Child Support Arrangements & Agreements
What is Child Support and what does it cover?
All parents have a responsibility to adequately and properly financially support their child/ren until they attain the age of 18 years.
Both the Family Court and government agencies consider such expenses to include housing, food, clothing and costs related to their child/ren’s education. These are the costs that parents should cover to assist child/ren in reaching their full potential.
This obligation continues after separation, and the payment paid by one parent to another is referred to as “child support” or “child maintenance”. This is an ongoing, periodic payment made by one or both parents for the financial benefit of a child/ren following the end of a marriage or relationship.
Different Types of Child Support Arrangements
There are three types of Child Support arrangements:
1. Child support as assessed under the administrative process by the Child Support Agency
2. Binding Child Support Agreements
3. Limited Child Support Agreements
Child Support assessed by the Child Support Agency
The Child Support Agency exists to assess the amount payable by one parent to another, for the purpose of child support. Separated couples will often rely upon the Child Support Agency (“the Agency”) to determine the precise sum payable.
How much Child Support will I pay?
The Agency will take into account matters such as the personal income of each party, the percentage of care each party has for the child/ren, and whether there are any other child/ren to third parties for whom the payer is responsible.
The Agency website has an online calculator which will accurately assess the child support payable “to the cent”, as long as the correct information is provided.
Private Child Support Agreements
Although parties can have an assessment undertaken by the Agency, they may choose to enter into a private agreement with the other party. These private agreements are essentially enforceable contracts between the parents that define the terms of one parent’s liability to the other.
There are two kinds of private agreement: a Binding Child Support Agreement and a Limited Child Support Agreement.
Why Choose a Private Agreement?
The Child Support Agency’s formula ascertains the reasonable costs for the child/ren as determined by the relevant legislation. The formula takes into account basic costs such as food, housing, clothing and the costs of public education.
Extra-curricular activities and private schooling are not included in the formula. Not only can private agreements cover such matters, but these can continue in force until the child/ren finish(es) their tertiary studies or apprenticeships, whereas the Child Support Agency payments cease upon the child/ren attaining the age of 18.
Private agreements offer parties greater flexibility, for example, by allowing payments for specific items such as private school fees, sporting costs and mobile phone bills.
Therefore, for some parents where the Agency’s assessment does not adequately provide for the child/ren’s financial needs, parents can agree to draw up their own private agreement, allowing parties to tailor their agreement to their specific financial circumstances.
These agreements can be complex documents, and to ensure they are legally enforceable, it is strongly recommended that such agreement(s) are drawn up by an experienced Family Lawyer.
Binding Child Support Agreements
Binding Child Support Agreements are, in essence, contracts entered into between two parents which stipulate the amount and duration of support to be paid. This type of agreement is legally binding on both parents and generally continues until the youngest child turns 18 or finishes full-time education. Parties do not need to undertake a child support assessment to enter into this kind of agreement.
Despite the agreement’s binding nature, a Binding Child Support Agreement can equally provide flexibility or creativity by allowing support to be provided in a variety of different ways, such as non-monetarily payments through the provision of goods or services to a child/ren (for example, the provision of a pre-paid mobile phone).
A Binding Child Support Agreement can also make provision for lump-sum payment(s) (such as cash or property transfer) that can be credited to the agreed child support amount due to the other parent. These types of agreements are precisely what they are defined as – “binding” and can only be terminated by the creation of a new Binding Child Support Agreement, a Termination Agreement, or by Court Order.
This type of agreement can also be terminated if provision is made within the terms of the agreement itself for a specific terminating event, such as the child/ren choosing to live with the other parent.
As a pre-requisite for entering a Binding Child Support Agreement, each of the parties must have obtained their own independent legal advice in relation to the nature and effect of the agreement, and a Certificate to that effect has to be attached to the Agreement.
Limited Child Support Agreements
A Limited Child Support Agreement, on the other hand, is much less formal in nature. Unlike the requirements for a Binding Child Support Agreement, a Limited Child Support Agreement can be entered into without the parties having to first obtain independent legal advice.
However, this kind of agreement must likewise be drafted correctly, or it will not enforceable. The agreement must be in writing, signed by both parties and enforceable for a limited time as it cannot exceed a three-year period.
This type of agreement must be registered by the Child Support Agency Registrar and before it can be registered, an administrative assessment of child support must be in place. This type of agreement is not enforceable until it has been registered and, thereafter, it cannot be subsequently varied.
A Limited Child Support Agreement cannot include lump-sum payments, unlike Binding Child Support Agreements. Further, the amount payable under such an agreement must be equal to or greater than the rate of child support as assessed by the Agency.
Parties may opt for a Limited Child Support Agreement for a specified period to cover limited expenses, such as private school fees, extra-curricular expenses or other allowances that are not included or covered under the standard Agency assessment.
Although such agreements are effective, they can be far more easily overturned or terminated when compared to a Binding Child Support Agreement.
Limited Child Support Agreements can be terminated by:
- either party in writing to the Registrar after the expiry of a three-year period;
- by subsequent agreement; or
- by written notice to the Registrar within 60 days of receiving notice from the Agency that the assessable amount of child support has changed by more than 15% .
When choosing the right agreement tailored to the needs of an individual family’s circumstances, it is imperative that both parties are fully informed of their rights and obligations.
Further, parents must be mindful of the impact any agreements may have upon the primary carer’s Family Tax or other Centrelink benefits. Although a Limited Child Support Agreement does not require independent legal advice, it is essential parties do not enter into contracts they either do not understand or are otherwise pressured into signing.
Agreements, whether binding or limited, can be set aside in circumstances of fraud, non-disclosure, and conduct which would make it unjust not to set them aside, such as undue influence, duress or unconscionable conduct.
When these agreements are drafted properly they are both enforceable and effective in providing parties with security in knowing their child/ren’s financial needs will be adequately covered.
For advice on Child Support Agreements or any other child support or Family Law issue, fill out the enquiry form below or call DS Family Law on (08) 9486 1766 for an initial consultation
The above information is general in nature and is not specific advice for your situation. If you have questions about how the information contained in this article may apply to your situation, you must seek independent legal advice.
Let’s meet, and figure it out
For practical advice about what you should do next, please call to arrange a no-obligation initial consultation.