party wants to provide “in kind” payments of child support to the other under the Agreement, they will need to be specifically considered by the Child Support Registrar.
The financial stability of the two family units moving forward can be greatly affected by how the financial support of the children is managed, especially if one household has far greater financial resources than the other.
What should you do before deciding on your Child Support Arrangement?
While it is important to get the financial support of the children sorted and agreed upon, it is imperative that you seek legal advice before entering into any agreement.
Before deciding on what Child Support Agreement to go with, take the time to thoroughly consider your individual circumstances.
- Does your child have additional needs that will not be met by the Child Support Assessment?
- How old are your children?
- How has your income been affected by the separation?
- Are you living just as comfortably as you were before the separation, or is it likely that there will have to be sacrifices made?
Plus, you need to be aware that Centrelink has its own requirements about receiving Child Support. So if you are a parent in receipt of a Centrelink benefit, you need to consider if the arrangement you decide on will have an impact on your Centrelink entitlements and your obligation to seek and obtain Child Support.
Investing in an experienced family lawyer at the start of this process will help you understand how the process works in relation to your circumstances and will take some stress off your shoulders. We will be able to give you advice specific to your individual circumstances. There is a lot to consider when it comes to making these decisions and poor-decision making can have long-lasting impacts on all involved.
DDCS Lawyers specialise in all aspects of family law and can help guide you through the child support and property settlement processes. If you need assistance, contact our team on (02) 6212 7600 to book a consultation.