Take Control of Child Support
Child support can be defined as: ongoing financial assistance made by one parent to the other to assist with the costs of raising the children of the former relationship.
Parties will often rely upon the Child Support Agency to make “administrative assessment” of the parties’ incomes in order to determine the precise sum payable. In doing so, the Child Support Agency will take into account matters such as the personal income of each party, the percentage of care each party has for the children, and whether there are any other children to third parties’ for him the payer is responsible.
The majority of post-separation parents will usually be content to make their child support payments in accordance with the assessment formula.
Child Support Agreements versus Administrative Assessments
Some parents would prefer to exclude the involvement of the Child Support Agency and to make their own private arrangements instead, such agreements are known as either Limited Child Support Agreements or Binding Child Support Agreements.
These agreements have the effect of excluding the Child Support Agency from the Child Support Assessment process altogether. The personal circumstances of the parties’ and the means by which they mean to support the children will largely dictate whether a Limited or Binding Child Support Agreement is appropriate.
Binding Child Support Agreements
Binding Child Support Agreements are, in effect, contracts entered into between two parents which stipulate how much child support will be paid and for how long. These agreements may also dictate how the support is made available. This type of agreement is legally binding on both parents’ and usually (but not always) lasts until the youngest child turns 18 or finishes full-time education.
Payments made pursuant to a Binding Child Support Agreement can be either more or less than the Child Support Agency assessed figure. Despite its binding nature, such an agreement can also provide flexibility and allow support to be paid in a variety of different ways, including support by “non-cash” payments, e.g. the provision of goods and services to a child.
For example, some parents may choose to have the non-custodial parent take responsibility for payment of child care or school fees in place of regular monetary payments. Payment could also be, e.g. for the purchase of a mobile phone for a teenage child and payment of the monthly fees. It could also include payment for the custodial parent’s petrol in driving the children to and from school/extra-curricular activities. Entering into a Binding Child Support Agreement provides the parties’ with a great deal of flexibility in making financial arrangements.
Great care needs to be taken before entering into an agreement of this type. They are precisely what they claim to be – binding – and they can only be terminated by the creation of a new Binding Child Support Agreement, a Terminating Agreement, or by Court Order. The agreement can also be terminated if provision is made within the agreement itself for a specific terminating event, e.g. the Mother’s re-marriage or the children choosing to live with the other parent.
Limited Child Support Agreement
A Limited Child Support Agreement is much less formal in nature than a Binding Child Support Agreement. Unlike the requirements for a Binding Child Support Agreement, a Limited Child Support Agreement can be made without the parties having to obtain independent legal advice. The sum payable under such agreement must also be equal to or more than the annual rate of child support as assessed by the Child Support Agency. The agreement will not take effect unless and until it is registered by the Child Support Registrar; it can be terminated by either party after the expiry of three years from the date of execution.
Matters to consider
For a Binding Child Support Agreement to be binding, Section 80c of the Child Support Assessment Act 1989 (Cth) provides that both parties must receive independent legal advice before entering into such agreement.
Each party’s solicitor must provide a certificate to the effect that such advice had been given, and this certificate is annexed to the agreement itself. This procedure makes sure each party has received independent advice as to the nature and effect of the agreement and the effect it would have on their rights. Advice is also given as to the advantages and disadvantages, at the time the advice was provided to the party, of making the agreement, it is often the case that Binding Child Support Agreements are registered both with the Family Court and with the Child Support Agency.
Before a Binding Child Support Agreement will be accepted by Centrelink, the parties must have sought a Child Support Assessment from the CSA. Notwithstanding the parties can agree on an amount that may be less than the assessed amount, Centrelink will, for the purposes of family tax benefit payments, use the assessed rate when calculating parties eligibility for family tax benefit payments.
Many separated parents find dealing with the Child Support Agency to be a cumbersome and difficult process. The assessment process detracts from the parties’ ability to make their own arrangements, which makes them and the children much better. If you require further advice or information concerning Limited or Binding Child Support Agreements, please contact DS Family Law for an initial consultation.
For further advice regarding this or any other parenting issue call DS Family Law on 08 9486 1766 or visit our Child Support information page.
The above information is general in nature and is not specific advice for your situation. If you have questions about how the information contained this article may apply to your situation, you must seek independent legal advice.