When a separated couple has children, one parent will usually be required to pay the other parent child support. While this amount can be determined by a specific calculation, a separated couple may instead opt for a binding child support agreement.
How child support works
When going through the child support process there are alternative child support options:
- pay child support as assessed by Services Australia; or
- Parents can agree between themselves as to what their arrangements are, which can only to work if there is sufficient trust between parents; or
- enter into a limited child support agreement, which is in place for up to three years. This type of agreement requires you to pay at or above the amount of child support assessed by Services Australia.
- obtain child support departure orders from the court, which provides that someone should be paying more or less than the child support assessed amount. There must be a child support assessment already in place and there are criteria that you must satisfy before the court will make a child support departure order. .
When are Binding Child Support Agreements made?
Generally speaking, binding child support agreements are discussed when you are working out your property settlement and parenting arrangements.
Entering into a binding child support agreement gives parents certainty about what financial assistance will be in place for the children in future and helps them plan their financial future.
The standard child support assessment completed through Services Australia cannot enforce the payment directly to a third party of payments such as private school fees, music lessons and other extra-curricular activities. The amount of child support payable can be increased if Services Australia are satisfied that there is a reason to do so, but they cannot enforce payment being made to the third party.
A common reason to get a binding child support agreement is if one parent harbours concerns that the other parent may not in future fulfill their verbal agreement to cover particular expenses.
What are the advantages of a Binding Child Support Agreement?
Binding child support agreements have many benefits for both parties to the agreement.
It gives parents security and certainty and allows them to make arrangements that suit their family circumstances.
It also allows for funding arrangements to be outlined if the parents plan to enroll their children in private schools. The agreement can cover who pays the school fees, medical payments, private health insurance and extracurricular activities.
Parents may also decide to enter into a binding child support agreement if their child has significant medical or educational needs.
Once an agreement is registered with Services Australia, it can be registered with the Federal Circuit and Family Court of Australia. If somebody does not comply with the agreement, the court can enforce its provisions.
What are the disadvantages of a Binding Child Support Agreement?
A binding child support agreement is in place until there is a terminating event, such as a child turning 18 or finishing secondary school. Events happening during that period can impact a parent’s ability to afford their agreed child support agreement.
Parties can agree for a binding child support agreement to be terminated if one parent’s income drops below a certain level.
To end the agreement, you must enter into a termination agreement, which requires both parties to get legal advice.
If one parent refuses to enter into a termination agreement, the other parent must apply to the court to terminate the agreement.
What should I do when considering a Binding Child Support Agreement?
If you decide to pursue a binding child support agreement, work out what your expenses attributable to your children are.
Think about what it is you really want this agreement to cover. Get financial advice about budgeting, working out how much on average you spend on your children per week, and how you will manage your funds.
Take into consideration both of your financial circumstances and work out what is going to be achievable for both of you running two separate households.
A child support agreement may be conditional on several elements: it may come into effect when the property settlement is finalised.
Independent Legal Advice
For a binding child support agreement to be binding, it is a requirement that you get independent legal advice about the effect of the agreement on your rights and the advantages and disadvantages of entering into the agreement at the time.
You do not have to get legal advice with a limited child support agreement although we recommend that you do. Some parents prefer the flexibility of being able to renegotiate a limited child support agreement. But for some parents that introduces too much uncertainty.
Here to Help
Contact us for free no-obligation initial telephone advice about binding child support agreements.
